A meeting held between Territory and Municipal Services executive director Fay Steward and representatives of Kingston Traders on Thursday morning saw TAMS back away from its earlier nine-page Memorandum of Understanding which traders said was "bureaucracy gone mad."

It required Kingston building owner Pawl Cubbin – on behalf of traders - to provide $20 million public liability insurance, 10-year $20,000 bond for construction completion and a $20,000 bond for damage to the grass.

Mr Cubbin has already committed to personally paying for the grass to be restored to the area after spending two years trying to get the government to replace garden beds full of drought-resistant and spikey native plants which he says are an eyesore and make Green Square a hazard for children to play in.

When the issue was revealed by The Canberra Times on Tuesday, community opinion fell behind traders with TAMS accused of heavy-handed regulation and trying to foist the cost of government asset management onto small business.

The issue also reignited earlier criticism of the lack of consultation in removing the grass from Green Square in the first place – a decision taken by Jon Stanhope in 2008 after the grass suffered seriously in the drought.

Traders believe the new landscaping has affected the number of families using the area for shopping and recreation and have spent years attempting to get the government to reverse its stance.

Three months ago Chief Minister Katy Gallagher accepted the offer from Mr Cubbin to personally fund the grass being restored after a petition containing 900 signatures was tabled in the Assembly.

Mr Cubbin estimates it is going to cost him upwards of $15,000 with the actual turf being donated by Canturf.

TAMS and the traders have yet to negotiate ongoing responsibility for upkeep and watering of the grass once it has been laid.

Mr Cubbin said: "it's been a really stressful exercise to date but the traders are pleased that TAMS is now taking this seriously and wants to work with us to get the grass back. We're hoping it will only be a couple of weeks, depending on the contractor's availability.''

Instead of an MOU, traders and TAMS will now exchange letters agreeing to simple terms in a joint project.

Public liability will be covered by the contractor undertaking the landscaping – as is the usual practice.

"As had been intended, the project will be undertaken as a partnership arrangement," said Mr Rattenbury.

"This will be reflected through an exchange of letters between TAMS and the Kingston Traders Association.

"The Kingston Traders Association has agreed to take responsibility for selecting and managing a suitable contractor to undertake the work, while TAMS will liaise with the Association and the selected contractor to facilitate the necessary work approvals as quickly as possible.

"It has also been clarified that the public liability insurance requirements for the work will rest with the contractor, not the traders, which is the standard government procurement process.

"Both parties have committed to finalising arrangements next week regarding ongoing maintenance of the grass, including irrigation, mowing and fertilising, as well as the upgrading of sprinkler systems.

"As part of the discussion the Association agreed to retain the section of the existing Green square garden which has the popular lizard artwork."

Mr Rattenbury said that work is hoped to start within two weeks.

"Earlier this week I asked senior officials of TAMS to finalise the partnership arrangement in such a way that it benefits both parties and I am pleased that a resolution has now been reached," Mr Rattenbury said.