A £700,000 investment to improve a Keighley eyesore has been refused by Bradford Council, which fears it could hinder the town’s development.

The Damside multi-storey car park has stood empty on the edge of the town for years, but in 2011 a Keighley company Damside Investments opened a car valeting service at the site, with permission to operate for three years.

It applied to extend this permission on a permanent basis, using the car park for the sale and display of cars and parts. It said the full permission would lead to a massive investment in the five storey building and create 15 jobs.

Yesterday the Council refused the request, saying the site may soon be needed for town regeneration projects.

The planning agent behind the application called that decision “nonsense” and argued the Council should not be holding back businesses growth in anticipation of projects that could be years away from actually happening.

Refusing the plans, officer Peter Timbrell claimed such an investment in what the Council sees as an unwanted building would “compromise longer term aspirations” of Keighley, and that the car park lay in a Town Centre Expansion Zone. His decision means the company only has permission to operate on the site until late 2014.

He said permission was granted on a temporary basis to prevent what he called the “unnecessary sterilisation” of a large part of the expansion zone.

He goes on to say the planned investment would: “effectively assure the long-term survival of the building. It confirms that this unattractive building will potentially remain in place for the foreseeable future, preventing any wider re-development of the site involving the removal of what is widely described as an eyesore.”

If the investment were to go ahead, he warned Bradford Council would have to pay Damside “very substantial” compensation if they needed to demolish the building. Phil Coote, the agent working for Damside, said: “They refused it because the land might be needed for regeneration, but they have no plans for this.

He said the company has yet to decide whether to appeal the decision.