The stadium will now be called the Central Energy Trust Arena.
The memorandum of understanding signed on Wednesday provides for the two organisations to develop the stadium under a 10-year partnership, with the City Council investing $17.5m over a 10-year period, and the Trust investing $2.2 million.
Negotiations by the Trust were led by chairman and former Palmerston North City Mayor Sir Brian Elwood and deputy chairman Rod Titcombe.
"This is a significant deal for the region as well as the city," says Mayor Grant Smith. "It gives the region a stadium of a credible size, and facilities to be proud of, with a long-term plan backed by a significant partner."
A review of the stadium in 2013 prioritised a set of projects needed, including a new stand, splitting up the back fields, better lighting, seating and changing facilities. New signage is due within the next four to six weeks.