Judges praised the scheme for its great commitment and partnership with business. They also hailed Rotorua Lakes Council's recognition of the importance of urban design and breathing new life into the inner city - particularly in relation to the tourism industry.
The inner city revitalisation project was launched in 2013, partly in response to changing retail trends - such as the advent of online shopping, and increasing numbers of vacant shops in the CBD.
Focus groups were formed and a programme of initiatives launched to explore the community's ideas for revitalising the CBD, including opening a community 'Ideas Store' in an empty shop in the main street.
Other initiatives that developed from the project ranged from introducing free parking, weekly competitions, an 'I love Rotorua' wall and community Scrub Day for cleaning up the CBD, through to pop-up galleries, an annual Tulip Festival and the Light Rotorua campaign to decorate the city.
A hallmark of the work undertaken to date has been collaborative partnerships between the council and local businesses, retailers, community organisations and other agencies.
Rotorua mayor Steve Chadwick says Rotorua is changing and refreshing itself.
"And where else would you start but in the heart of the city. It's been so successful, with the whole community saying 'gosh, it's looking lovely.' And they're feeling part of it.
"It's restoring a sense of energy, a sense of pride and a sense of place."
LGNZ President Lawrence Yule said the project had been an important venture with interesting new initiatives achieving excellent community buy-in, and providing real opportunities to improve the economic wellbeing of the area.
While the full potential economic impact of the ongoing inner city revitalisation programme is yet to be realised, positive trends are already surfacing such as increased foot traffic in key areas and improving retail patterns.
In its new long-term plan Rotorua Lakes Council has committed $1.2 million a year for the next three years for inner city revitalisation work, and $800,000 a year for the subsequent seven years of the plan.