The contentious Dickson Coles proposal will go ahead after Planning Minister Mick Gentleman used his "call in" powers to approve the development.
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Mr Gentleman's surprise intervention means work on the long-planned housing and supermarket project will begin within six months.
Coles' development arm had applied for approval to redevelop a carpark site on Antill Street, next to the existing Woolworths, with 140 apartments, a supermarket, 4900 square metres of retail space and 472 basement carparks.
The decision has been broadly welcomed by traders and local residents, who said Coles' final proposal was an "acceptable outcome".
Jhay Mann, the president of MyDickson Town Team, said the development would be a "positive addition" to the growing inner-north district.
Mr Mann, who owns Jhay the Cobbler, said Coles' final proposal was "1000 times" better than what had been put forward in 2014.
Dickson resident Ron Brent said Mr Gentleman's intervention was a "reasonable response". Mr Brent said the residents' opposition to the original plan was necessary to block what would have been a "disastrous development".
In a statement, Coles welcomed Mr Gentleman's decision.
"Since the original development application was lodged five years ago, Coles has engaged extensively with a broad range of stakeholders to ensure the Dickson development meets the needs of the community," a spokeswoman for the company said.
Mr Gentleman said the decision to approve the project would "provide certainty to locals and businesses owners in the area".
Pressed on why he resorted to using his "call-in" powers, Mr Gentleman said he had received advice that indicated the project could face further delays in the ACT Civil and Administrative Tribunal if it was approved through the traditional assessment pathway.
Projects approved via the "call in" power can only be appealed to the Supreme Court. Mr Gentleman has previously used the power to waive through plans for a new media centre at Manuka Oval, demolition of public housing flats on Northbourne Avenue and the Ngunnawal bush healing farm.
"If you look at my previous decisions on 'call-ins', it's about one every 12 months," Mr Gentleman said.
"It is not an overreach. It is a careful decision making process. This development had to really get to a high bar to have ministerial approval and it has reached that high bar."
Greens planning spokeswoman Caroline Le Couteur didn't support Mr Gentleman's intervention.
"We believe that the community involvement has led to a considerable improvement in the development proposal. Thus the Greens believe that the proposal should be assessed using the normal process," Ms Le Couteur said.
Thursday's decision signals the end of Coles' five-year battle to get the project off the ground.
It initially lodged plans to build two supermarkets and 155 apartments at the site, before scaling back those aspirations amid opposition from residents.
The ACT government approved the amended plans in June 2016, but that decision was overturned in March 2018 when the ACT Civil and Administrative Tribunal ruled the proposal was at odds with local planning guidelines.
Coles launched Supreme Court action in an attempt to override that ruling. Coles has worked to further revise its proposal, as those proceedings continued.
German supermarket group Aldi last year withdrew from the project, which created space for an outdoor courtyard dubbed "Dickson Square" to be added to the development.
Mr Gentleman said a total of 655 carparks would built as part of the project. A carpark will be installed at the nearby Dickson Section 72 to accommodate shoppers during the construction phase.
In a rare show of bipartisanship, Opposition planning spokesman Mark Parton said Mr Gentleman's use of the special power to end the "sad and sorry saga" was warranted.
"A new supermarket is needed in Dickson and this has gone on for too long," Mr Parton said.