The State Commission Assessment Panel (SCAP) will on Wednesday discuss plans lodged by the city council and partnering development company ICD Group to demolish the ageing Central Market Arcade and build a 38-storey retail, office, hotel and residential building.

Included in the plans are 210 residential units, 15 per cent of which the developers say would be priced at below $419,750 in line with a State Government affordable housing requirement and the council’s own “guiding principles” for the project.

But in its submission to the SCAP, the SA Housing Authority wrote that “the (development) application cannot be considered as one that includes affordable housing” as the council has not met State Government criteria.

According to SA Housing Trust Regulations, housing can only be classed as “affordable” if it is subject to a legally binding agreement ensuring it is only sold to low to moderate income earners, the SA Housing Trust or community housing providers.

“The project does not propose to deliver affordable housing through a formal housing agreement,” SA Housing Authority affordable housing planning officer, Maria Klimenchuk, wrote in her letter to the SCAP.

“Unless a Land Management Agreement (LMA) for the purpose of delivering affordable housing outcomes has been executed and is registered on the title of the land… then the application cannot be considered as one that includes affordable housing.

“I can confirm that, to date, no LMA of this sort has been executed and registered on the title of the land and neither is one in the process of being registered.”

Klimenchuk went on to state that “as the application does not satisfy or address” the housing criteria, “no development concessions based on the inclusion of affordable housing should be applied to the assessment of this application and afforded to the applicant”.

The Housing Authority’s view is reiterated in advice provided by the State Planning Commission to SCAP members.

“The applicant has not agreed to enter into an affordable housing agreement and therefore, will not be providing affordable housing in a formal arrangement,” a report to panel members states.

Adelaide city area councillor Robert Simms said he was “very concerned” to read the development “may not satisfy the affordable housing criteria as set out in regulations”.

“I will be asking administration for their response to the SCAP submission on Thursday night,” he said.

“I understand that as part of the redevelopment affordable housing is being offered to eligible purchasers for a period of 90 days.

“I will therefore be asking administration what steps will be taken to promote this to ensure there is take up of this housing.”

But an Adelaide City Council spokesperson told InDaily no LMA was required as ICD Group had contractually committed to deliver 15 per cent affordable housing in its legally-binding project development agreement with council.

“The City of Adelaide Council affordable housing principle requiring 15 per cent affordable housing will be integrated within the development (subject to suitable take-out being secured),” a spokesperson said.

“Where affordable housing is proposed the South Australian Governments Affordable Homes Program should be used to offer such housing. This housing should be offered exclusively to eligible purchasers for a maximum timeframe under the Affordable Homes Program (90 days)”.

An ICD Group spokesperson said the company was “committed to adopting the affordable housing policy – this has always been our commitment – and will happen in due course as the project progresses”.

“Furthermore, we have a binding agreement with the City of Adelaide to follow the State’s Affordable Housing Policy.”

It comes despite a planning report prepared by Ekistics on behalf of ICD Group and the council in which the developers claim that a formal agreement is not needed as affordable housing would be integrated in a “realistic and viable way”.

“While the project does not propose to deliver affordable housing through a formal housing agreement, the project aims to market the apartments to a wide range of purchasers, with purchase prices starting below the current ‘affordable housing’ price limit of $419,750,” the report states.

“Discussions are also continuing with suitable community housing providers interested to acquire product in the project, to provide discounted affordable rental product to their key-worker clients.

“These dwellings are not limited to the $419,750 price limit, but will be offered to eligible tenants at circa 75 per cent of the market rent.

“As such, the intent of affordable housing is integrated into the project in a realistic and viable way and the variety of apartment sizes ensures the development caters for a variety of household structures.”

Notwithstanding the SA Housing Authority’s objection, the State Planning Commission has advised the SCAP to grant planning consent to the council and ICD Group.

“The proposed development is a significant development for the City of Adelaide,” its report to panel members states.

“The replacement of the existing arcade building with an innovative, mixed-use complex will add significant value to the surrounding locality as well as to visitors and residents of the CBD.”

According to a council report in 2019, less than two per cent of city properties sold since 2017 were affordable to low-income households.

The report also noted that of the since 2012, only five of 25 eligible developments in the city to adhere to the State Government’s affordable housing policy included at least 15 per cent affordable housing.

The city council unveiled concept plans in 2019 to demolish the ageing Central Market Arcade, which was last developed in the 1960s, and build a new two-level retail space and adjoining multi-storey tower with a hotel, apartments and offices.

The Adelaide City Council will retain ownership of the retail and public spaces, with developers ICD Property to own and manage the central tower.

At the time, Lord Mayor Sandy Verschoor described the launch of the project as “a defining moment in the Adelaide CBD’s history” that would “set the market up as a key destination for at least the next half century”.

The project is expected to break ground in 2021 and will create approximately 337 jobs during construction.