An ACT Legislative Assembly committee is divided over controversial plans for the redevelopment of Cooyong Street.
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Government MLAs on the Assembly's standing committee on planning and environment have recommended the area, which includes the Allawah, Bega and Currong flats on the edge of Civic, be rezoned for high density residential and mixed-use development.
But in a dissenting report, the committee's two opposition MLAs said the proposal was "poorly thought out" and "potentially destructive for the property sector".
The committee has also called on the government to reconsider the 15-storey height of two of the buildings after concerns the plan was inconsistent with the city-precinct code of 12 storeys.
The government will now consider whether it will change the territory plan to allow for the redevelopment, which would demolish the ABC flats in Reid and Braddon, and install new high density apartments with some retail and commercial space. Under the proposal, 10percent of the development would be public housing, which would allow some existing tenants to live in the new development, but many would be relocated to other parts of Canberra.
The plan would provide space for up to 2300 people to live on the site across two 15-storey and a number of six-storey buildings.
But the committee said the government should reconsider the height concerns as ‘‘out of character with the surrounding area".
Sustainable Development Minister Simon Corbell said on Friday he would consider that recommendation but a redevelopment was necessary because the flats did not meet any contemporary housing standard.
Opposition planning spokesman Alistair Coe agreed the flats needed an overhaul, but said the government was going about its planning in an "ad hoc" way and the proposal "drags the city to the east".
Mr Coe and his committee colleague Liberal MLA Andrew Wall argued the development essentially turned the government into a property developer and this could "undercut the private market and potentially skew the construction sector".
The opposition believes the project should be handled by the private sector.
"If the ACT government doesn’t sell these units, all they’re going to do is put in more public housing," Mr Coe said.
"What that could mean is that the same problems that exist in the current ABC flats could occur in the redeveloped site."
Mr Corbell said this would not occur.
"The government policy is quite clear on this – we don’t support nor have we developed projects that involved large or 100percent public housing stock," he said.
Mr Corbell said he would consider the report and hoped to table a response in the Assembly by the end of the year.