The Land and Environment Court has approved a Darby Street apartment complex rejected unanimously by Newcastle council over height and privacy concerns.
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The council refused the six-storey building opposite Newcastle Art Gallery a year ago after nearby residents complained that it was too big and out of character with the surrounding area.
The $20 million project includes 30 serviced apartments on the corner of Darby and Queen streets and 24 units fronting Queen Street.
The project is 19.4 metres tall, 5.4 metres above the site's height limit, a 38 per cent variation which concerned councillors and residents of the neighbouring Regency Park gated estate.
Developer John Markovic took the council to court, and the two parties reached an agreement during a mandatory conciliation meeting in September.
The modified design removes an unusual web-like facade on Darby Street and replaces it with brickwork. Its height remains the same, but the upper floors are set back further.
The court approved the new design on November 25, ruling that complying with the height standard was "unreasonable and unnecessary" and that the project met the objectives of the height control.
Cooks Hill Community Group president Glenn Burgess said the decision showed there was "no certainty in the planning laws" for residents.
"It was a surprise given it was such a large exceedance," he said.
"If you bought into Regency Park, the expectation that you'd have potentially a 14-metre building there, and you get one that's much higher than that."
The city's Urban Design Consultative Group, which provides independent advice to the council, had asked the developer last year to address the height exceedance.
Deputy lord mayor Declan Clausen said he was disappointed that the project had been approved by a court instead of the elected council.
He said the applicant had declined to modify the building before it was refused in December 2019, despite requests from the council and the community.
"While it's pleasing to see some movement was achieved via the court process, and that the applicant has made modifications to the design to address some of the concerns, the applicant's decision to refer the matter to court rather than work collaboratively with council effectively cut the community out of the decision making," Cr Clausen said on Monday.
City of Newcastle (CN) confirmed the height of the two buildings, including lift overruns, had not changed during the court process.
"The applicant amended plans to respond to concerns raised by CN," a spokesperson said in a written statement.
"The refinement of materials, increased setbacks and building form agreed to by the applicant reduced the bulk and scale of the previous design, satisfying concerns raised regarding height."
Mr Markovic, a Sydney hotelier, bought the former Roads and Traffic Authority building for $6.85 million in 2017.
He told a public meeting last year that he wanted to create a "landmark" building at an entrance to the central business district.
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