City planners have refused permission for hundreds of new cost-rental and social homes at Galway Harbour.
Previously, the Health and Safety Authority had recommended refusal - due to nearby fuel storage tanks and the danger they could pose.
The Amharc Atalia development is led by the Land Development Agency, and is the culmination of many years of work.
It would offer 356 apartments across four blocks, up to 13 stories high, as well as a new public plaza, coastal walk, gardens and retail units.
Most apartments would be single and two-bed units delivered in a relatively even split, and all would be cost rental or social units.
The development is seen as a key strategic development in tackling Galway City Council's lengthy waiting lists, and the wider housing crisis.
But now city planners have refused permission - because of nearby fuel storage tanks and the potential for a major accident.
This was previously flagged by the Health and Safety Authority as an unacceptable risk.
The Land Development Agency now has four weeks to take an appeal to An Coimisiún Pleanála if it so choses.
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