Developers Wrenbridge and Buccleuch Property proposed to demolish the former Argos building on Newborough and replace it with ground-floor retail units and, above, accommodation for 52 in-training NHS doctors and nurses from Scarborough Hospital and 150 university students.
In a heated meeting at Scarborough Spa, councillors voted to reject planning permission on the grounds that the size of the building in the plans is too "overbearing" and an overall dislike to the building's proposed design and appearance.
Cllr Phil Trumper, whose motion to reject was carried, described the appearance of the plans as an "Eastern Bloc urban prison".
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The meeting was, on occasion, interrupted by residents in the public gallery and insults exchanged between councillors. At one point the meeting was temporarily adjourned and the chairman threatened to close the public gallery due to interruptions.
Cllr Bill Chatt raised concerns about the "overbearing" nature of the site and the impact of blocking sunlight on the surrounding area, describing the proposal as "replacing one monstrosity with another".
He also queried whether it could be guaranteed that any future councils would not overturn the effective ban on students obtaining on-street parking permits as part of the parking-free development.
The plans had drawn widespread criticism over their location, appearance, parking and viability. Many of the scheme’s opponents have called for an open public square instead.
Scarborough Council was set to borrow £22m from the Public Works Loan Board to finance the scheme, which was first devised in mid-2019.
As part of the plans, a separate application will also appear before the council’s planning committee today to demolish No.1 St Helen’s Square, the former public toilets and Nos. 48-49 Newborough, adjacent to the Argos building, to create a "public square" opposite the Market Hall. At the time of writing, this application has yet to be decided.
A motion to approve the former Argos plans from Cllr Paul Riley failed to gain a majority vote.
The council's planning officers had recommended the plans for approval prior to the meeting.