The Legana Shopping Centre is looking to expand onto land next to Woolworths and The Reject Shop.
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The West Tamar Council voted on Tuesday to remove restrictive convenants on the land to allow it be sold and developed as part of the shopping centre.
The restrictive convenants prevented anything but one house being built on the land.
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The council's senior statutory planner Karin van Straten said the proposal to remove the convenants was considered reasonable.
"Amendment of the restrictive covenants applicable to Lot 902 will provide for the expansion of the Legana town centre business area," she said.
A separate development application will need to be lodged by the land's new owners, Prospect company Bass Corporation, for the expansion.
If no objections are lodged by April 26, the convenants will be removed and the plans resealed.
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