Councillors in Clonmel, Co Tipperary plan to remove a Georgian building from the Record of Protected Structures (RPS) in order to allow the development of a multistorey car park, hotel and shopping centre, which was refused by An Bord Pleanála last week.
An Bord Pleanála upheld appeals by the Department of the Environment and An Taisce against the controversial €40 million development which was approved by Clonmel Borough Council last August.
The council had given planning permission to the Borc Partnership to build a 500-space car park over nine levels, a 2770 sq m shopping centre and an 80-bedroom hotel on a one-acre site in the town centre currently occupied by the Clonmel Arms Hotel.
The hotel is a listed Georgian building and the proposed development would have involved its partial demolition.
An Bord Pleanála refused permission on the grounds of excessive scale and height of the development in the historic town centre and that there were no exceptional circumstances that would permit the demolition of a protected structure.
In its ruling the board also said the development would have an adverse impact on a nearby national monument, the restored 17th century customs house, the Main Guard, and was contrary to council's own development plan for the town.
"The monolithic nature and scale of the proposed development would be out of keeping with its surroundings and would significantly detract from the historic centre of Clonmel in general, and the setting of a national monument," Bord Pleanála inspector Graham Carlisle said.
An emergency meeting of the borough council was held on Tuesday night to discuss the decision. It is understood that councillors had been contacted by the developer last weekend to express his disappointment at the reversal of the council's original planning decision.
A motion was put forward by mayor Phil Prendergast proposing that the hotel should be delisted, to allow plans for the development to be resubmitted. The motion was unanimously agreed by the 12-member council. The proposal will now be put out to public consultation before it can be formally ratified by the council.
The town had been "devastated" by An Bord Pleanála's decision, which had been prompted by unnecessary interference by An Taisce and the Department of the Environment, Ms Prendergast said.
"Clonmel has been demoralised by this negative decision, we really need this centre for investment in Clonmel."
While there was no guarantee that a new application for the same site would be successful, at least the "heritage barrier" had been removed, she said.
A spokesman for An Taisce said yesterday that the council's decision was short-sighted and highlighted its failure to protect national monuments and listed buildings.
"Rather than face up to the reality that this was an ill-advised development they are attempting to accommodate a repeat application that won't succeed."