Cashel Town Council has denied "all allegations of wrongdoing" relating to its purchase and resale of convent land formerly owned by the Presentation nuns.
A planning application for a hotel, car park and commercial buildings on the site has attracted considerable opposition in the south Tipperary town.
Objectors to the proposed development claim that the site was intended for use as a town park and that the nuns were threatened with a compulsory purchase order by the council which forced them to abandon an agreed sale for the entire property.
In a statement yesterday, Séamus Maher, town clerk, said: "The town council became aware that the Presentation sisters were proposing to depart from Cashel and expressed an interest in purchasing part of the convent lands in order to ensure that this prime town centre site would be used to best advantage for the town and the people of Cashel."
Mr Maher accepts there was a reference to the possibility of a compulsory purchase order but said this occurred when negotiations on acquisition by agreement were already well advanced.
He could not comment on speculation the nuns had already agreed a deal with local businessman Michael McCormack.
Mr Maher said he had not seen any evidence to support the claim that the nuns lost out on £15,000 (€19,000).
However the nuns claim that they had already agreed a deal with Mr McCormack which they were forced to abandon as a result of the "threatened" compulsory purchase order.
Sr Patricia Wall, a spokeswoman for the Presentation Order, said the order lost £15,000 as a result of having to renegotiate the deal.
She said the nuns had been offered £615,000 for the entire property but eventually received £600,000 in a split sale of the buildings to Mr McCormack and the land to the council.
Mr Maher said the council paid the nuns a price equivalent to €418,000 for the 2.8 acres of land in 2001. Last year, the council sold the land for €1.9 million to CMS Developments Ltd of Clonmel, subject to planning permission for a hotel on the site.
Mr Maher said the sale of the land to CMS Developments Ltd was supported by eight of Cashel's nine town councillors. Tom Wood (Independent) voted against.
However, last night Martin Browne (Independent) told The Irish Times he had withdrawn his support for the sale and is "disgusted by what's happened".
He called on the council to refuse planning permission, return the lands to the public domain, deliver a town park for the people and compensate the nuns for their financial losses.
He added: "The nuns were terrific for Cashel and served the town for generations" but were "short-changed by a profiteering local authority".
Mr Maher said any resolution to negate the sale to CMS Developments Ltd would be ineffective as a contract is in place.
Regarding claims that the council intended to use the land for a town park, Mr Maher said no commitment was ever given to developing a town park.
Richard O'Brien, a spokesman for the Save Our Town Park Committee, said his committee has the support of more than 1,400 people in the town.
"Why are they [the council] so adamant that the convent grounds should be developed as a hotel - who and what is driving such an agenda for this site?" Mr O'Brien asked.
"We do not want any more empty shops with apartments overhead being built after the initial guise of a hotel falls through."
