The approval Tuesday has some strings attached.
The Staten Island Advance says it requires 100 percent of the city's revenue from the lease to be used for improvements in that borough.
The proposed New York Wheel would have a view of the Statue of Liberty, New York Harbor and the Manhattan skyline.
The $500 million project also includes an outlet mall and hotel.
Developers also need approval from the borough president, the City Planning Commission, the City Council and the mayor.
Mayor Michael Bloomberg has already promoted the project.