Canberra supermarket chain SupaBarn says owners of a service station in Kingston, including a developer with previous ties to Woolworths, will control a large redevelopment site opposite Green Square under a proposed planning change.
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The two supermarkets have been vying for a site in Kingston for many years. In 2010 the ACT government granted a pre-commitment for a supermarket to Supabarn, as part of a supermarket competition policy.
The two government-owned blocks of car parks adjoining the privately owned service station will be a mixed-use development including the new full-line supermarket.
In a submission on planning changes to enable the redevelopment, SupaBarn warns the mandatory consolidation of all three blocks means the service station owners control the entire redevelopment.
In 2006, the Kingo Group bought the service station site. Among the group is David Maxwell, a former Woolworths national development manager.
Late on Tuesday Mr Maxwell said he was one of three families who owned the service station site and he now wanted to sell the site.
Mr Maxwell said he had previous relationships with Woolworths, Coles, Aldi, IGA and knew the Koundouris family well. These days he was busy with the Riverview Property Group, which is developing 4500 homes in West Belconnen.
''I am too busy. If James (Koundouris) wanted to buy (the service station site) from us, I'd be happy to talk to him. I am busy enough.
''I have to be mindful I have other shareholders and have to negotiate with them and get their agreement. That slows things down.''
Mr Maxwell said negotiations were getting towards how the three blocks would be put on the market which was a logical urban design and development outcome.
He said the Kingo Group had not delayed the redevelopment.
''It is about getting the best outcome, the key design. The planning has taken its time. From our point of view we have been participating in discussions to a point where it can be unlocked.''
Economic Development Directorate director general David Dawes said the car park blocks would be released as soon as outstanding issues were resolved including negotiations with the owners of the service station site.
''In order to achieve the best outcome for the whole site, the development needs to be designed across all three blocks.
''A development which has to work around the service station would be sub-optimal.
''The need to remediate the service station site is a necessary condition for achieving the best outcome and so is part, but not all, of what needs to be negotiated.''
Planning rules are being changed to allow for eight-storey buildings in the Kingston group centre, and more commercial and residential development.
Consultation on the changes has finished. A recommendation is expected to be handed to the Planning Minister shortly.
In a submission on the changes last August, Supabarn's James Koundouris said he understood the government may offer to sell the service station site (Block 29) along with the two blocks on the car park. All three blocks make up Section 19 in the Kingston precinct.
Supabarn supports consolidating and selling all three blocks for redevelopment. But the move could mean the service station site owners being responsible for decontamination of their land.
''This approach also makes contamination issues central to the redevelopment of Section 19 as a whole. It would be most unfortunate if development was further delayed by these considerations,'' Mr Koundouris said.
Supabarn wants all three blocks offered for sale.
If not, it wants a clause in the variation deleted, which requires the blocks to be consolidated into one before redevelopment proceeds.
Years of delay have not only held up a supermarket. Across the road the Cusack Centre owners have been waiting to build a complementary redevelopment.
Owner John Cusack reckons the high residential density of Kingston coupled with Griffith, Forrest and Narrabundah could support two side-by-side, full-line supermarkets.
The Cusacks closed their Kingston furniture store in 2011. Mr Cusack expects another 12-month wait before the car park land on the opposite side of Eyre Street is redeveloped.
