A “new type of plan” has been adopted by the SIC at its Wednesday meeting.
The Scalloway Local Place Plan is one of the first of its kind anywhere in Scotland.
The innovative project was previously discussed at a remote development committee meeting last week.
Team leader for coastal zone management Simon Pallant labelled it a “new type of plan” on Wednesday afternoon.
Development committee chairman Alastair Cooper called the plan a “credit to the community”.
It was “not just a document, it is actually happening”, according to Mr Cooper.
The plan’s top priorities, including the demolition and redevelopment of the village’s former youth club and expansion of parking at Burn Beach, are already underway.
Shetland Central councillor Davie Sandison echoed Mr Cooper’s comments. He said it was an “extremely good community process”, but emphasised that it would take “many many years” to realise its aims.