Plans for more than 1,500 homes on a jewel-in-the-crown site saw developers and council officers "at loggerheads", a fiery council meeting heard.
It was suggested there had been a "massive breakdown of communication" over two plans for Sniperley.
One councillor insisted "we are not cash cows for developers", while a developer said council officers seemed to negotiate "with one hand tied behind their backs".
A government-appointed inspector will now decide the matter in a public inquiry in January, as developers appealed to the Planning Inspectorate over Durham County Council not deciding on the two plans within a set time period.
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Councillors at the planning committee meeting on Tuesday (September 7) said they had never seen such an extensive list of reasons for refusing a plan - "13 specific failures".
The first of the two schemes was an outline plan for up to 1,550 homes at Sniperley Park with a local centre, pub, primary school, park and sports pitches.
Ward councillor Mark Wilkes suggested this plan from Co. Durham LLP put the council at "massive financial risk".
He said he had never before seen a developer "refuse to agree to even basic Section 106 requirements" - agreements used to ease the impact of plans, like developers paying towards the NHS, education or open spaces.
These could cost more than £20m for the two Sniperley plans, including over £10m for schools, he said.
"The developers for both applications have sought to get away with not paying what is required for infrastructure," he added.
"It would be unthinkable for any local authority in the country to expect to pay for this scale of infrastructure.
"I'm genuinely appalled with the arrogance which certain developers have and the way they seem to think they can behave.
"We as a local authority are not cash cows for developers."
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Councillors raised issues like climate change, environment, energy, land, rights of way, transport, play areas "near pylons" and electric charging points.
Cllr Carl Marshall said: "My initial reaction to this is bewilderment at how we've got to this stage that the council and the applicants are at absolute loggerheads.
"This was one of the jewels in the crown of the county plan, integral to delivering 30,000 new jobs and housing.
"In all my time in being involved in planning, I've never seen such a comprehensive list of reasons for refusal."
He said the forthcoming appeal could cost more than £1m: "Someone needs to get the bottom of what's happened with this for me, chair.
"There's clearly been political leanings on officers behind the scenes," he added before he was told to "stick to the issues" by committee chair Cllr George Richardson.
The second scheme was Bellway Homes' full plan for 370 homes near Sniperley Farm and an outline plan for a park and ride extension.
Cllr Wilkes said this scheme was "even worse" and overdevelopment impacting on homeowners, citing "laughable" and "shocking" public transport and drainage criticisms.
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The developer's agent James Hall responded, saying they were shocked and disappointed with the 13 reasons for refusal.
He said Bellway had worked since 2020, went "above and beyond what is expected of them", produced a masterplan, revised the scheme and would "pay our fair and proportionate share" of money to the NHS and others.
He said: "Bellway are not ducking any of their responsibilities."
He said the plans had not been presented properly by the council: "Several of the reasons for refusal do not seem to apply to our scheme.
"There are a number of untruths that have been said today."
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He asked for the decision to be deferred for "meaningful, common ground meetings".
He added: "The feeling has always been that the officers have been negotiating with us with one hand tied behind their back.
"It just smacked of something else going on in the background but we don't know what that is, clearly.
"For that reason we believe we need to go to a public inquiry, which is a very rare occurrence.
"We don't do this lightly."
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Cllr Maura McKeon said: "It just feels like a bit of a dog's dinner.
"There's clearly been some massive breakdown of communication at some point between the developers, council and the stakeholders involved."
Cllr Patricia Jopling said: "What we want are the right houses built on that site.
"These two applications together is the most enormous amount of houses, and we've got to get it right."
Planning officers questioned the design quality and said both plans lacked full masterplans, sustainable transport or energy, and agreement on delivering facilities like schools, healthcare, allotments and sports pitches.
Councillors could not approve or reject the plans in the usual way because of next year's appeal, which takes the decision out of their hands.
They voted they were "minded to refuse" both schemes, but the decision will be made by the Planning Inspectorate later.
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