David Mellen said it the project was very exciting
It would be built on land next to the replacement for the Victoria leisure centre.
Supporters hope the scheme will provide three rehearsal studios, production "spaces", creative-business units, offices and training and networking rooms.
The city council has entered into an agreement for a lease with Dance4, a not-for-profit national agency currently based in Hockley.
Dance4 was given the right to a 150-year lease of the land with a "peppercorn" rent – a nominal payment – on the condition it could get planning consent and funding within two years.
The Nottingham Creative Village project was discussed by ward councillors at this week's St Ann's and Dales area committee meeting.
Dales ward councillor David Mellen said: "It's really exciting, three things coming together: Dance4, the new leisure centre and the new square. It's going to have a real effect on the area.
"It's about providing a leisure centre and a square that's going to last our generation and our children's generation, and the people of St Ann's and Sneinton, for time to come."
Fellow Dales ward councillor Ken Williams said: "I'm really optimistic that in the next two to three years we will see huge change."
The creative village would be used for training, education and public performances and offer a shop.
The site is 0.37 acres and fronts Brook Street.
Other options considered by the council included selling the surplus land, or waiting until the property market picks up before doing so. Instead, the land will be safeguarded for two years, to enable Dance4 to work on its proposals.
The present Victoria leisure centre is set to close at the end of March – a year earlier than planned – in a decision which will save the council £395,000 in running costs.
The campaign group Save Victoria Baths is trying to prevent this.
Consultation on the new Sneinton Square is still taking place. Work will start by the end of this year and be completed by November 2011.
caroline.lowbridge@nottinghameveningpost.co.uk