In brief: Recent press reports have made much of Leanne Hodyl's Churchill Fellowship report findings that high-rise apartment towers are being built within Melbourne's Hoddle Grid at four times the maximum densities allowed in cities such as Hong Kong, New York and Tokyo. In the light of this report, Managing Associate Meg Lee (view CV) sets out some key considerations for developers, city planners and the new Victorian Minister for Planning in ensuring that Melbourne plays its part in providing much-needed housing stock, while also maintaining our much lauded liveability.

HOW DOES IT AFFECT YOU?

  • The Churchill Fellowship report by Leanne Hodyl (the Hodyl Report)1 highlights the challenge faced by planners at the Melbourne City Council and the development approvals division of the new Department of Environment, Land, Water and Planning, who currently have only non-binding tools and guidance to assist with assessing the appropriateness of tower proposals and balancing equitable development rights between adjacent lots.
  • Developers of tall towers in Melbourne's central business district may face increasing pressure (and associated costs) under new policies, planning provisions and approval processes for tall tower developments that require greater provision of community facilities, better ground level open space and improved internal apartment amenity.
  • The Minister for Planning may introduce minimum standards for apartments in Melbourne's CBD and a new approval process for buildings over 25,000sqm, for which he is the Responsible Authority. These new approval process will involve the Victorian Government Architect, Melbourne City Council and a new central city planning body.

BACKGROUND

Leanne Hodyl is a town planner at the Melbourne City Council. She wrote the Hodyl Report as part of a Churchill Fellowship, rather than in her capacity as an employee at the Council. The fellowship funded Ms Hodyl's study tour to New York, Vancouver, Tokyo, Hong Kong and Seoul to review central city controls on high-rise building densities in each of those cities. Her report then focused on one block in Melbourne (between A'Beckett, Elizabeth, Franklin and Stewart Streets) and compared the extent to which this block could be developed in each of those cities.

The findings of the Hodyl Report echo those of the Melbourne City Council Draft Housing Strategy, which was taken to the Future Melbourne Committee Council meeting on 10 June 2014. The Draft Housing Strategy states that:

Melbourne has the narrowest and least rigorous policy guidance on housing quality for medium and high density developments when compared to like cities. In Sydney, Adelaide and London, for example, specific and measurable outcomes include not only minimum apartment sizes, but also requirements for the orientation of apartments, minimum internal amenity standards relating to daylight, sunlight and privacy and levels of internal storage.

And

The densities of some Melbourne developments are in excess of 5000 dwellings per hectare. They are up to four times the maximum densities allowed in planning policies in other very high density cities such as Hong Kong, New York and in Sydney and ten times the densities allowed in London.

The Hodyl Report was released in the early days of the new Andrews Government and its new Planning Minister, the Hon Richard Wynne MP. It comes in the wake of what some considered a 'proliferation' of tower approvals by the previous Liberal Government Minister for Planning, Matthew Guy, dubbed by some as 'Mr Skyscraper'2 .​

It is important to acknowledge that residential tower developments are an efficient way to address the increasing demand for housing in Victoria. Plan Melbourne reported that the 'inner city' currently has 11 per cent of the metropolitan population, and predicted that it will take 19 per cent of the projected growth by 20313. The Melbourne Planning Scheme itself notes in clause 21.07 that:

The City of Melbourne supports the growth of the municipality’s residential population, which is forecast to reach 177,000 people by 2030 (ID Consulting 2011, Population Forecasts). Most of this increased population is planned to be accommodated in the City’s areas of urban renewal, planned urban renewal and the Hoddle Grid

Chris McNeil, Director at Spade Consultants4 explains the population pressures further:

Based on the Victorian Government’s Victoria In Future 2014 (VIF) projections, the Melbourne metropolitan area will require, on average, 39,500 additional dwellings each year between now and 2031. The difficulty in achieving these numbers shouldn’t be underestimated, particularly against a backdrop of trying to curb urban sprawl … Moreover, assuming population growth remains as projected, failure to achieve these kind of numbers runs the risk of creating additional upward pressure on dwelling prices. 

High rise apartment buildings in the inner city, where public transport, cultural infrastructure and employment is at its densest, provide a key component in delivering Melbourne’s future growth. The VIF projections, as well as the Melbourne City Council’s own forecasts, anticipate around 3,500 new dwellings in the City of Melbourne on an annual basis. If more than 3,500 can be achieved, there’s a possible advantage in that it reduces pressure in areas where residents may vigorously oppose ‘towers’ of even four levels.

The Hodyl Report findings and the skyscraper 'fear-mongering' needs to be balanced with a comprehensive consideration of the impact of any controls on housing supply and affordability. In this context, a recent New Zealand report found that the impact of minimum apartment and balcony sizes for affordable housing units added as much as $30,000 to the cost of development per apartment5.

WHAT DID THE HODYL REPORT FIND?

Ms Hodyl's findings, graphically represented in aerial perspective for the subject city block on A'Beckett Street under the maximum allowable rules for each city, reveal that:

  • For Melbourne, the maximum number of residents could be up to 8600, with a density of 6290 people per hectare, 1046 cars per hectare, 0.1m2 open space per person, 92 per cent site coverage at ground level and tower heights of up to 95 storeys, with no community benefit.
  • For Hong Kong, the maximum number of residents could be up to 3600, with a density of 2620 people per hectare, 237 cars per hectare, 1.5m2 open space per person, 61 per cent site coverage at ground level and tower heights of up to 46 storeys, with ESD benefits resulting from density bonuses.
  • For New York, the maximum number of residents could be up to 3500; with a density of 2560 people per hectare, 114 cars per hectare, 1.1m2 open space per person, 73 per cent site coverage at ground level and tower heights of up to 33 storeys, with 172 affordable housing units resulting from density bonuses.
  • For Vancouver, the maximum number of residents could be up to 1750, with a density of 1290 people per hectare, 192 cars per hectare, 3.0m2 open space per person, 64 per cent site coverage at ground level and tower heights of up to 33 storeys, with 37 affordable housing units and 7000sqm community facilities resulting from density bonuses.

The report has been criticised and has its limitations. The focus is on just one city block and extrapolates from that to the whole of the central business district. It does not factor in the fact that planning decisions are always made in the context of previous approvals and according to existing developments abutting and nearby the site in question. As such it is somewhat arbitrary to conclude that approval would automatically be given to develop the remaining vacant parcels on the block that is the subject of the study at the same density as the existing approved developments.

Further, the report takes a somewhat simplistic approach to the current lack of mandatory density or apartment size controls by failing to study the take-up and use of the guideline tools in decision-making.

Ms Hodyl does not argue against high-rise apartment developments or 'height' per se. She acknowledges that increased apartment development in the city benefits residents (easy walking access to jobs, shops, restaurants etc) as well as the city, by enabling it to evolve, grow and become economically stronger and more sustainable6. However, she concludes that reform is needed to better balance development and investment and to deliver better quality places.

Ms Hodyl recommends the introduction of four related planning tools:

  • density controls in central Melbourne to provide an as of right maximum;
  • density bonuses to incentivise developers to provide new open spaces, affordable housing or other community facilities in exchange for greater density above the as of right maximum;
  • an enforceable tower separation rule; and
  • apartment standards to address internal amenity (eg including access to daylight, setbacks, minimum floor to ceiling heights) and minimum size requirements.

While there is some overlap with Hodyl Report recommendations (namely the introduction of minimum standards for apartments), the focus on the Draft Housing Strategy is squarely on provision of affordable housing. The Draft Housing Strategy recommendations are yet to be adopted into Melbourne City Council Policy and have been the subject of significant public and industry submissions7, particularly in relation to the recommendations to:

  • develop inclusionary zoning to require provision of 15 per cent affordable housing in new residential developments in the Hoddle Grid and renewal areas such as Arden-Macaulay, Fishermans Bend and E-gate;
  • incorporate the Office of the Victorian Government Architect (OGVA) document (currently in draft form) – Victorian Apartment Design Standards – into the Planning Scheme; and
  • include development bonus schemes for renewal areas to encourage the delivery of additional apartments in a proposed development in exchange for providing affordable housing. (This measure only works where there is an existing restriction on height, density or floor space ratios, or a combination of these, that can be surpassed to provide the developer with a bonus above the amount of a development allowed for a particular site).

The Property Council of Australia (PCA) has expressed concern that these recommendations could increase the cost of development and damage Victoria's competitive position. In particular, the PCA submission warns the City of Melbourne to consider the impact of NSW’s State Environmental Planning Policy 65 (SEPP 65) mandatory controls on Sydney's housing market.

WHAT ARE THE CURRENT CONTROLS ON TALL TOWERS IN THE HODDLE GRID?

​The Capital City Zone (CCZ) controls apply across the Hoddle Grid: Schedule 2 for the Retail Core areas, Schedule 1 for areas outside the Retail Core, and Schedule 3 for areas south of the Yarra River. The CCZ excludes third party notification and appeal rights, although the City of Melbourne, as a matter of general practice, accepts and takes into consideration any objections that are lodged where adjacent land owners have found out about an application for approval. While we are aware of several current applications at the Victorian Civil and Administrative Tribunal for adjacent land owners to be joined to existing Tribunal appeals against permit decisions, such applications for joinder have largely been rejected by the Tribunal to date, on the basis that, in the face of third party exemptions in the Planning Schemes, there would need to be a compelling reason to allow joinder to a Tribunal appeal8.

Varying overlay controls also add to the matrix of controls on any one city block, including Heritage Overlays and Design and Development Overlays (DDOs), which in some cases include maximum or preferred height controls. DDO Schedule 2 (DDO2) is a height control overlay with mandatory height limits set out in Table 1 for Area 1 of 40m that cannot be varied by permit. Area 1 is largely located between Elizabeth and Swanston Streets from Lonsdale to Flinders Streets. The aim is to protect views of landmarks, including the Shrine of Remembrance, Parliament buildings and churches, and to ensure solar access to public spaces. In other areas within the DDO2 (Areas 2-9) maximum heights can be varied if certain objectives and performance standards are achieved. DDO14 and DDO62 are other DDO controls that each set out in Table 1 maximum heights for differing sub-areas covered by the overlay schedule that again cannot be varied by permit.

The area studied by the Hodyl Report is not within the DDO2, DDO14 or DDO62 and is not subject to mandatory height controls.

What the Hodyl Report does not assess or address is the overriding policy matrix that must be considered in any planning application. The State Planning Policy Framework at clause 15.01-2 requires that planning should consider 'as relevant' the Design Guidelines for Higher Density Residential Development (Department of Sustainability and Environment, 2004) (Higher Density Guidelines) in assessing the design and built form of residential development of five or more storeys. The Higher Density Guidelines include various objectives and 'design suggestions' such as:

  • Objective 2.6 – to ensure areas can develop with an equitable access to outlook and sunlight;
  • Objective 2.10 – to ensure new tall buildings do not create adverse wind effects;
  • Objective 5.1 – to provide a range of dwelling sizes and types in higher density residential developments;
  • Objective 5.4 – to ensure that a good standard of natural lighting and ventilation is provided to internal building spaces; and
  • Objective 6.6 – to create public open space appropriate to its context.

The Local Planning Policy Framework (LPPF) in turn further provides at Clause 22.01 that, where the CCZ1 or CCZ2 apply, it is policy that the design of buildings is assessed against the following design standards, as appropriate:

  • The maximum plot ratio (which is a form of density control, although admittedly, in the absence of minimum apartment size its ability to fully control density is limited) for any city block within the Capital City Zone should generally not exceed 12:1, unless it can be demonstrated that the development is consistent with the function, form and infrastructure capacity of the city block, including the capacity of footpaths, roads, public transport and services.
  • Towers should have a podium height generally between 35 to 40 metres, except where a different parapet height already exists or where the need to provide a context for a heritage building or to emphasise a street corner justifies a variation from this norm.
  • Towers above the podium should be set back at least 10 metres from street frontages.
  • Towers should be well spaced to equitably distribute access to an outlook and sunlight between towers and ensure adequate sun penetration at street level as follows:
    • Development above 45 metres be set back 24 metres from any surrounding podium–tower development.
    • Tower separation setbacks may be reduced where it can be demonstrated that towers are offset and habitable room windows do not directly face one another and where consideration is given to the development potential of adjoining lots.

These policy and guidelines have, in our experience, been used by decision-makers (Council and the Minister alike) over the years to require setbacks, demonstration of air rights over abutting lots where development goes to the boundary, and requirements to enter into s173 Agreements so as to require boundary windows to be closed over in the event of future development on adjoining lots. Such tools can therefore assist in ensuring equitable development between adjacent parcels and appropriate tower separation and treatments at street level.

While an early draft of the Victorian Apartment Design Standards was apparently leaked last year to the media, there is yet to be a final version or a widely accessible draft. In the meantime, the Tribunal relies upon the Higher Density Guidelines. In the Abby Apartments9 case last year, the Tribunal commented that, in that case, the reliance on the policy for housing diversity and affordability was imbalanced and that the proposal failed to meet a number of acceptable standards from the Higher Density Guidelines. The Tribunal went on to state that:

The Tribunal has been grappling with acceptable standards for internal amenity in recent years. There has been a gradual shift in approach such that what is acceptable is not a matter for compliance with prescribed standards under building (or other) law. Until the scheme contains clearer guidance than that in the current guidelines, what is an acceptable standard is a matter of fact and degree in individual circumstances.

It is understood that the proposed OVGA standards are based heavily on SEPP 65, introduced by former NSW Premier Bob Carr in 2002. SEPP 65 includes minimum apartment sizes for one-, two- and three-bedroom units (but not for studios) and mandates that an architect design all high-rise projects. Architect involvement in the design of high-rise developments has become a common condition imposed in permits issued by the City of Melbourne.

While, as noted above, the PCA expressed concern in its submission to the Draft Housing Strategy about following the model of SEPP 65 in Melbourne, an earlier response to a survey conducted in 200910 found that a majority of Property Council members believed the implementation of SEPP 65 had led to the improved design of residential flat buildings and had only a relatively minor impact on affordability (although time delays and red tape implications had some cost implications).

Notably, the NSW Government is now considering amendments to SEPP 6511 together with a new Apartment Design Guide (ADG) (which will replace the existing Residential Flat Design Code), to potentially 'improve apartment design further and …make apartments more affordable'. Two of the possible amendments are introducing a prohibition against refusing development that can comply with minimum car parking standards and moving to performance-based design criteria in the ADG, to avoid strict limits causing unintended design outcomes.

The Hodyl Report does not address the use of any of these existing tools in decision-making and their potential to address and guide a sensible balancing exercise in decision-making. However, the point made by the report that there are currently no mandatory density or internal apartment amenity controls in Melbourne obviously remains valid.

Similarly, the point made by the Report that there are no mandatory requirements for provision of open space or for provision of community facilities is also valid (although Ms Hodyl does not factor in the open space contribution required at subdivision stage). A comparison could be made with the level of community and infrastructure contributions required in growth or renewal areas, such as Docklands or the planned Fishermans Bend development, to demonstrate that CBD residential tower developers do not have the same obligations as developers in growth or renewal areas. However, any move to impose mandatory requirements in the inner city needs to take account of the fact that the inner city is generally already well serviced by existing infrastructure and community facilities, and thus should not be subject to the same contribution requirements as growth areas. 

WHAT WILL HAPPEN NEXT?

In a recent interview with The Sunday Age newspaper, Mr Wynne was asked about his predecessor's approval of numerous tall tower developments in the CBD. His response flags the likely direction of any changes he will make to CBD planning controls, namely that he will focus on:

  • quality of ground level spaces and the impact of tower developments on the pedestrian realm;
  • introducing minimum standards for the internal amenity of apartments and apartment size12; and
  • a new, more transparent, process for the approval of tall towers (presumably only for those buildings over 25,000sqm floor area for which he is the Responsible Authority, although this is not clear at this stage.

Mr Wynne was quoted in the interview as saying that: 'Height in appropriate settings is a good thing. But we all live on the ground. We all get about the place on the ground. So what's happening on the ground? Is it an activated space? Is it a space that is pleasant? Is it a space where we are interacting?'13

It is understood that the 'new transparent process' will involve a new Victorian Planning Authority for the central city and will involve review by the Victorian Government Architect. However, the details of the new body or the new process are yet to be released. The pre-election planning policy announcements made by Labor or Mr Wynne did not make any comment as to whether third party exemptions will remain in place under the new process. Further, there has been no mention of any new requirements for the provision of contributions or 'works in kind' to provide for public facilities.

Since returning from sick leave in February, the Minister has approved his first tower development at 380 Lonsdale Street. In announcing the approval at a Property Council function, the Minister stated that the tower was an example of good urban design that worked well at street level14. Therefore, while the proposed changes are yet to be introduced, it does not appear that the Minister is stalling on decisions in the meantime for appropriately designed tower developments. Therefore, while the proposed changes are yet to be introduced, it does not appear that the Minister is stalling on decisions in the meantime for appropriately designed tower developments.