Katherine Mayor Fay Miller has set the record straight on a new development at the town square following widespread concern the council is sponsoring a rival cafe.
"Council is not going into opposition with anybody," she said.
Original plans to upgrade Katherine's main street with a $5 million government grant, first announced in 2018, have been down-sized to focus solely on the town square.
About $3 million remains after a large portion was siphoned off to fix the Katherine Hot Springs and impracticable design plans have been scrapped.
Shady trees, a new toilet, bike racks and an entertainment space are now in the pipeline - but it is the plan for a new cafe which is the main point of contention for cafe owners within the already struggling industry.
Existing cafe owners say additional competition will add unneeded pressure. The spread of COVID-19 has made matters only worse, with predictions of entire industries collapsing.
Despite criticism, Katherine's Mayor is standing behind the decision.
"The plan is to reenergise the CBD to encourage people to come back," Mrs Miller said.
"We are starting the redevelopment in the park, with the view of extending upgrades from there.
"Sometimes there needs to be something that attracts people and we have decided that will be a pop-up cafe."
Mrs Miller said while concern for local businesses has been heightened as the the spread of COVID-19 continues to cause disruptions, "the plans for the future were already in place".
She said rates would be comparable to that of the Pop Rocket Cafe, a seasonal cafe at the Katherine Hot Springs.
And in response to calls the council should inject the money into established businesses, Mrs Miller said a pool of grants have not seen uptake.
"Council has provided businesses the opportunity to make applications for 'beautification grants' and that hasn't seen much attention," she said.
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