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Developers face opposition in their attempt to build about 300 homes on Burgess Hill's old sewage works site after a consultant said their scheme had little to commend it.
Town councillors are recommending refusal of the scheme for Fairbridge Way when it is eventually decided.
They made their recommendation after studying a report from independent planning consultant Richard Walker.
Developers insist the site is not viable for commerce. But the land at and near the works is still allocated in planning policy for jobs use, such as warehouse, industry, or offices.
Mr Walker told Burgess Hill Town Council of the application "I find it has little to commend it. The allocation of the site for employment use until its future can be considered in conjunction with the Core Strategy and Town Wide Plan is, in my view, justified completely by national and local policies and by the location and characteristics of the site."
"The refusal of the applicants to accept this, essentially on grounds of financial viability, does not justify a change to allocation. In any event, I do not accept the financial viability argument".
Mr Walker also cited a string of other planning objections to the scheme.
But his report acknowledged that part of the site could be considered for housing when proper access and other services could be provided.
Fairbridge Developments Ltd and Glenbeigh Developments are asking Mid Sussex district councillors to approve up to 325 homes.
An inspector refused to include the site in an official "small scale" housing list after it was put forward by developers.
But in their application submission the firm Vail Williams, advisers for the developers, say the land is not viable for industry or warehouses, mainly because of the costs of decontamination and providing a long access road. And the firm also says the site would not pay as offices because of its location, market demand and general low office rents in the area.
Clerk to Burgess Hill Town Council David Carden confirmed the planning committee would be recommending refusal of the scheme.