A US$125m (€107m, £93.3m) proposals to create a leisure development – featuring a world class aquarium and cultural centre in Memphis – have moved a step closer, after the Tennessee city won state approval to expand its downtown tourism zone.

In October last year, Jim Strickland, mayor of Memphis, revealed plans for the Mud Island area, focused around the aquarium on Mud Island itself and the cultural centre across the river, with the two projects connected by a pedestrian bridge.

Earlier this week, the State Building Commission approved the expansion of the city's Downtown Tourism Development Zone (TDZ) to include Mud Island. The significance of this is that any potential developments can be financed through state sales taxes from within that area, providing a significant boost to proposed projects.

"My goal was to make sure that this concept is real and didn’t just gather dust on a shelf, and this is real progress toward building the riverfront worthy of a great city like ours," said the mayor.

"By leveraging sales tax dollars in the TDZ that would otherwise have gone to Nashville, we can do this without using the general fund dollars that pay for basic services like police and fire."

The aquarium on Mud Island would operate as a center for freshwater studies, making Memphis a "national leader in hydrology and freshwater science, river ecology, and development of policies that protect and restore deltas, rivers, watersheds, and aquifers". Included in the redevelopment, the Mud Island Amphitheater would be upgraded, while the Mud Island River Park would be free for year-round use and made more accessible by the new pedestrian bridge.

Across the river, the Cultural Centre would establish a new civic terrace, with cultural activities and events to take place regularly. The Brooks Museum of Art had previously expressed interest in moving from its current home at Overton Park. According to the plans, the museum would become the "cultural amenity" the project proposes.

The Brooks Museum started fundraising for the move last year, with construction on its new home scheduled to start between 2020 and 2022. The aquarium is expected to open in 2023.

The redevelopment plans are part of the city's wider Bicentennial Gateway Project – a plan to link significant investments in Downtown Memphis, including Mud Island, Uptown Memphis, the Pinch District and Riverfront area, as well as the renovation of the city's convention centre.