Diagram of the former Boyd site

The City of Melbourne has struck an agreement with developer Cairo Melbourne to build a residential and commercial development on council-owned land that will feature 20 per cent affordable housing.

The land, on the site of the former JH Boyd Girls’ School on City Road, was acquired by the council from the state government for $10.5 million in 2007, with the intention to develop a community centre and open space with commercial and residential development that integrated affordable housing.

The council had formerly been in an agreement with the developer for the site, however a successful contractual outcome could not be met and the contract of sale was terminated earlier this year, with the site currently being used as a temporary park.

Now the council has renegotiated an agreement to sell Cairo the land for $15.5 million.

“The new agreement reinforces our commitment to transform the former school site into a key civic centre and provide much needed open space for Southbank residents, workers and visitors,” Melbourne Lord Mayor Robert Doyle said.

“Twenty per cent of the development, 46 apartments, will be affordable housing. The apartments will comply with liveable housing guidelines which mean they will be safe, comfortable and easy to access for people of all ages and abilities.”

Retail space will also be located on the ground level.

Mr Doyle said the council had negotiated better open space provisions, and that the original building design would be modified to ensure views of the heritage library nearby were protected.

Chair of the council’s planning committee Ken Ong said the developer would also investigate sustainability outcomes.

“The developer has agreed that the materials used should be in keeping with the heritage character of the library,” he said. “Cairo Melbourne Pty Ltd has also agreed to investigate sustainable options for the roof of the new building, including solar panels or a roof garden.”

City of Melbourne director of city design and projects Rob Adams told The Fifth Estate that it was council policy to require up to 15 per cent affordable housing on any development on council-owned land.

The current project was set at 20 per cent affordable housing because the original proposal was entered into under an old policy. Mr Adams said the policy had been modified after the National Rental Affordability Scheme was wound up to reflect the commercial realities.

Mr Adams said if there were not an affordable housing component the council could potentially charge more for the land, so in effect the council was subsidising affordable housing.

“There’s a strong moral stance being taken,” he said.

Entry into the contract of sale is subject to and conditional on a public submission process under the Local Government Act 1989.

The proposed sale will be considered by the council before the end of 2016. A temporary park will remain in place on the site in the interim.

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