Development proposals which it was claimed could lead to a second town in Kenmare, Co Kerry, have been refused by An Bord Pleanála.
The 300 house, apartment and commercial units, retail, bar, restaurant and car spaces on a 54¾-acre site near the sea had already been refused by Kerry County Council.
It was appealed by the developers, Neidín Developments and Rosvenor Ltd.
The board's inspector found that while the "exceptionally beautiful site" was a natural extension of the town and would not lead to urban sprawl, the major development being proposed was premature. Moreover, a master plan for Kenmare was needed.
The board ruled in accordance with its inspector, giving four main reasons for its refusal. These included: "the existing deficiency" in Kenmare's water supply and the pending construction of an inner relief road.
Traffic congestion was also cited as well as the current zoning of the site - amenity and low density under the 2004 Kenmare local area plan adopted by the council. The application attracted a large number of observations from locals as well as from An Taisce and the conservation group Friends of the Irish Environment.
A local action group also appealed the decision. It welcomed the council's refusal but argued that Kenmare was a heritage town and a planned town and consequently there was a need for master-plan led development which the group said was not being provided for in the county council's decision.
In his assessment of the proposal for An Bord Pleanála, senior planning inspector Robert Ryan also referred to "the high proportion of holiday homes" built in Kenmare in recent years. "This physical growth is reflected in the somewhat surprising fact that the town's population has actually declined between 2002 and 2006 to 1,701 from 1,844 persons," Mr Ryan noted in his report.
The board's decision has been welcomed by the local action group. Spokesman John Joe O'Brien said the existing make-up of population and available facilities in Kenmare now needed to be looked at.
A recent county council meeting heard that Kenmare's water supply was on a knife edge and a dry summer would have precipitated water shortages.