Impact on the Public Plaza and surrounding area
46The Council contended that the proposal would adversely impact on the character, viability and vitality of the public plaza and surrounding area. The evolution of the development concept for the St Margaret's development envisaged active ground floor uses across all five of the principal buildings addressing the primary street frontage onto Bourke Street and the public plaza at the core of the development, and at every stage, from the Original Masterplan and rezoning report, the Amending Masterplan and the application for development consent, included retail/commercial space at ground floor level; the proposal is not in accordance with the objectives of the B4 zone, does not meet the aims of the LEP, is inconsistent with cl 3.2 of the DCP, fails to meet the objects of the Act, is not in accordance with crime prevention principles, would result in a poor relationship between the proposed apartments and the public plaza and thus not represent design excellence in accordance with cl 6.21 of the LEP, and would harm the vitality of the public domain space and detract from the public plaza.
47The Council accepts that the Masterplan is not prescriptive for or against residential uses on the ground floor, however it submits that an understanding of the embryo of the redevelopment of St Margaret's, and the identification of the creation of the public plaza, is important in understanding and applying the planning controls. The Council submits that the LEP and DCP should be applied understanding that there is a public domain with vitality and vibrancy that will not be achieved with the conversion, and that what is sought by the planning controls is not residential development. While there will be 10 entrances to 10 apartments adjoining the public plaza, there will be reduced activity because it is residential and as a consequence the plaza will be less attractive and less likely to be used as public domain. Considering the external appearance of the building and the interface with the public domain, the Council submits that the use of planters which are required for visual privacy operates so as to demonstrate that the use is private rather than public, which will diminish the quality of the public domain. Residential development is permissible, however it will operate to discourage rather than encourage use of the public domain.
48Zone submits that with the adoption of the DCP the Masterplan in effect ceased to exist, and the absence of the St Margaret's development from Section 6 of the DCP means that the Masterplan has no further work to do. Even if the Masterplan is still relevant, it does not dictate uses, but expresses a desire for the redevelopment; the public benefits were fundamental to the redevelopment, and none of those benefits were linked to having commercial uses at ground floor. Zone submits that while the preference of the Council and the applicant is for commercial uses, that has been pursued and has not provided an outcome that is beneficial.
49The expert planners disagreed as to the relevance of the masterplans, and whether the proposal will impact on the character, viability and vitality of the public plaza. Mr Fletcher was of the opinion that if the Masterplan concept for redevelopment was intended to be sustained as part of the planning controls for the site then the provisions for commercial ground floor uses for all five of the principal buildings should have been incorporated into the LEP or DCP, and the Masterplan is no longer of relevance in assessment of the application. Mr Jones was of the opinion that the masterplans are a relevant consideration under s 79C of the Act. The Original Masterplan included references to encouraging active uses at ground floor to buildings fronting the public space, and made a nexus with bonus floor space; that nexus was continued through the Amending Masterplan and into the development application; the development application obtained a significant increase in the overall development floorspace which was justified through a package of public benefits, a substantial element of which was the public domain space with the plaza as its core and the through site links. In Mr Jones' opinion the intention was always that the public domain space would be activated by the surrounding ground floor retail/commercial space that would closely interact with the public space.
50Mr Fletcher was of the opinion that the proposal is consistent with the planning controls and the Act. Should market dynamics shift to demand more non-residential floor space, a future development application could change the use to commercial or office uses. The proposal will replace long vacant redundant commercial space with residential accommodation that will provide additional population in the locality to support the remaining viable commercial activities. In his opinion the relationship between the private space at the front of each dwelling and the adjoining Public Area has the potential to be more attractive than a frontage to a busy street and footpath; the proposed delineation between private and public space will clarify the legal status of the space, and activity and interactivity within the plaza would not be affected if the delineation is clear. He considered a residential use to be an active use, and commercial or retail use would not necessarily be more active; the hours would be different, and a café would have greater activity during the hours it is open. Mr Fletcher agreed that it would be more appropriate and preferable to have viable commercial operation at the ground floor level.
51Mr Jones' evidence was that the original design and concept for St Margaret's has been translated into the current planning controls, evident in the identification of the site in the B4 Mixed Use zone and within the Local Centre Area under the DCP which allows late night trading hours in the immediate area including the pizza restaurant and for the Beresford Hotel. Conversion of the units would harm the vitality of the public domain space by removing the opportunity for activity and interactivity, and the privatising of the ground floor would result in a perception of the public space also being privatised and adversely affect existing and future commercial opportunities in the St Margaret's development. The proposal is inconsistent with cl 3.2.3 of the DCP which states that a diverse range of activities should be provided at street level. Mr Jones was of the opinion that the proposal for raised planter beds with bamboo screening would not meet the principles of surveillance and territorial reinforcement for crime prevention.
52In oral evidence, Mr Jones accepted that the Original Masterplan did not specify that ground floor uses must be commercial or retail, and that in the Council's adoption of the Masterplan there was no requirement for ground floor commercial or retail uses, or that the bonus floor space was dependent on that. Mr Jones agreed that, on balance, compared with the present position, residential uses would have more vitality.
53During the course of its assessment of this development application the Council requested information as to vacancies, marketing, and rentals (exhibit 8, p 140). For the purposes of these proceedings, Zone's solicitor provided a Schedule of Occupancy and Rental Arrears/Payments from 1 January 2005, based on her firm's records (exhibit H). Based on exhibit H, the commercial/retail units have since 2005 been tenanted in varying combinations of units and sub-units. The Schedule shows the first occupancy of any of the units from 1 October 2005; no tenants in November-December 2006; and full occupancy for the period between 1 September 2007 to 1 August 2009. The type of business has varied. Shops 5B and 6A were occupied by a chicken take away shop from 1 December 2005 to1 November 2006; shop 6B by a women's accessories and small homewares shop from 1 December 2005 to 1 August 2006; and shop 7A by a giftware/homeware shop from 1 October 2005 to 1 July 2006. Shops 4, 5 and 6A were occupied by different restaurants from 1 January 2007 to 1 December 2012 (apart from a period of two months in June and July 2012). Shops 6B, 7A, 7B and 9 were occupied for restaurant use from 1 September 2007 to 1 August 2009, and again from 1 November 2009 to 1 March 2013.
54The Schedule identifies rent free periods, and periods where the lessee is paying rent and the rental payments are not in arrears by more than one month's rent, during periods when the units were occupied. Based on that information, I accept that there have been periods when the shops have been occupied but rent is not payable during a rent free period, or when rent is in arrears; periods when all, some or none of the units have been occupied; and that there was full occupancy between 1 September 2007 to 1 August 2009. While the Schedule records no occupants after February 2013, it was observed on the view (and confirmed in photographs annexed to Mr Jones' Statement of Evidence exhibit 2) that as at the date of the view, there was one occupant, a hairdresser.
55The Schedule does not provide information as to the reasons for non-occupancy or for rental arrears. While some of the written submissions raised concerns that past difficulties in obtaining tenants may have been attributable to the size of the units or the rent charged, there was no economic or other expert evidence provided to the Court as to the viability of the ground floor units for retail or commercial purposes, either past or prospective. At its highest, the evidence before the Court supports a finding that commercial/retail uses have been pursued by Zone since 2005, and that for whatever reason the commercial/retail units have not achieved full occupancy or an outcome regarded by Zone as appropriate.
56The first issue to address in considering the impact of the proposed conversion of those units to residential units on the public plaza is the weight to be given to the Original Masterplan and Amending Masterplan in assessment of this development application. The Original Masterplan (exhibit 9, p1) included recommendations that active uses be included in ground level frontages (at 3.5), and that active uses incorporated at ground level be allowed as a bonus to floor space (at 3.8). The Amending Masterplan made a number of changes to the approach adopted in the Original Masterplan, and was the basis on which the 2001 development application was made, as outlined in the Statement of Environmental Effects submitted with that development application (exhibit 9, p 241), and as accepted by Mr Jones in his Statement of Evidence (at 7.8).
57In the context of the development of the proposals for redevelopment of the St Margaret's hospital site, the conditional endorsement by the Council in February 2001 of the Amending Masterplan (and the consequent amendment of the 1997 DCP) would be relevant to considering the public interest as required by s 79C(1)(e) of the Act: Terrace Tower Holdings Pty Ltd v Sutherland Shire Council (2003) 129 LGERA 195. However, in my view the replacement in 2012 of the planning controls applicable at the time of determination of the 2001 development application, and in particular the express provision at 1.6 of the DCP that it replaces masterplans, together with the absence of provisions for the St Margaret's development in Section 6 of the DCP, mean that the specific provisions of the Masterplan have little if any work to do in the determination of this application. Further, even if it were still relevant to determination of this application, when the Amending Masterplan and the associated documents are considered, it would not dictate that the ground floor of the Henry Building remain for retail/commercial uses.
58The Amending Masterplan noted (exhibit 9, p 76) that the major aspects of the Original Masterplan proposals for the redevelopment of St Margaret's were a public place formed in the middle to the site linked to the existing streets, retention and adaptive re-use of the hospital and chapel, vehicular access from Bourke Street and all parking underground, a "mix of uses with predominantly residential with a range of supporting and compatible retail and commercial uses and possible temporary accommodation", and "active uses at ground level are encouraged". The Amending Masterplan considered the three different building envelope configurations provided in the Original Masterplan, and noted (exhibit 9, p 92) that "the character and vitality of the public place is the start point in defining the design objectives of the New Masterplan". The Components of the Development at 6.5 (exhibit 9, p 93) describes the building that is now the Henry Building as an element of the amended building envelope group in the following terms:
Building 2. The western boundary building. With the demolition of the north wing Public Hospital and the Lavinus Nolan building, the new western building contains the public space, activating this long edge condition with ground floor retail uses. The Southern end contains the carpark entry ramps, while the northern end contains the loading dock and garbage room facilities. Levels 1 to 3 are proposed commercial studios linked to upper level living spaces. This commercial/residential form sits on the retail base creating an articulated building form. Entrance to the upper levels is via two cores, the northern with a lift entrance.
59Land uses are described at 6.6 as "an overlapping of mixed commercial, retail and potential community uses from the basement to level 2, with levels 3 upwards accommodating residential space". Part 6.13 Safety and security identifies the urban design principles incorporated in the reconfiguration of building envelopes to create a safe public domain, including "through site links that allow for visual connection along their entire length", "public space that is activated by ground floor uses and building entries 24hrs a day", and "public space and through site links that are overlooked by the residential component". Part 7.0 considers Floor Space issues, including at 7.4 consideration of the FSR control under the 1997 DCP, which included a bonus floorspace incentive for provision of improvements to the public domain. The Amending Masterplan noted at 7.4 (exhibit 9, p 105) that the ability to implement environmental innovations into the development "is dependent on the quantum of development possible on the site and the correct configuration of building massing on-site which will result in the economies of scale necessary to implement them", and further, that "one of the major aims of this development proposal is to integrate the development into the surrounding community and provide active and community uses at ground level together with streetscape improvements", which included improved pedestrian paths, potential allocation of space for community function, increasing the width of Church Lane, and remaking the Bourke Street pathway. The package of improvements for a floor space bonus was to provide "public open space, through site links and public art in the development".
60The Council documents in evidence include correspondence concerning the details of the public domain works proposed as part of the bonus floor space package, including a letter from Council dated 2 February 2001 (exhibit 9, p169) and a response dated 5 February 2001 (exhibit 9, p 172) included details of the plan for the plaza, proposed easement for public access, through site links (including the transition from the shared zone to Little Bourke Street and Church Lane), public art, and the library location plan; a Minute Paper for the Planning and Development Committee 13 February 2001 (exhibit 9, p 206); and a Council resolution endorsing the recommendation of 13 February 2001 dated 21 February 2001 (exhibit 9, p 227). The latter document refers to the "upper level residential units" and "ground floor commercial and retail uses" in relation to the Henry Building (exhibit 9, p 229) in the context of the design of the building at the Crown Street Public School boundary. The floorspace bonus of 0.85:1 is to be available subject to the provision of a public plaza with through site links and open space, an integrated public art program, and a multi purpose or other community facility.
61None of these documents link bonus floor space with provision of retail/commercial uses on the ground floor, but rather with the proposed public domain works including the public plaza.
62The Statement of Environmental Effects submitted with DA 489/2001 (exhibit 9, p 241) discussed retail/commercial facilities at 5.6.4, which were, for Building 2 (Henry Building) (at p 36) "to be located on the ground level, with an eastern outlook" into the plaza, to be "continuous over the length of the building footprint, but subdivided along the building façade alignment by the residential access stairs". It is clear from this document, and the reference at 6.5 of the Amending Masterplan to ground floor retail uses, that the intention was to provide for ground floor retail/commercial uses. However, the language is not prescriptive, and, as Mr Jones agreed in oral evidence, is consistent with the role of a masterplan to provide a statement of intent.
63The Amending Masterplan, and the background to the development application approved in 2001 for redevelopment of the St Margaret's site, establish a clear preference for ground floor commercial and retail uses. The evidence of the expert planners was that commercial and retail uses would be preferable, Mr Fletcher accepting in oral evidence that if those uses were viable he would not support this application. However, the central focus of consideration of the development application the subject of this appeal must be the applicable provisions of the present planning controls, including the provisions of the DCP. The proposed use for residential apartments is permissible, as a form of development not specified as prohibited, in the B4 Mixed Use zone under the LEP. The DCP makes specific provision for residential development on ground and first floors in section 4.2.5.4; section 3.2.2 of the DCP includes specific requirements for residential developments adjoining the public domain; and the objectives and provisions for active frontages in section 3.2.3 do not preclude residential development.
64The objectives for addressing the public domain provided in section 3.2.2 of the DCP include providing development that "is attractive, comfortable, safe, functional and accessible to all", and that development presents appropriate frontages to the public domain "in terms of scale, finishes and architectural character". The Council raised no issue as to finishes or architectural character, the primary concern being the proximity of units 9 and 10 to the publicly accessible part of the plaza. I am satisfied that the amended design in exhibit C, subject to the imposition of conditions 3 and 4 as discussed above, would be consistent with the objectives of 3.2.2, and that the proposal would meet the requirements in 3.2.2(2) of maximising the number of entries and visible internal uses at ground level, and the specific provisions for residential developments in 3.2.2(7).
65The site is not on the Active Frontages Map, and no specific requirements are specified. Considering the generally applicable provisions for active frontages in 3.2.3, the focus of attention was on the statement that active frontages are encouraged "so activities within buildings can positively contribute to the public domain", and that such uses include retail, customer service areas, cafes, restaurants and "other uses that involve people". Mr Jones accepted that residential uses "involve people". While I accept his evidence that residential uses would involve less activity than retail or commercial uses, I also accept Mr Fletcher's evidence that retail or commercial uses generally generate activity only when they are open, while residential uses would generate activity at other times. Both experts agreed that residential uses would generate more vitality than the present situation.
66While it was common ground that commercial or retail uses would be preferable for the site, I accept that this has been pursued. I am satisfied that residential uses would generate activity, which while different in timing and nature to that generated by commercial or retail uses, would assist in reinforcing the vitality and liveliness of the public domain as sought in 3.2.3. Based on the amended plans in exhibit C, I am satisfied that the proposal meets objective 3.2.3 (a) of pedestrian orientation, and (e) by providing building entries facing the plaza, and that it provides the variation in function, façade relief, and details encouraged in Table 3.2 for active frontages.
67Clause 6.21(4) of the LEP provides the matters that must be considered in determining whether the proposed development exhibits design excellence. No issue was raised as to the design, materials or detailing of the proposal. The central issues in dispute relate to how the proposed development addresses the matters listed in cl 6.21(4), in particular its relationship to and impact on the public domain. I accept that the provision of screening planters and the identifiable private space between the planters and the front of each units will indicate private use as opposed to public use. However, on the evidence before the Court these areas are outside the Public Areas identified in the easement permitting public access for passive recreation and thoroughfare, and the delineation between private and public space would not of itself impact on the utility of the public space including the outdoor seating or its use as a thoroughfare. I agree with Mr Fletcher that the increase in activity referred to above would improve the quality and amenity of the public domain (cl 6.21(4)(b)), and that the proposal would not detract from the overall utility of the plaza as public domain (cl 6.21(4)(d)(x)). I am also satisfied that with the imposition of conditions 3 and 4 and modifications to the front of units 9 and 10, given the agreement that the proposal for units 1-8 is appropriate, that the interfaces between the units and the public domain are appropriate (cl 6.21(4)(d)(xii)).