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A £120 million regeneration project was given the elbow at a special planning meeting attended by hundreds of residents in Gravesend last night.
Cheers erupted from campaigners as councillors sitting on the regulatory board of Gravesham Borough Council held a nail biting vote following hours of debate.
It resulted in the plans being turned down by just one vote.
Developer Edinburgh House has spent more than £4 million and three years preparing the application for 400 flats, shops, a hotel and 1,000 parking spaces in the town's Heritage Quarter.
Following the decision last night Edinburgh House managing director, Tony Quayle, said: "Today's decision puts Gravesend's economic future in grave danger.
"In an era when town centre development in the UK has all but ground to a halt, it is surprising to see inward investment of this scale thwarted.
"This decision has seriously harmed the prospect of creating new jobs, rejuvenating the town centre and attracting new businesses."
Those who voted against it said it was too big, not enough open space was provided, and no details were given for the Western Quarter part of the development, which was just an outline application.
Many councilors who spoke against the plans also paid tribute to the huge public opposition, which was in evidence on the night.