The Local Government Commission has agreed there is a case to argue for shifting boundaries in the central North Island.
Several hundred rural households are pushing to be included in Palmerston North City Council's boundaries.
They want out of the Horowhenua District Council area, saying it neglects them despite the high rates they pay, and that they are much more oriented towards Manawatu.
The commission has decided there is enough community support for it to hold meetings and assess the application.
It will also be talking to the two councils in the new year.
Amber light for local government reform in Golden Bay
The Local Government Commission has agreed to progress a plan for a new governance model for Golden Bay.
It will assess an application to replace the current community board with a local board, which would give Golden Bay more independence from its parent, the Tasman District Council, and more decision-making powers.
The commission's chief executive, Donald Riezebos, said its decision was helped by the results of a community survey and a petition, which showed widespread support for change.
He said the commission would meet with a working group and the council in the new year, before proceeding to the next stage.