The construction of a footpath inflamed tempers and sparked debate among councillors.
A modification application was submitted for a vehicle repair station at 80 Station Street in Bowral at the September 11 Ordinary General Meeting of Wingecarribee Shire Council.
The original Reekies Tyres and More building was engulfed in flames when a fire broke out on November 26, 2016.
READ MORE: Bowral tyre shop fire | PHOTOS, VIDEO
Dozens of firefighters from several stations worked into the night to extinguish the fire. The building was completely gutted.
The applicant sought to delete the DA requirement to construct a concrete footpath across the full length of the property.
They considered the provision unnecessary as the site did not generate pedestrian activity and the existing trees and power poles made the footpath an "unachievable condition".
Councillors were divided between helping the business get back on its feet and following the Bowral Development Control Plan (DCP).
Mayor Duncan Gair said council had a policy and until that policy change it needed to be upheld.
"Not all footpaths are necessary at the time [of construction]."
Cr Garry Turland said it was his opinion the condition to construct a footpath was "blackmail".
"The footpath is actually on private land.
Cr Ian Scandrett was in favour of the recommendation to refuse the application. He said the condition was accepted at the time the original DA was approved.
Councillors Scandrett, Andrews, Whipper and Gair voted to refuse the modified application for the footpath. Cr Turland voted against this.
The Bowral DCP encourages development to improve urban function throughout the town, including the provision of a safe and accessible network of pedestrian links.