Iris Capital says a state planning panel's decision to reject its EastEnd development could leave Newcastle's city centre with "a hoarded-up hole in the ground for years to come".
The Hunter Central Coast Regional Planning Panel decided unanimously this week to knock back Iris's amended plans for stages three and four of the EastEnd project, despite Newcastle council support for the project.
The panel ruled the proposed $145 million development had an "unacceptable" impact on views and parking and differed too greatly from a concept plan approved in 2018.
The revised development had drawn criticism from Heritage NSW, the National Trust, the Newcastle Club, Anglican Dean Katherine Bowyer, Newcastle East Residents Group and Newcastle Inner City Residents Alliance.
Iris said on Friday that the planning panel's decision made a mockery of government goals to boost housing supply and improve building design.
"Despite objections from a small minority, the proposal was recommended for approval twice by the City of Newcastle, had received endorsement from the Government Architect's office following a thorough, detailed and rigorous structured design competition process, in addition to full support to proceed from council's own Urban Design Review Panel," the company said in a statement.
"The decision by the state run and financed planning panel is completely inconsistent with the publicly claimed aspirations of the federal and Minns state governments to increase housing supply both across Australia and, more particularly, in this state.
"The decision further mocks the efforts of the Government Architect, who ironically forms a part of the state government's Department of Planning, Housing and Infrastructure team, part of whose remit is to promote design excellence in major projects across NSW."
The state's five Sydney and four regional planning panels are independent bodies not subject to the direction of the Minister for Planning.
Iris said the planning panel's decision undermined the credibility of the state-run design process and was a "cautionary tale of what could eventuate for developers embarking on this process in the future".
The Iris plans changed when City of Newcastle demolished its King Street car park in 2021 over concerns it was structurally unsound.
The developer applied to "remass" stages three and four of the EastEnd complex by adding height and floor space to some apartment buildings in return for creating a public plaza off Hunter Street.
Iris said on Friday that the revised project "provided for a greater experience for the general public with the delivery of the Hill to Harbour connection across Iris's land in return for the maintaining the developable amenity approved pursuant to the concept DA".
The company, run by billionaire hospitality and property mogul Sam Arnaout, said the panel's decision would have "significant economic consequences for the city".
"The direct investment of approximately $150 million + in the project would have seen a multiplier effect of well over $400m in spending in the region, in addition to the loss of hundreds of jobs that would have been created and 195 apartments at a time when there is a chronic shortage of places for people to live in NSW."
Iris said it was committed to the highest possible standards of architecture in the development.
"During the COVID and post-COVID years, building and construction across Australia has and continues to be challenging, and quite a number of projects in Newcastle and other parts of the state and have been stillborn as a consequence of rising costs, labour shortages, rising interest rates and increased regulatory scrutiny on the industry (much of which was warranted).
"It would be an incredibly disappointing outcome if this significant rejuvenation project were to stall at the halfway point with a key node of the Newcastle City Centre being left as a hoarded-up hole in the ground for years to come."
The council last year approved the demolition of buildings on the site, including an old timber house the National Trust classed as an important part of the city's heritage.
The company said it would make no further comment while it considered its options for the future of the project.
Iris has been marketing and selling apartments in the third and fourth stages but will need to change its plans, pursue a legal appeal within six months through the Land Environment Court or ask the planning panel to review its decision.
