Planning authorities have knocked back one of the biggest apartment projects ever proposed for Newcastle over fears neighbouring fuel storage tanks could explode.
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The Hunter Central Coast Regional Planning Panel rejected the $125 million Annie Street wool-stores conversion in Wickham this week, three years after the plans were lodged.
The decision has not been formally loaded onto the NSW Department of Planning website, but the reasons for the refusal are understood to be in line with a City of Newcastle assessment of the project.
A spokesman for Investec, the company behind the 300-unit development, said he could not comment on the outcome of the planning process until he had received formal notification that the project had been rejected.
City of Newcastle recommended refusing the proposal due to the risks outlined in a consultant's report commissioned by the council.
It has urged the NSW government to step in to resolve the conflict between the storage tanks and an otherwise desirable redevelopment.
On paper, the high-density residential development close to the city, and reusing heritage buildings, ticked a lot of boxes for the council.
But the consultants, Arriscar, found the risk of fatality from a "vapour cloud explosion" at the Ampol fuel terminal, though unlikely, exceeded thresholds for residential development in the Department of Planning's Hazardous Industry Planning Advisory Paper No.10.
"The major contribution to risk of fatality at the proposed development is from vapour cloud explosions arising from flammables tank overfill and Buncefield-type incident," Arriscar said.
"The conclusion is that the proposed ... development at the Wickham woolshed stores site is an inappropriate development given that the risk criteria for both individual risk and societal risk are not complied with."
The Arriscar report said the area with an annual one-in-a-million risk of fatality covered all of the proposed residential buildings.
The area with an annual one-in-100,000 risk of fatality covered the proposed commercial and open space areas of the redevelopment.
The Ampol storage tanks receive gasoline and diesel via the Sydney-Newcastle Pipeline for distribution via fuel trucks.
They also store aviation fuel and ethanol.
Wickham resident advocate Lyn Kilby said the NSW government would have to address the future of the storage tanks if it wanted in-fill development in that neighbourhood.
Investec applied for concept approval for the entire project and development approval for the $37 million first stage.
The concept plan includes reusing three large four-storey wool stores, new buildings up to six storeys and parkland.
Stage one includes 100 apartments in one of the heritage buildings and a park.
The proposed redevelopment is in a light-industrial zone, but Investec argued it could have been approved under planning law incentives for preserving heritage buildings.
City of Newcastle chief executive officer Jeremy Bath said the redevelopment was highly desirable, but safety had to come first.
"We were all so excited by the proposed redevelopment of the old Wickham Woolstores," he said.
"Unfortunately, the independent hazard and risk assessment has identified the fuel tanks as an intolerable risk.
"The assessment shows that in the event of an explosion the potential vapour cloud would have had a life-threatening impact on residents living at the Woolstores."
Mr Bath said the assessment finding was "devastating for myself and staff given the effort of the developers to produce a sympathetic reuse of the heritage site".
"But it goes without saying that the safety of the residents has to outweigh the economic benefits that would have come from the redevelopment.
"Unfortunately, these sorts of conflicts are sometimes unavoidable in a suburb's transition from industrial to residential living.
"Given the complexity of the development caused by its proximity to the Caltex site, it's likely a solution will now require the intervention of the NSW government."
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