The site is to be developed by CHC Affordable Housing, a non-for-profit chaired by Col Alexander, who heads property development company CIC.

The block, adjoining the Downer oval and near the local shops, is bounded by Bradfield, Frencham and Melba streets.

The recommended change to the Territory Plan has made some changes to meet residents' concerns. It allows childcare, health facilities and commercial space but not shops on the ground floor, as well as the apartment and townhouse development. It prohibits boarding and guest houses.

It allows up to 300 dwellings, as high as four storeys across most of the site, including the Melba Street frontage and most of Bradfield Street, with buildings set back at least 30 metres from the front of the site, protecting heritage-listed trees alongside the street. The Frencham Street frontage is limited to two storeys.

The CHC masterplan for the site says the housing will include affordable housing, downsizers and retirement living with associated community facilities, townhouses and apartment units. It was CHC's first foray into the retirement sector.

The development prompted 21 submissions, most from residents worried about the effect on the quiet neighbourhood, parking and traffic, and house values.

Cecilie Young and Daniel Oakman said the buildings were too high and the number of dwellings too large. It would mean a substantial increase in traffic, and the underground carpark would mean headlights shining directly into their home. "We are concerned that this will adversely affect our ability to enjoy our home and affect the peaceful ambience of the suburb," they said.

Peter Annis said a large four-storey development was out of keeping with the area.

"I understand the need for better utilisation of space in the inner suburbs but I cannot see the urgent need to crowd every available space to the absolute maximum capacity. I am sure that nobody would be game to suggest this would happen in the richer part of Red Hill," he said.

"... I have, like many Canberra residents, travelled the world and seen what happens to large high-density residential blocks 20 to 50 years down the track, often progressing from award-winning constructions to – let's face it – slums."

Resident and former Greens Assembly Member Caroline Le Couteur said consultation had been inadequate, and pointed out that the development would increase the number of dwellings in Downer by 20 per cent, from the current 1500.

Among public submissions were suggestions the site should be developed for community gardens and wetlands, but the planning directorate said it had never been open space and had been used for cheap office space since the school closed.

It was in a "strategic" location, less than one kilometre from the Dickson shops and where the planned tram would run. Medium-density housing on the site would increase housing choice in the area, including for people on lower incomes, and help create "a more compact city", the directorate said.

As to complaints that high-density housing was not in keeping with the suburb, the department said it was separated from the lowest-density areas by the shops and playing fields, with trees helping to soften the impact. Limiting the heights to two and four storeys was well below what was usually allowed in the RZ5 zone, it said.

While the development would boost the number of dwellings, the number of people living in the suburb would still be well below 1971 levels, when 5800 people lived in Downer, compared with 3555 at the last census. This was due to smaller households.

As a result of submissions, the directorate has set the development back from the street, protected trees, specified no more than 300 dwellings, mandated road access from Bradfield and Melba streets, and required courtyard open space with mature trees.

The recommended variation from the planning directorate is now with Planning Minister Mick Gentleman for a decision.