Plans to transform land around City Hill with more than 1000 homes will have to clear an extra hurdle, with the federal government to scrutinise the clearing of a critically endangered species' habitat.
The ACT government plans to sell a block of land off Commonwealth Avenue next financial year, paving the way for 350 apartments.
Another two City Hill blocks, which have been earmarked for 700 apartments as well as shops and offices, will be auctioned over three years under plans unveiled in the 2018-19 territory budget.
But as it prepares to put the first parcel to market, the government's City Renewal Authority has referred the project to the Department of Environment and Energy.
Clearing the site would mean removing 1.49 hectares of golden sun moth habitat.
In counts, 38 sun moths were observed in the wider 2.9 hectare site.
In its submission to the department, the authority said there was "no feasible alternative" to clearing the site because the ACT government had committed to selling it.
The vegetation, which includes mostly Chilean needlegrass, was "low-quality" habitat, the authority said.
Referrals to the department can result in applicants being forced to prepare an environmental impact statement and providing an "offset" to compensate.
City Renewal Authority chief executive Malcolm Snow said work was under way to determine the extent of its "offset requirements". He did not expect the referral to delay the sale of the site.
The City Hill block is the latest known habitat for the critically endangered golden sun moth in line for redevelopment.
The Department of Finance is selling a large block of land in Barton for a housing or commercial complex.
In consultation on the proposal, the Friends of Grassland said the move would "totally destroy" the block, while the ACT government's conservator of flora and fauna doubted approvals would be granted for the "destruction of the significant site".
Construction of a new access road to the proposed Yarralumla brickworks housing estate will mean removing 2.6 hectares of golden sun moth habitat.
In April, Planning Minister Mick Gentleman exempted the ACT government project from needing a full environment impact assessment.
Mr Gentleman's decision came after a government report showed a block of grassland in Franklin could be used to offset the loss of golden sun moth habitat at the Yarralumla site.
As well as building the new access road to the brickworks site, the government plans to widen Dudley Street from six to 10 metres and install a new roundabout.
Doma Group's planned 380-home development at the 16 hectare Brickworks site is expected to generate an extra 2400 car trips a day.
Dudley Street runs mostly through land administered by the National Capital Authority and the planned access road is on territory government land.
The authority this month approved works on the Commonwealth-administered section of land, which includes most of Dudley Road.
Transport Canberra has lodged plans with the ACT Planning and Land Authority for the new roundabout and 130-metre long access road.
Public consultation on the $2.4 million road upgrade is open until June 18.