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C270: How will it affect development in Melbourne’s central city?

C270 is the amendment to the interim planning controls (C262) that landed like a bomb last year. For the most part, this amendment is a step in the right direction. However, there is one change that will have a profound impact on development viability: the Plot Ratio is now 18:1.

If you own a site and were planning on lodging for a permit based on 24:1 plot ratio, you will be hit hard. Your yield will now be based on an 18:1 plot ratio unless you can convince Council to agree to additional height by providing 10% of your yield above 18:1 for “public benefits”.

Within hours of this news breaking yesterday, we had clients withdrawing offers to buy sites. Unfortunately this change will slow down development acquisition activity considerably.

The basic effect of this bonus scheme is that sites will be worth less. This is potentially damaging if you already own a site. However, this will have no effect for developers looking to buy a site. Developers will now factor this “public benefit” in as an additional tax they have to pay; therefore the amount they will be indebted for the site will decrease.

Here is the trap: If a developer factors in a yield of over 18:1 in their purchase price they will end up paying for it twice. The project won’t stack up with this.

My advice to developers is to buy a site based on an 18:1 plot ratio. Any extra yield will cost the developer 10%. The developer will be able to afford it, provided they haven’t already included this in the land purchase,

Obviously the biggest long term losers are land owners trying to sell their sites to developers. Their sites just went down in value… considerably.

We have been anticipating that the Minister will bring in inclusionary zoning – i.e. developers paying for public housing – for some time, however, this is the first amendment that has given such a number.

Here is more detail on what we have been told yesterday, how it differs from the interim controls (C262), and how it affects development:

Plot Ratio

Whilst they have changed the wording from “Plot Ratio” to “Floor Area Ratio”, the meaning remains the same. The maximum is now 18:1 but when considering the “Public Benefits” allowance, you can effectively build to an additional height provided you allow for an additional 10% extra to either:

  • Public open space and laneways on site
  • Office use
  • Public space in the building
  • Social housing in the building

The public benefit comes with a bracketed “(agreed with council)”, which suggests the council has to choose the benefit they want or if they want it at all. With this in mind, and at this stage you can’t bank on the additional yield above 18:1.

Setbacks

Above the podium:

  • 5m front setback from the street
  • Side and rear 5m, however, you can now build on a boundary if the site context allows it.
  • Side and rear setback over 80m high is now 6% of height, “with discretion to allow the building floor plate to be adjusted” – we interpret this as meaning buildings with larger setbacks at the top and with a step down to 5m at the podium is allowed.

Overshadowing

This control will only affect the key public spaces such as Federation Square, the State Library forecourt, the Shrine of Remembrance, Yarra River, City Square, Bourke Street Mall, and Boyd Park. It is currently unclear whether the winter or equinox overshadowing will come in to effect. If it is winter, it’s really bad news.

As with the last controls, most of Flinders Street is still unable to be developed.

Wind

The revised wind speed criteria is now based, on average comfort levels, not just extreme wind events. This is great news. It must be said that it is impossible to provide comfortable walking criteria on extremely windy days.

Height Controls

Unchanged

Street Wall Height

Reduced to 20m with discretion to increase to 40m if site context allows. This doesn’t have a big impact because, firstly it is discretionary, and secondly, you can take the lost yield and put it on top of the building.

Now is the time to put in your public submissions.

Craig Yelland is a Director of Plus Architecture

6 comments

Bilby's picture

A lot of things can affect the value of a property between the time of purchase and the time of development. If I buy a property in a suburban street and someone puts up a block of flats beside it, overshadowing the garden, that will certainly affect the value of my land. But few tears are shed for NIMBYs in the rough and tumble world of development and planning, are they?

So, when a developer buys a site and the planning scheme changes, the developer is entitled to cry "Not in my backyard" with respect to those policy changes. But the argument is the same - we all want the advantages that good planning reforms bring, without any of the inconvenience to business or personal interests. But you can't have it both ways.

So, for all the planning policy reform developer NIMBYs out there, I feel for you, but your pain is for the greater urban good.

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Nicholas Harrison's picture

Everybody seems to have missed one of the biggest changes to existing controls contained in this amendment.

The western side of Elizabeth Street in the Hoddle Grid and Melbourne Central have been included in the 40m maximum height control area.

So the 169m high 385 Bourke Street and the 211m high Melbourne central tower will now be in a 40m height limit area.

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johnproctor's picture

^ interesting.

That is great news for Elizabeth Street imo. Still lots of nice little terrace shops all up there that I'm glad are protected. Noting that there are a few existing permits on those sites (like the one above Galleria behind 385 Bourke).

Not sure why Melbourne Central needed to be included in the 40m limit thought? its basically an enclosed city block so imagine a development could be conceived over 40m without much impact beyond the site boundary.

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theboynoodle's picture

The basic effect of this bonus scheme is that sites will be worth less. This is potentially damaging if you already own a site. However, this will have no effect for developers looking to buy a site. Developers will now factor this “public benefit” in as an additional tax they have to pay; therefore the amount they will be indebted for the site will decrease.

This shouldn't be worthy of comment, but I so rarely hear anyone from within the industry 'admit' this point - that the cost incidence of such regulation is on the site not the developer nor the eventual property owner/tenant - I feel moved to applaud.

Note: same applies re. minimum apartment standards. They may impact prices if they reduce supply, but simply having to make them bigger and put in more windows won't actually raise the price.

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Rohan Storey's picture

Yes, since there's no maximum, and the 'public benefits' are discretionary, it wont be quite the same as the old regime (or as in other cities round the world) that you just work from the new maximum backwards, and count in the cost of the 10% charge (however thats arrived at) - which i s what happened before 1999, when you could provide a through-block link, bluestone pavement, quality design, and maybe some heritage restoration, and get your bonuses every time (which led to a few link being built where not actually necessary).

On the other hand if any amount of office is allowable, and a certain amount of affordable housing means ten times as much for sale can be added to your scheme, then no doubt, many schemes will be going up to the maximum height panops and yarra overshadowing allows !

Meanwhile, heritage restoration is I think a public benefit that could be factored in (somehow).

And in regard to Melbourne Central and other things soon being within a 40m limit area, o well, the old Myer tower and quite a few others are already within the 40m limit !

Lookingupatbuildings

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Craig Yelland's picture

I attended Larry Parson’s clarification session last night and learnt the following:

There is a guideline on the calculation of the FAR bonus. It is actually based on the end commercial value determined by the valuer general. The 10% is the difference in value. Not the area provided.

The side setback is still continuous for the height of the building. Wedding cakes are not allowed. However you can move the tower to a better location on the podium provided it doesn’t increase the floor plate.

NICHOLAS HARRISON is right. Some maximum heights have changed in areas such as the western side of Elizabeth St. Some of the mandatory heights in lower areas have become discretionary albeit with a guide to suitable height.

Director of Plus Architecture
www.plusarchitecture.com.au

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