Rutland County Council decided whether to accept £29.4m to redevelop St George's Barracks in private after voting to exclude the public from the online meeting.
Rutland County Council decided not accept the Housing Infrastructure Funding which has been allocated to build a garden village on the site at North Luffenham.
It will provide 2,245 new homes and associated facilities including a new school and health centre.
More than 100 members of the public had joined the virtual meeting to listen to this evening's debate, but on the advice of the council's monitoring officer, the debate has gone into closed session.
Several councillors had called for the meeting to continue in public because of the scale of public interest.
Including Conservative Councillor Kenneth Bool, he said: "We've always tried to keep meetings as open as possible and this should apply here, particularly as we have so many people listening and following the issue." He told members the St George's Barracks issue began four years ago "shrouded in secrecy" adding: "If we go into excluded debate it makes me and the public wonder what else there is to hide. "There is a dark shadow over this project. This is a matter that affects everyone in Rutland and I can't see why residents can't hear their elected representatives discussing it."
Lib Dem Councillor Gale Waller backed the call to continue in public. She added: "We are often told that this development is as key to Rutland as the reservoir was in the seventies. We owe it to residents to make a decision in public."
Fifteen councillors voted to continue the meeting in private. Twelve others voted against.
Rutland County Cllrs voted against accepting the HIF grant. 13 against, 12 for and 2 abstentions
