Kingston shop owners have reached an impasse with the government on the vexed issue of returning grass to the once popular cafe strip, accusing bureaucrats of foisting tens of thousands of dollars of unexpected costs on to them as well as tying them up in legal red tape.

Meanwhile, coffee drinkers such as Holly Hart will continue to keep a close eye on three-year-old Ivy and seven-year-old Zander as they negotiate spiky and rubbish-strewn garden beds which, the traders say, present injury risks for children. ''Grass would be easier for me to contain them and keep an eye on them and would be nicer for them to play on,'' Ms Hart said.

Six years after the family-friendly grassed area was ripped up to make way for drought-resistant native plants and brick paving, the issue shows no signs of resolution despite overwhelming public support for grass to be replanted.

In October, Chief Minister Katy Gallagher bowed to community pressure after more than 900 people signed a petition calling for grass to be planted and Kingston traders offered to pay for it themselves. Local businesses also agreed to water and maintain it.

But Pawl Cubbin, the spokesman for the Kingston Traders Committee and the part-owner of the building housing new bar Little Brooklyn, said the committee had been gobsmacked by the list of demands sent to it by Territory and Municipal Services and could not proceed in good faith with the government.

Demands include Mr Cubbin providing - on behalf of traders - $20 million public liability insurance for two to three days of work; a 10-year $20,000 bond for construction completion; a $20,000 bond for damage to the grass; a $500 upfront payment to the ACT government for the cost of irrigating the grass during the establishment period; an upfront payment of $1700 for the annual cost of watering the grass, with continuing watering costs to be decided by TAMS.

A further estimated $27,000 would go towards landscaping itself - with traders responsible for having a traffic plan and work plans drawn up, fencing erected around the area while work took place, the removal and return to TAMS of the existing drought-resistant plants, the upgrade and repair of the sprinkler system despite this being an ACT government asset, and all the signage associated with the work.

Traders would have to mow, water and maintain the grass and the government would at any stage retain the right to change the landscaping ''to a more suitable design and the costs of the reinstatement will be borne by Pawl Cubbin on behalf of traders''.

''These costs came as a surprise to us and we never signed up for them,'' Mr Cubbin said.

''We've been lobbying for this for more than a year, doing our best to work with TAMS to get this across the line and we've hit a brick wall. It's bureaucracy gone mad. This is a simple project. We're talking four small bits of grass, not a football field.''

Territory and Municipal Services Minister Shane Rattenbury tried to broker peace between traders and TAMS on Monday saying the memorandum of understanding was negotiable and he was personally committed to seeing grass returned to Green Square - reflecting the views of the ACT Greens that grass was appropriate for the area.

Mr Rattenbury said he understood traders ''may well be experiencing some accumulated frustrations because it has taken some time'', but government approval was given only in October and delays in getting back to traders over their concerns in December were due to key staff being on leave.

''This is a draft MOU and as business people they must understand that you need to start with some version and then work from there. TAMS is committed to working with them in good faith,'' he said. His office would be prepared to work with the traders to broker a deal.

Mr Cubbin said the government was wrong to remove the grass in the first place, a decision taken under Jon Stanhope during the drought when watering was stopped and the grass suffered significant damage.

Green Square jeweller Gabby Radinger had been working in the area for 28 years and said the majority of traders opposed the removal of the grass.

''We knew this would take away from the village feel we had and would affect the success of local businesses. We fought it tooth and nail but they didn't listen to us.'' After almost two years of negotiating with the government, Mr Cubbin decided to personally fund the grass restoration.

''I was thinking in the vicinity of paying around $15,000 to $20,000. I said I would do certain things and I will. But this list of demands is something else entirely.'' It was preposterous to make him take out public liability when the government already had public liability insurance, he said.

His own costings by a professional landscaper came to about $15,000 with Canturf agreeing to donate the grass.

Mr Cubbin noted that Manuka traders in the neighbouring shopping centre enjoyed a green turf courtesy of the ACT government.

''Imagine what would happen if the government ripped up the lawns and put natives and tanbark down,'' he said.