KENDAL'S K Village has been given another chance to succeed after councillors narrowly agreed today to lift a range of planning conditions to allow more 'high street' shops into the centre.

The relaxation of conditions imposed back in 2005, means administrators have been given permission by South Lakeland District Council to attract a wider range of stores to the £100 million complex.

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The original conditions meant the centre could only accommodate units selling seconds or discounted ‘end of line’ goods as a 'factory outlet' centre.

The hope is for new retailers to occupy empty units - but that has sparked concerns how it might impact on Kendal's high street.

The centre's asset managers, the London-based Global Mutual Properties Limited, made today's application to help K Village 'fulfill its ambition.’

The turnaround specialists are acting for administrators KPMG based in Belfast.

KPMG hope the relaxation of conditions will boost K Village's performance and make it more attractive to a new buyer. But the lifting of a Section 106 agreement also means that £161,000 owed to the council is lost.

The original developers, Kendal Riverside Ltd, collapsed with debts of over £68 million as it plunged into administration in December 2012.

The centre's poor performance has been blamed on the changing financial and economic situation which has marred its opening since 2010.

The decision today was only possible after councillors on SLDC's planning committee agreed - with a single casting vote - to relax the original planning conditions.

In a deadlocked vote, planning committee chairwoman Mary Wilson (Lib Dem) used her casting vote to accept the officers' recommendations that conditions be lifted.

An alternative proposal - that today's decision be deferred for SLDC to seek further legal advice on how the council can claw back the outstanding £161,000 owed as part of the original Section 106 agreements - was also defeated by Coun Wilson in a casting vote.

The decision to lift conditions did not sit well with councillors on either the Lib Dem or Conservative benches.

Coun John Holmes (Cons) said: "I'm sick of being led by this development - let it sink. Let it sink and the phoenix will rise from the ashes. Someone will come along and bring it back."

Lib Dem Philip Dixon asked: "Is this the key that will unlock the door to a rosy future? No, it's a white elephant and the sooner it hits the deck, the better - so we can start again. 

"We, the taxpayers of South Lakeland, are picking up the tab for unfettered capitalism."

Coun Sylvia Emmott, for the Lib Dems, said she was unconvinced today's measure would work.

"I'm still not convinced that relaxing the conditions would not have an adverse effect on trading in Kendal town centre," explained Coun Emmott, who called for the decision to be deferred for legal counsel to advise on how SLDC could get some money back.

But Coun Janette Jenkinson, for the Conservatives, said: "I think we have to make something happen here. We have to say something has to happen to make it successful without it detracting from Kendal town centre."

She said SLDC had wrongly 'bailed out' out the development by contributing £100,000 towards improvements between K Village and nearby Kirkland upfront before it got the money from the developers.

"That's where we went wrong," said Coun Jenkinson, and "some of us said so at the time."

Planning officer Mark Loughran told councillors the conditions had originally been put in place to 'protect the town centre' but added that the authority did not think that lifting them now would have a 'great deal of impact.'

He said that of around £200,000 in payments that should have been made to SLDC from the development and put into schemes such as the Kirkland improvements, and public art projects, - only £39,000 had been paid.

Coun Joss Curwen, for the Lib Dems, said SLDC should pursue the money it is owed by the original applicants - Kendal Riverside Ltd.

But Labour's Coun Bharath Rajan said: "We know the developers cannot afford the sums of money that were promised at the time - we have to be pragmatic."

Tory leader David Williams said: "It's a great shame this council spent £100k (on Kirkland improvements) on the assumption it was going to get it back - against the advice of certain members at the time."

Council solicitor Matthew Neal and planning officer Mark Loughran explained that latest government planning guidance was to be 'sympathetic' to retrospective adjustments of 106 agreements.

Mr Neal said that the financial obligation - the money owed to SLDC - should also pass on to the next company that buys K Village.

Both council officers pointed out that the applicants could not renegotiate new 106 agreements as they were only acting as the administrators - rather than being owners seeking to take the centre over.

Mr Loughran told members at the start of the meeting: "It's unfortunate a lot of the monies for environmental improvements have been spent (before the council got the money for them).

"It's galling and I accept it's galling. They (Kendal Riverside Ltd) made a financial commitment at the time of consent but because of financial circumstances they are trying to back out of that financial comittment."

Asked how many of the 125 residential properties in the centre had been sold, Mr Loughran said that until recently only one had been purchased.

But he said that in the last six months, the administrators had 'upgraded' the interior and that properties are now being 'let in batches of 10'.

"I'd say 20 to 30 are in use," said Mr Loughran.