Plans to construct a commercial and residential complex along with a three-screen cinema at the Glebe in the centre of the town have been submitted to the local county council. Several objections to local builder Michael Kelly's proposed development have been lodged with the council, which is already considering an alternative proposal from Keeney Construction to build a retail, residential and office scheme at the site of the Magee clothing factory in the Milltown area of the town.

A third developer, Mullingarbased Bennett Construction, last March won approval for a retail scheme in an area of the town knows as The Mullans.

An objection from Keeney Construction to this project is due to be ruled on soon by An Bord Pleanala. Keeney Construction is a UK-based firm headed up by Donegal native Danny Keeney.

Anxious traders along with business people and local residents say the town needs the kind of commercial boost a new shopping complex would provide. Earlier this year, 2,500 local people signed a petition calling on An Bord Pleanala to facilitate and promote commercial development in the town. A recent public meeting attracted 1,200 locals, many voicing concerns about the motivation of some objectors to specific developments.

Local Fianna Fail county councillor, Jonathan Kennedy, was one of the organisers the meeting. "These hold-ups have dragged on for seven years now. The whole thing is creating a bad vibe in the town."

Last August, one of Donegal town's largest employers, the Hospira, announced it would close its plant by the end of this year with the loss of 560 jobs. Donegal is an unemployment blackspot, with around 6,000 jobs lost in the county since the late 1990s and only about 1,000 created, according to Siptu.

"People here are very angry over the closure and in-fighting over planning applications isn't helping matters. We have our bypass in place, we have broadband here, we're primed and ready for development, but so far, it just isn't happening, " says Kennedy.

An Bord Pleanala is expected to rule soon on The Mullans development and Kennedy is confident a favourable decision will help transform the commercial life of the town.

"We're centrally located and have a catchment area of up to 50,000 people. When you look at it, we can actually facilitate all three complexes."

As well as Dunnes Stores, the Bennett Construction scheme would include 12 other retail units, a restaurant and wine bar, and would create 300 jobs during construction.

Earlier this year, An Bord Pleanala upheld an objection by Keeney Construction to another Bennett Construction development in the Drumlonagher area of the town. The retail-warehousing scheme would have been anchored by Atlantic Homecare.

Local auctioneer Keith Anderson says persistent objections to proposed developments are threatening the commercial future of Donegal town. "From a commercial perspective there's nothing here in town. People are going to Letterkenny and Sligo, and even Derry and Enniskillen to do their shopping.

"Bundoran now has a Lidl and other retail outlets. There's been talk lately of Tesco moving into Ballybofey. The danger now is that if these towns start taking off before Donegal does, our catchment area is going to get tighter. In the last few years we've sold a lot of land in the vicinity for planned residential development. A lot of those houses will never be built if the Dunnes Stores scheme doesn't go ahead."

Local developer, Michael Kelly is confident his proposed town centre development will win approval from the county council. "We're well-located and that's what the planners are looking for. To be honest with you, I think there's room enough for everyone."

Donegal TD and Minister for Agriculture Mary Coughlan believes the interest shown by developers anxious to invest locally is itself a vote of confidence in the town.

"Donegal Town has a very vibrant business community and is a popular shopping and tourism destination, with a large catchment area. There has been significant government investment in the town's infrastructure over recent years and it is also due to benefit from our decentralisation programme. It is not surprising therefore that. . . different people have sought to make commercial and retail investments in the town."