Morgan & Banks Properties Pty Ltd v Manly Council
[2002] NSWLEC 251
•25 October 2002
NEW SOUTH WALES LAND AND ENVIRONMENT COURT
CITATION: Morgan & Banks Properties Pty Ltd v Manly Council [2002] NSWLEC 251
PARTIES:
APPLICANT
Morgan & Banks Properties Pty Ltd
RESPONDENT
Manly Council
CASE NUMBER: (1)0315 of 2002
CATCH WORDS: Development Application
LEGISLATION CITED:
Environmental Planning and Assessment Act 1979, s 97
CORAM: Nott CMurrell C
DATES OF HEARING: 30 Sept 2002; 1 & 3 Oct 2002; and view on 2 Oct 2002
DECISION DATE: 25/10/2002
LEGAL REPRESENTATIVES
APPLICANT
Mr N A Hemmings, QC, and
Mr I Hemmings, barrister
SOLICITORS
Staunton Beattie
RESPONDENT
Mr B McClintoch, SC, and
Mr S Flanigan, barrister
SOLICITORS
Deacons
JUDGMENT:
| In the Land and Environment Court of New South Wales | Heard by: Commissioners A J Nott (presiding) and J Murrell Decision date: 25 October 2002 |
Morgan & Banks Properties Pty Ltd
Applicant
v
Manly Council
Respondent
Judgment
Overview
The applicant has applied for development consent to convert the eight-storey northern tower of the Radisson Kestrel Hotel at 8–13 South Steyne, Manly, containing 44 hotel suites, into 17 residential apartments.
Main issues and evidence
The council opposes the granting of consent, on the basis that the loss of the hotel would have adverse economic and social impacts for Manly. To give greater force to its concerns, the council has prepared and submitted to the Minster a draft local environmental plan that would, if gazetted, prohibit the hotel beings being used for the purpose of a residential flat building. There is a question of what weight should be given to this draft LEP.
At the hearing, written or oral evidence for the applicant was presented from: Mr D Dransfield, adviser to the tourism and hospitality industries and author of Hotel Futures; Mr D Snashall, social planner and economist; Mr A Harding, architect; Mr I Fleming, town planner; Mr P Twiney, traffic engineer; and Mr R Nettle, transport planner. There were also other expert reports (part B of exhibit M) relating to aspects of the development that were not in issue at the hearing.
For the council, evidence was given by: Mr B Haratsis, financial and economic analyst, and principal of MacroPlan Australia; Ms M Cooper, social planner; Mr N Ingham, town planner; Mr C Hutcheson, traffic engineer; and Mr Ketheesuran, council’s development assessment engineer.
Summary of main findings
Having considered all the evidence and submissions, and having inspected the hotel in the presence of the representatives of the parties, we have concluded on balance that it would not be appropriate to grant consent. We set out later in this judgment the reasons for our decision. However, briefly stated our reasons are as follows.
The validity of the proposed amendment to council’s local environmental plan is in issue. The making of the amendment is not certain and we are inclined to give no weight to the draft plan. The economic information upon which the council decided to prepare the draft plan significantly overstates the likely adverse impacts that might result from the closure of the hotel. Nevertheless, we acknowledge that the council has a long-standing policy of encouraging the provision of quality tourist accommodation, and it was because of that policy that the council approved the northern tower of the hotel.
We are required to consider the likely economic and social impacts of the development in the locality (s 79C(1)(b) of the Environmental Planning and Assessment Act 1979). We think that there would probably be minor overall adverse social and economic impacts in the locality from the closure of the hotel and from the redevelopment of the building for large residential apartments. We have taken into account the fact that the subject building was approved for use as serviced apartments or “holiday accommodation”, having a larger floor space ratio than would have been the case for an ordinary residential flat building. Under the planning controls that applied at the time the building was approved, it appears that the council would not have allowed the erection of such a large building to be used merely as a residential flat building. Nor would the current planning guidelines permit the erection of such a large building for the purpose of using it as a residential flat building.
The granting of consent for the proposed redevelopment would mean the loss of a four-star hotel, leaving the Parkroyal Hotel as the only four-star hotel at Manly. In refusing the development application, there is a reasonable prospect that the Radisson Hotel would be refurbished and renovated with a view to maintaining its status as a four-star hotel or at least having a three-and-a-half star rating as a hotel. Alternatively, the building could continue to serve the tourist industry as serviced apartments with its present configuration of rooms or suites.
The proposed development would result in a state-of-the-art, streamlined, landmark building. The internal and external architectural design of the new building would clearly be suitable for the proposed large, luxury units. The expert architectural evidence indicates that the proposed building would be in accordance with the principles in State Environmental Planning Policy No 65—Design Quality of Residential Flat Development. However, the existing building used as a hotel has a reasonable appearance in the streetscape and is still aesthetically acceptable.
We acknowledge the legitimate desire of the applicant to obtain the highest financial return from its investment by redeveloping the building for large, strata-title units, targeting the higher end of the residential market, without the planning restriction that the units be used for holiday accommodation. However, we think that the council’s policy of promoting and encouraging tourism would be better served at the present time by maintaining the status quo and not granting consent for the proposed change of use (in planning terms) from holiday accommodation to residential apartments.
Proposal in more detail
The Radisson Hotel at Manly comprises two separate buildings, both owned by the applicant. The present development application relates only to the northern building (“the subject building”) at 8–13 South Steyne (“the subject site”), which has 44 hotel suites, basement carparking, conference rooms, foyer, manager’s office, restaurant and kitchen, associated storerooms, and outdoor swimming pool. The southern building, at 45 Ashburner Street, is separated from the subject building by Dungowan Lane.
If this appeal was allowed, the Ashburner Street building could continue to be used as holiday accommodation. But it was conceded by the applicant that this southern building would loose its four-star rating, as it does not have some of the facilities or amenity of the northern building.
The northern tower of the hotel at 8–13 South Steyne is contained in lot 103 DP 791179. A small part of the building is contained in lot 102 in the same DP and is owned by the Manly Surf Club. The club’s continuing use of lot 102 will not be changed by the proposed development.
The architectural plans of the existing building at the subject site and the plans of the proposed redeveloped building are exhibit T.
The amended carparking layout for the basement and for part of the ground floor, together with a redesigned carpark ramp, is seen in the amended plans exhibit 22. These amended plans were prepared during the course of the hearing as a result of a conference between the expert traffic engineers for both parties. The proposed layout will provide for 32 car spaces for the residents and 3 car spaces for the visitors, and there will be improved ramp access and manoeuvring aisles. The improvement to the carpark is necessary because of the change of use that would result in permanent residents living at the subject site, and there would be no valet parking service as there is at the present time.
Looking at the development as a whole, what is proposed is not simply an “adaptive refurbishment for residential accommodation and strata subdivision” as described in the development application form. However, this is not an issue in our assessment as indeed the plans and other documents lodged with the application clearly show the very extensive building works proposed. The internal walls of all floors will generally be demolished and replaced by the completely reconfigured walls of the proposed large apartments. Parts of the floor plates will be demolished, in order to relocate the lift tower and stairs, or in order to have the floor plate at each storey in one plane (some of the floors are presently stepped). The current façades on the east and west elevations will be demolished and replaced; and substantial changes will be made to the appearance of the northern façade from level 3 upwards. A substantial encroachment onto part of the council’s road reserve of the hotel’s ground-floor area, including part of the hotel’s restaurant, will be removed altogether, and the applicant’s lease of the area of the encroachment will be surrendered. (This leased area of roadway was originally part of the subject site and was dedicated free of cost to the council in accordance with conditions of consent.) The internal columns of the present building will remain, although some columns will be deleted where a vertical blade wall on the northern elevation serves as structural support, as well as being an architectural feature. The areas of covered balconies or terraces will be increased. The finished architectural design and treatment of the exterior of the building will be substantially different from the existing building. However, the general form, height and massing of the building will be somewhat similar to the existing building, although some increase in size of the building may be noticeable at the northern-eastern corner, at the upper parts of the northern elevation, and at the western elevation with the construction of the new lift tower.
The “gross floor area” on all floors above the ground floor will be increased. However, the total gross floor area of the whole building will be less than the current area, but only because 233.3 m2 of the existing ground floor will be converted to carparking space that is excluded from the measurement of gross floor area. The gross floor area also does not include the areas of the enlarged covered terraces or balconies. The gross floor area of the proposed building is 3,522 m2 on a site of 980 m2, giving a floor space ratio of 3.59:1.
The coloured computer-generated images and colour photographs in exhibit U give a very good appreciation of the appearance of the proposed building compared with the existing building.
For the intended luxury apartments, a totally new floor layout appears desirable. And the covered or partly covered terraces and balconies will clearly contribute to the amenity of the occupants.
According to Mr Harding, the construction cost alone of the proposed development would be in the order of $16 million. In addition, there would be other costs, including architect’s fees and costs of various consultants’ reports.
Previous planning controls and consents
Both parties referred to previous development applications relating to the site and placed some reliance on previous consents. In chronological order, see:
(1) reports to the council meetings on 5 July 1983 and 2 August 1983 (exhibit 17),
(2) report for council meeting on 13 September 1983 (exhibit S),
(3) Manly Local Environmental Plan No 6 gazetted 16 December 1983 and Development Control Plan effective 7 January 1984 (exhibit 16),
(4) report for council meeting on 26 March 1985 (exhibit Y),
(5) consent of 28 March 1985 for 45 Ashburner Street, Manly (exhibit X),
(6) report for council meeting on 3 December 1985 (exhibit 18),
(7) consent for 8-11 South Steyne dated 13 December 1985 (exhibit H),
(8) Development Control Plan for the Residential Zone 1986 (exhibit 19),
(9) report for council meeting of 20 January 1987 (exhibit 24),
(10) consent of 21 January 1987 for 12 South Steyne,
(11) report for council meeting of 2 February 1988 (exhibit 23), and
(12) consent of 4 February 1988 for 13 South Steyne.
These development consents are to be construed from the terms of the consents themselves. While not altering the legal effect of the consents, we have had regard to the circumstances and planning policies applying when the consents were granted. It was part of the council’s case that the existing building was approved with a greater floor space ratio than for an ordinary residential flat building, because the subject building was going to be used (and in fact was required to be used) for holiday accommodation.
Development application in 1983 (DA 927/83)
The chief town planner’s report for the council meeting of 5 July 1983 records that an application (DA 927/83) had been received by the council for the redevelopment of the six properties at Nos 8–14 South Steyne. The proposed development was described as a “mixed residential flat building of 8 floors containing a coffee lounge, restaurant, reception area, gymnasium, club facilities, outdoor recreation facilities and 48 serviced rental apartments with basement parking for 39 vehicles.” The chief town planner stated (among other things) that:
The zoning of the subject land is Residential 2(d)(tourist) [under the Manly Planning Scheme Ordinance as amended].
The applicant had indicated that if the proposed serviced apartments became unviable, the building would be converted internally from 48 apartments to 22 strata titled units.
The existing buildings on the six lots are in a run-down condition and their amenity is substandard.
The total floor space of the proposed building is well in excess of the maxi-mum which council could approve under schedule 7 to the Local Government Act 1919, and the statutory controls would have to be amended.
The proposed development is consistent with the Structure Plan that provided for the residential area immediately to the north and south of the Town Centre to be developed for higher density residential purposes and oriented to tourism.
“In order to achieve the objectives of the Structure Plan for the Manly Town Centre and the Manly Tourist Area Precinct, I am of the opinion that as a general principle council should consider offering bonuses in respect of this site in order to achieve a desirable development.”
However, the chief town planner recommended that the original DA 927/83 should not be approved because of non-compliance with schedule 7 and because the development was unsatisfactory in certain respects. The chief town planner also recommended that the applicant should submit an amended proposal. The council adopted these recommendations.
LEP 6 and DCP for the site
On 12 July 1983 the council to resolved to prepare a local environmental plan applying only to 8–14 South Steyne “for the purpose of allowing tourist facilities” and in particular to allow council to consent to an amended development application generally in accordance with DA 927/83. The council also resolved to prepare a development control plan specifying development standards for the site.
The chief town planner’s report of 2 August 1983 stated:
While the drafting of the Local Environmental Plan and Development Control Plan has largely been prompted by the proposed development of this site, the contents and controls embodied in these documents have their origins in several background study reports. In particular, the report “Tourism in Manly” prepared as part of the Manly Planning Scheme Review stated that:-
“If tourist planning for Manly is to be oriented toward the encouragement of investment opportunity for the building of new holiday flats, then the planning provisions must be realistically attuned to the market and be aimed at holiday type accommodation which is attractive to the user, and provide a higher investment return than existing rental accommodation”. (p 5)
This report also identified and qualified Manly’s high degree of dependency on tourism.
The Structure Plan which was later prepared for the “Flat” of Manly and the Manly Town Centre defined a specific Tourist Precinct around the Town Centre to take advantage of the proximity to commercial, retail and entertainment activities and also to provide a buffer between the commercial centre and residential areas to the north and south. Within this tourist precinct, tourist accommodation and ancillary facilities are to be encouraged including the promotion of “specialist” and high quality tourist accommodation as well as investigating innovative holiday flat types to provide maximum beds at minimal cost. A further objective was to provide incentives for the development of tourist oriented activities (p 9 Structure Plan for the ‘Flat’ of Manly & the Manly Town Centre). Both of these reports have been publicly exhibited for comment.
It is considered that the preparation of the Local Environmental Plan and the Development Control Plan is a further refinement of the principles and findings of these reports and a step towards achieving their stated objectives. Further, it should be noted that both the draft Local Environmental Plan and draft Development Control Plan have been designed as models for future planning instruments to apply to the proposed Tourist Precinct which includes the existing Tourist and Commercial zones from Denison Street to Ashburner Street.
On 16 December 1983, Manly Local Environmental Plan No 6 was published in the gazette and came into effect. LEP 6 applied only to 8–14 South Steyne. It suspended the application of schedule 7 to the site. And it amended cl 64A of the Manly Planning Scheme Ordinance to permit (with consent), at the subject site, development for the following purposes, in addition to other development that was permissible in the zone:
Tourist facilities, being an establishment providing for holiday accommodation or recreation and may include a boat shed, boat landing facilities, camping ground, caravan park, holiday cabins, hotel, house boat, marina, motel, playground, refreshment room, water sport activities, or a club used in conjunction with any such activities.
To supplement LEP 6, a development control plan applying only to 8–14 South Steyne was adopted by the council and came into effect on 7 January 1984. One of the objects of this DCP was to encourage tourist facilities.
This DCP of 7 January 1984 contained the following definition:
“holiday accommodation” means a residential flat building–
1.which–
(a)contains a reception desk and foyer, a manager’s office and manager’s residence,
(b)may contain shops or ancillary commercial premises which have frontage to a street or to the foyer of the building,
(c)may contain other ancillary facilities such as dining room, restaurant, common room, recreational facilities and the like,
(d)is not used in whole or in part for the permanent or long-term accommodation of any person other than the building manager, and
2.in which each residential flat (other than the one occupied by the manager–
(a)is let as temporary holiday accommodation on a daily or weekly basis,
(b)is fully furnished, including cooking and eating utensils, bedding and linen, and
(c)is provided with regular cleaning and linen services.
This definition was later incorporated in condition 8 of the consent of 13 December 1985 (par 32 below).
For a purely residential flat building, the DCP of 7 January 1984 specified a maximum floor space ratio (FSR) of 1.3:1, and if the development met special criteria, the council could allow an FSR up to 2:1. However, for holiday accommodation, a greater FSR was permitted, up to 3:1 having regard to the special criteria. The criteria included the worthiness and architectural quality of the building, and compliance with the objectives of the Structure Plan.
Consent of 13 December 1985 for Nos 9, 10 and 11 South Steyne
The applicant in respect of DA 927/8 was unsuccessful in obtaining all the land at 8–14 South Steyne. Accordingly, in October 1995 an application (DA 1648/85) was lodged in respect of a smaller site consisting of Nos 8–11 South Steyne, and the proposed development was for an eight-storey block of 36 serviced holiday apartments, manager’s flat, coffee shop/bistro, reception lobby, conference facilities, with basement and ground-floor parking, and reconstructed surf club premises. The application was advertised under s 342ZA of the Local Government Act 1919.
On 13 December 1985 the council granted consent to DA 1648/85. This is the first development consent for the erection of part of the subject building. Relevantly, the consent provides:
Notice to Applicant of Determination of Development
Application No. 1648/85
Proposed Construction of 8 Storey Residential Flat Building
Premises 8-11 South Steyne, ManlyTO: Focus Development Corp. Pty. Ltd., of 225 Miller Street, North Sydney, being the applicant in respect of Development Application No. 1648/85.
Pursuant to Section 92 of the Act, notice is hereby given of the determination by the consent authority of the Development Application No. 1648/85 relating to the land described as follows:- 8, 9, 10, 11 South Steyne, ManlyThe Development Application has been determined by granting of consent subject to the conditions specified in this notice. …
3.The total floor area of the building is to be reduced to comply with the 3 to 1 maximum allowable plot ratio and the building plans are to be dimensioned accordingly.
…
6.The applicant entering into a restriction as to user for a term of not less than ten (10) years to the effect that the individual apartments will be used for temporary accommodation only and not as permanent housing.
7.The restriction as to user mentioned above be registered on the title of the property.
8.The development complying with the definition of holiday accom-modation as defined in the development control plan which applies to this site.
9.The applicant liaising with the Municipal Engineer regarding the dedication of the realignment area to Council at no cost and the terms of the lease of the realignment area for the use of the forecourt and car parking arrangement proposed.
…
15.Satisfactory arrangements be made for the servicing of the coffee bar/bistro to avoid conflict with the proposed car parking at ground floor level.
…
19.The maximum number of Strata Titled units associated with this site is 13.
Condition 3 required the floor space ratio of the building to be reduced to 3:1, which was be maximum FSR permitted by the DCP for holiday accommodation (par 30 above). The council might have been prepared to grant approval for an ordinary residential flat building to be used for permanent accommodation having a FSR up to 2:1, in order that be old buildings on the site might be removed and replaced by a building having a better streetscape appearance. However, the evidence does not suggest that the council would have allowed a building having a FSR of 3:1 if it was going to be used for permanent residential accommodation and not for holiday accommodation.
Of particular importance is condition 8, which incorporated the definition of “holiday accommodation” (par 29 above).
The effect of this consent was to approve the erection of a residential flat building that was required to be used for holiday accommodation. In other cases, a distinction has been made between the physical form of a building and its use. (See, for example, Holroyd Municipal Council v Mangano (1972) 26 LGRA 357 at 366 per Hardie JA. By analogy, some planning instruments defined “professional consulting rooms” to be the use of the whole or part of a dwelling house by a certain number of medical, dental or health professionals.)
The consent of 13 December 1985, and in particular condition 8, still applies to at least that part of the subject building that is erected on that part of the subject site formerly known as Nos 8–11. This consent affects 36 of the total of 44 hotel units in the subject building. The part of the subject building that is on Nos 12 and 13 was erected pursuant to the two consents considered immediately below.
Consent of 21 January 1987 for 12 South Steyne
In November 1986 an application was made to develop No 12 in conjunction with the approved development on the Nos 8–11. The proposal included a restaurant on the ground and first floors, conference facilities, as well as the major part of four apartments which extended from Nos 8–11 onto No 12. The development application and the accompanying plans were not tendered in evidence, so is not possible to say how the previously approved development on Nos 8–11 was amended in order that the development at No 12 would be integrated with it.
Set out below are the possibly relevant terms of the council’s consent of 21 January 1987 relating to No 12:
Notice to Applicant of Determination of Development
Application No. 2001/86
Proposed six-storey infill development.
Premises 12 South Steyne, ManlyTO: Mr. P. Burke, Focus Development Corp. Pty. Ltd., 225 Miller Street, North Sydney, being the applicant in respect of Development Application No. 2001/86.
Pursuant to Section 92 of the Act, notice is hereby given of the determination by the consent authority of the Development Application No. 2001/86 relating to the land described as follows:-12 South Steyne, Manly - Lot 1, D.P. 607781
The Development Application has been determined by granting consent subject to the conditions specified in this notice. …
5.The maximum number of additional strata titled units associated with the combined development shall not exceed four.
There were no conditions of consent expressly requiring the approved development on No 12 to be used for holiday accommodation or prohibiting the permanent occupation of the four apartments. However, it would appear that access to these four units was through the building on Nos 8–11, to which condition 8 applies.
Consent of 4 February 1988 for 13 South Steyne
In December 1987 a development application was lodged in respect of 13 South Steyne for four serviced apartments, milk bar, duty free shop and conference facilities, to be carried out in conjunction with the development that was then under construction at Nos 8–12. The development on No13 had a maximum of four storeys. The council’s notice of determination granting consent for this development is dated 4 February 1988. Possibly relevant terms of the consent are as follows:
Notice to Applicant of Determination of Development Application No. 2350/87
Proposed Four Storey Infill Development in Conjunction with Adjacent Apartment Building containing Additional Facilities as well as Four Studio Apartments.Premises: No. 13 South Steyne, Manly.
T0: Focus Development Corporation Pty Ltd., of P.O. Box 1027, North Sydney, being the applicant in respect of Development Application No. 2350/87.
Pursuant to Section 92 of the Act, notice is hereby given of the determination by the consent authority of the Development Application No. 2350/87 relating to the land described as follows:-
No. 13 South Steyne, Manly.The Development Application has been determined by granting of consent in conjunction with the adjoining serviced apartment building on 8-12 South Steyne. The proposed building will contain a milk bar, duty free shop, bar, conference area and studio apartments with on site parking for 1 vehicle on 13 South Steyne; Manly; in accordance with the plans received by Council on 3rd December; 1987 subject to the following conditions specified in this notice. …
6.The rear studio apartment on the third floor level is to be eliminated and this area to be redesigned as an open balcony to the satisfaction of the Chief Town Planner.
7.The maximum number of additional strata title units associated with this site shall not exceed three. …
16.Payment of an amount of $5,700 based on $1500 per 1 bedroom unit and $1250 per one hundred square metres of commercial premises, in respect of a contribution for the provision, upgrading, and enhancement of open spaces and civic public places in the Municipality and for landscaping, civic design, maintenance and provision of necessary infrastructure therein, in accordance with Section 94 of the Environmental Planning & Assessment Act, 1979. Such payment is to be made prior to the release of the approved building plans.
17.The land is to be consolidated with the adjacent parcel containing 8-12 South Steyne, such consolidation to take place prior to occupation of the building:
Further, you are advised of the following terms regarding any future Building Application for the proposal:-
A. It is considered that the proposed building will become an integral part of the building approved by Building Application 91/87, and Council considers that a Building Application for the proposal should take the form of an amendment to that application.
Consent of 28 March 1985 for 45 Ashburner St
As mentioned earlier, the southern building of the Radisson Hotel at 45 Ashburner Street is not the subject of this appeal, but the proposed development has implications for its future use.
Relevant parts of the development consent dated 28 March 1985 for 45 Ashburner Street are as follows:
Notice to Applicant of Determination of Development
Application No. 1445/85
Proposed Five Storey Residential Building Containing 40 Motel Type Units, Manager’s Suite and Dining Room with Basement Car Parking for 29 Vehicles.
Drawings numbered 2585, sheets 1-6 dated Feb. 1985.
Premises 45 Ashburner Street, Manly.TO: W.T. Merriman & Associates Pty Ltd. being the applicant in respect of Development Application No. 1445/85.
Pursuant to Section 92 of the Act, notice is hereby given of the determination by the consent authority of the Development Application No. 1445/85 relating to the land described as follows:-45 Ashburner Street, Manly.
The Development Application has been determined by granting of consent subject to the conditions specified in this notice.
The conditions of the consent are set out as follows:-
1. The proposed development is approved by Council as temporary holiday accommodation let on a daily or weekly basis and any proposal for the permanent or semi-permanent occupation of the building is to be the subject of a further development application.
2. The applicant shall enter into a deed of agreement to include a covenant on the title and a restriction as to user to the following effect prior to the release of the working drawings:-
(i)The building is not to be used in whole or in part for permanent or long term accommodation of any person other than the building manager.
(ii)That any application for the subdivision of the building under the provisions of the Strata Titles Act, 1972, shall be on the following basis:-
(a) The manager’s residence, kitchen, dining room and reception office shall vest in the Body Corporate and become common property.
(b) The car parking area shall also become common property.
(c) The other 40 units shall be subdivided into no more than 15 lots, each lot containing at least 2 units.
The motel approved at 45 Ashburner Street was larger than a building that would have been approved for use simply as a residential flat building. In the town-planning report recommending the granting of consent, it was stated:
Considerably [sic] bonuses in terms of site density and car parking have been proposed on the basis that the building will not be available for permanent or semi-permanent accommodation.…By restricting the number of lots in any proposed strata subdivision Council would be reasonably confident that the units would be purchased for investment purposes and not for occupation by the owners.
Restriction as to user
On 8 December 1992 a restriction as to user under s 88E Conveyancing Act 1919 was lodged at the Land Titles Office. The restriction applied both to the subject building (at 8–13 South Steyne) and to the Ashburner Street building of the Radisson Hotel. The restriction reads:
“ The individual apartments which comprise the hotel building on the land must be used for temporary accommodation only and not as permanent housing for a period of ten (10) years from 18 December 1985.”
The restriction as to user has expired. However, it does not necessarily follow that it would now be appropriate on a merits assessment to grant development consent to change the current approved use of holiday accommodation to a use for permanent residential accommodation. The previous development consents authorised the strata titling of the holiday suites. And it appears that there was a concern on the part of the council that prospective purchasers of the individual strata lots should be warned that they would not be able to use the units for permanent accommodation (cf. par 43). If the main purpose of the restriction as to user was to assist in the establishment of a building whose use was for holiday accommodation, that purpose has been achieved.
Additional comments on the nature of the current use
As it presently exists, the subject building at 8–13 South Steyne appears as one single building, although it was erected pursuant to three separate development consents. The existing building steps up from three or four storeys at No 13 to eight storeys at Nos 8–11. From the above consideration of the consents, it appears that the lawful use of the whole of the subject building, or at least of the major part of the building, is for the purpose of serviced apartments or “holiday accommodation”. It appears that a business entity calling itself a hotel could operate lawfully within the terms of the development consents. The council did not submit that the present use of the building as a hotel fell outside the ambit of the approved use or uses.
We place little significance on the fact that the three development consents for the subject building had conditions specifying the number of strata units that could be created. With appropriate legal arrangements in place between the various lot owners, a hotel could be operated in a strata-titled building. Selling individual strata lots is sometimes used as a way of financing a particular venture. One of the council reports mentions that strata titling was necessary to raise finance. As it turned out, the 44 hotel units have not been strata subdivided.
We have previously referred to the distinction between the built or physical form of the subject building and its use (par 35). From our inspection of some of the hotel units and from an examination of the floor plans of the subject building, the 44 hotel units have the typical appearance of hotel rooms or suites. There are 42 one-bedroom units and 2 two-bedroom units. Fourteen of these units have spas. Each hotel unit may be capable of being used as a separate domicile or dwelling, having a washing machine in the bathroom, and having a small kitchen alcove or cooking bench, but the hotel unit would be a small, confined dwelling. However, all the units are quite suitable in size for use as hotel units and the hotel suites are sufficiently spacious. The units are suitable in size for holiday accommodation.
Current planning controls
Manly LEP 1998
Manly Local Environmental Plan 1988 applies to the subject land. Among the general aims of LEP 1988 in cl 3(1) is par (f): “to recognise that tourism is a major industry and employer in Manly and to endeavour to encourage its growth and continuing viability.” Clause 4 provides that the policies and strategies of the LEP are—
(b) in relation to tourism:
(i)to encourage and concentrate tourist development in the Tourist Area;
(ii)to encourage tourism to co-exist with local residents to their mutual advantage; and
(iii)to develop tourism as an industry for the purpose of gaining employment, economic, cultural, social and recreational benefits in the community.
Tourist Area is defined in cl 7(1) of LEP 1988 to mean any land shown by heavy black dots on the map. A coloured extract from this map is reproduced in Mr Ingham’s statement of evidence. The tourist area is a relatively small part of all land zoned Residential, generally located close to the beach. The subject land is zoned Residential and is within the tourist area. The tourist area in the locality of the subject land appears to be similar to the former Residential 2(d)(tourist) zone in the Manly Planning Scheme Ordinance that applied at the time of the granting of the development consents for the subject building.
In the current Residential zone, residential flat buildings are permissible with consent. The following development is prohibited:
…backpacker accommodation, clubs, hotels, motels, refreshment rooms, service stations and tourist facilities (other than backpacker accommodation, clubs, hotels, motels, refreshment rooms, service stations and tourist facilities in the Tourist Area).
“Tourist facilities” in LEP 1998 has the same definition as quoted above (par 27).
The Residential zone of LEP 1988 has the objectives, inter alia—
(e) to improve the quality of the residential areas by encouraging landscaping and permitting a greater flexibility of the design in both new development and renovations;
(f) to allow development for purposes other than housing within the zone only if it is compatible with the character and amenity of the locality, …
(h) to encourage the revitalisation of residential areas by rehabilitation and suitable redevelopment.
DCP for the Residential Zone 2001
As regards residential density, the council’s Development Control Plan for the Residential Zone 2001 places the subject site in sub-zone 1, as seen on the coloured density map reproduced in Mr Ingham’s report (exhibit 7). Clause 3.1.2 of the DCP provides that the maximum permissible density in this sub-zone is one dwelling per 50 m2 of site area. Because of the large floor areas of most of the proposed units, this numerical criterion will be met.
Mr Ingham also reproduced in his report the coloured height map of the DCP, which shows the maximum wall height for the subject site (in sub-zone 3) to be 12 m. The maximum wall height is the greatest vertical distance from the existing ground level to the topmost part of the external wall of the building. The existing and proposed buildings are similar in height. To the topmost part of the building, the height is close to 30 m. Most of the building contains eight storeys (ground level, and levels 1 to 7), plus a basement and roof-top level. Clause 3.4.2(vii) states that where an existing building already exceeds the maximum height, council will consider alterations and additions to the building if they do not increase the overall height.
On the northern elevation the height of the existing building steps down to partly three and partly four storeys, immediately adjoining the two-storey building at 15 South Steyne. In the proposed development, the north-eastern corner will become fully four storeys. The hatching on the plan exhibit V does not fully show the addition at the north-east corner nor the extensive changes to the whole of the front façade. However, at the hearing, the council raised no objection to the height or bulk of the proposed building.
As regards floor space ratio (FSR), cl 3.3.2 of the DCP specifies a maximum of 1.5:1. The FSRs of the proposed development and of the existing building are similar (par 17 above) and are substantially in excess of 1.5:1.
Tourism policy
In its register of policies, the council has a Tourism Policy, the aims of which include:
1.To revitalise the tourism industry in Manly.
2.To facilitate a diverse range of quality accommodation. …
4.To develop tourism as an “industry” for the purpose of gaining employment, economic, cultural, social and recreational benefits to the community whilst protecting the lifestyle of the residents and the natural environment. …
8.To develop a “theme” to sell Manly as a national and international tourist destination i.e. “Manly…More than just a beach!”
Draft LEP prohibiting the proposed use
On 12 August 2002 the council passed a resolution to prepare and put on exhibition a draft LEP (amendment no. 57) that would amend LEP 1988 so as to prohibit the buildings erected at the Radisson Hotel site and at the Parkroyal Hotel site being used for the purpose of a residential flat building. We will first set out the information in the report that recommended this resolution. It is reasonable to assume that the contents of this report led the council to pass the resolution, and we later comment on the reliability of the information given to the council, and consider the weight to be given to the draft plan. The terms of the draft plan (pars 65-67 below).
Report for the meeting of 12 August 2002
The report for the meeting of 12 August 2002 reads:
[1] Introduction
Council previously considered a report from Service Delivery & Business 17 June 2002 on the proposed conversion of the Manly Pacific Parkroyal and Radisson Kestrel Hotels to residential uses and resolved to commission a report on the economic impact on the potential loss of the two hotels from the local and regional economy. The economic impact report prepared by MacroPlan Australia is discussed below.
A meeting took place with the Minister for Tourism, the Hon. Sandra Nori, MP, and the Minister for Urban Affairs & Planning, the Hon. Andrew Refshauge, MP, on Monday 15 July 2002. The outcome of this meeting is also considered below.[2] Background
The Manly Pacific Parkroyal and Radisson Kestrel Hotels are zoned Residential under Manly Local Environmental Plan 1988, and are also within the Tourist Area in the LEP. The Tourist Area overlies the Residential zone in the area immediately adjoining the Town Centre, (which is zoned Business), and the Residential zone along and parallel with the Ocean Beach.
The present zoning and tourist area provisions carries forward the Residential D (Tourist) zone from the Manly Planning Scheme, 1968 which permitted residential and tourist uses, with consent of Council, but excluded commercial premises, industrial and warehousing type activities in the zone. Residential and tourist uses were identified in this zone as compatible activities.[3] The granting of consent to both the Manly Pacific Parkroyal and the Radisson Kestrel in 1980 and 1985 respectively is indicative of Council’s attitude in seeking to encourage international standard hotel accommodation on sites highly suitable for that purpose, and which might otherwise be developed for residential use.
[4] In relation to the Manly Pacific Parkroyal:-
· the current building has a building height (8 storeys) and a floor space ratio (3.68:1) substantially greater than surrounding development at the time (and even now). The building it replaced was 3 storeys;
· the site had always been developed as a hotel. In consenting to an earlier development application (in 1977), where the configuration of the proposed hotel rooms made their separate use as permanent. accommodation possible, Council imposed a condition, agreed by the applicants, requiring a restrictive covenant on the title to:-– restrict occupation to “temporary” accommodation
– disallow strata subdivision.
· this was not carried through in the existing consent in 1980 to an amended proposal, because the room configuration changed to more closely resemble traditional hotel accommodation. Council’s solicitors at the time suggested the proposed covenant was therefore not necessary. However, the concern by Council to ensure the continuance of hotel accommodation on the site is clear from these considerations.
[5] In relation to the [Radisson] ‘Kestrel’:-
· The floor space ratio allowed under the then site-specific Development Control Plan was considerably higher (2:1 with a possible 3:1) for holiday accommodation than was permitted for residential (1:3:1 with a possible 2:1);
· the 3:1 floor space ratio was possible where “an application requires special consideration. This consideration was accepted in this case with a 3:1 FSR permitted;
· carparking requirements were reduced from standard residential standards to recognise the lesser requirement of holiday accommodation;
· an innovative arrangement of differing sized units, ranging from ‘motel’ type rooms, to studio type rooms to suites was accepted given that the actual market demand for this higher quality accommo-dation was not accurately known at the time.
To ensure the objectives of Council, in allowing these more favourable development standards were maintained, the following condition was placed on the consent:
“(8) The development complying with the definition of holiday accommodation as defined in the development control plan which applies to this site.”
The Tourist Area in Manly Local Environmental Plan 1988 has further articulated Council’s policies with regard to both residential and tourism uses. The Manly LEP 1988 includes the following policies and strategies in relation to tourism -
(i)to encourage and concentrate tourist development in the Tourist Area;
(ii)to encourage tourism to co-exist with local residents to their mutual advantage; and
(iii)to develop tourism as an industry for the purpose of gaining employment, economic, cultural, social and recreational benefits in the community.
[6] Social and Economic Issues
The economic analysis prepared by MacroPlan for Council concludes that with the loss of 100 hotel rooms, the economic impact would be approximately $28 million per annum in direct expenditure lost from the local economy. Based on the loss of 100 beds:-
The direct costs would be:-· Loss of conference facilities and quality restaurants
· Loss of high quality short term accommodation for major events, festivals and key attractions
The indirect costs would be negative impact on local suppliers of goods and services including the following:-
· Tour providers
· Transport providers
· Restaurants and take-away shops
· Supermarkets, pubs, bars, bottles shops and clubs
· Entertainment, museums, art galleries
· Gambling establishments
· Conference related services
· Retail shopping including gifts/souvenirs/clothing.
The multiplier effect to both Manly and the Sydney Region includes:
· the loss of international marketing of Manly through the International booking system,
· the loss of business travellers and associated expenditure,
· loss of business networks,
· loss of international and national tourists to the region,
· loss of the significant high profile/high value market segment.
· reduction in Ferry and Bus patronage from tourists and day-trippers.
· non-local providers of goods and services to the Hotels and their patrons would also experience a reduction in demand.
For every additional bed lost from short term tourist accommodation, the economic impact would be approximately $280,000 of direct expenditure lost to the local economy each year.
Both Manly Pacific Parkroyal and Radisson Kestrel have four star ratings, are members of international hotel chains, and are highly regarded hotel destinations.
There is limited supply of high quality short-term tourist accommoda-tion in the Manly area. Including both the Manly Pacific Parkroyal and Radisson Kestrel. There are only 491 guestrooms across all star ratings as at December 2001.[7] Meeting with the Ministers of Tourism & Urban Affairs & Planning
At Council’s request a meeting took place with Ministers Nori and Refshauge on 15 July 2002. Both Ministers expressed their interest and concern in the issue, and offered the assistance of their respective departmental officers to assist Council staff with information and planning advice.
Discussions have been held with officers of Planning NSW regarding planning measures that Council could implement to address this issue. It is also proposed to have further discussions with the Depart-ment of Tourism regarding the Tourism Masterplan 2020 and the promotion of tourism in Manly Local Government area.[8] Conclusion
Following discussions with officers of Planning NSW it is considered that the appropriate measures to address the current situation include amending Manly Local Environmental Plan 1988 in respect of the two hotel sites to ensure that the provision of short term holiday accommodation is the principal land use on each site. It is considered that the most appropriate way to achieve this would be to strengthen the provisions of Manly LEP 1988 by adding specific provisions in respect of the two hotel sites to ensure that their present use is retained.
[9] If these two sites are lost through conversion to residential units there are no other sites available in Manly as well situated that could be economically assembled for a hotel development without again requiring substantial planning concessions in FSR and building height.
[10] It is considered essential for the local economy of Manly and the regional economy of Sydney for these two hotels to remain for short-term tourist accommodation. The economic impact on Manly alone with the loss of 100 beds would equate to $28 million out of the local economy annually and an additional $280,000 annually for every additional bed. There would also be the loss of over 330 local jobs. The hotels as they exist are viable businesses that out perform most, if not all, Sydney hotels with occupancy rates being 14.2% higher than the average occupancy for Sydney.
Council and the Minister are required to have regard to the objectives of the Environmental Planning & Assessment Act, 1979. Specific reference is made here to “the promotion and co-ordination of the orderly and economic use and development of land.”
A copy of the draft Manly Local Environmental Plan, 1988 (Amendment No. 57 ) is attached for the information of Councillors. In its preparation, Council has given consideration to the Best Practice Guideline for LEPs and Council Land dated January 1957.[11] RECOMMENDATION:
That Council resolve, pursuant to Section 54 of the Environmental Planning and Assessment Act, 1979, to prepare an amendment to the Manly Local Environmental Plan, 1988, in respect of the Manly Pacific Parkroyal and the Radisson Kestrel sites for the purpose of ensuring that these sites remain available for the provision of short term tourist/holiday accommodation, and Council also resolve to exhibit the draft Local Environmental Plan for public exhibition, pursuant to Section 66 of the Environmental Planning and Assessment Act, 1979.
The above recommendation was adopted by the council on 12 August 2002.
Draft plan exhibited and sent to the Minister; Class 4 proceedings
Under delegated authority, a council officer certified under s 65(1) of the Environmental Planning and Assessment Act 1979 that the draft plan may be publicly exhibited. There was no requirement for an environmental study.
Tourism NSW and the Australian Tourist Commission made submissions supporting the amendment. The applicant made a submission against it.
The council endorsed the making of amendment 57 and submitted the draft LEP to the Minister.
On 11 October 2002 the applicant commenced Class 4 proceedings seeking a declaration that the draft LEP is null and void and claiming an order restraining the Minister from making the plan. Those proceedings have been adjourned on the basis that the Minister has given an undertaking to the applicant not to make the plan unless the Minister first gives two days’ notice.
Terms of draft amendment no. 57
The draft amendment is expressed to apply to the land edged black on the map marked Local Environmental Plan 1988 (Amendment No. 57). This plan shows only two parcels of land as being affected. The first is the site of the Manly Pacific Parkroyal Hotel situated on the corner of North Steyne and Raglan Street. The second parcel of land to which the draft plan would apply is the site of both the north and south towers of the Radisson.
The draft LEP proposes to add two provisions to the current LEP. First, the following objective will be added to the objectives of the Residential zone in the table to cl 10 of the LEP:
(i)in addition, in respect of the land to which Manly Local Environmental Plan, 1988 (Amendment No. 57) applies, to encourage the provision and retention of tourist accommodation that enhances the role of Manly as an international tourist destination.
Secondly, the draft LEP will insert the following:
Clause 35
Notwithstanding any other provision of this plan, consent shall not be granted for the use of any building situated, as at the 12th August 2002, on the land to which the provisions of Manly Local Environment Plan, 1988 (Amendment No. 57) applies, for the purpose of a Residential Flat Building.
Weight to be given to the draft LEP
The validity of the draft LEP is in question, and it seems to us that the making of amendment no. 57 is not certain. We are inclined to give no weight to the draft LEP.
The report of 12 August 2002 relied principally on the findings of a Hotel Loss Impact Assessment dated July 2002 by MacroPlan Australia. This report overstates the likely economic impacts of the proposal by not sufficiently taking account of economic factors such as substitution. (However, we have also found that the report of Mr Dransfield underestimates the impact.)
Where we have no reason to doubt the information in the planning report to the council meeting of 12 August 2002, we have taken it into account. Apart from a consideration of the draft LEP itself, the material in the report is relevant when considering the merits generally of the application. Thus for example, having regard to our findings concerning the planning history of the subject site, we agree with the facts set out in the report at par 59 [5] above. The council was clearly seeking to encourage the provision of quality tourist accommodation in 1985, although in the documents relating to the 1985 consent there is no reference to an “international standard hotel” (par 59 [3]). Apart from the subject site and the Parkroyal site, there are no other sites available in Manly that could be economically assembled for a hotel development without again requiring substantial concessions in FSR and building height (par 59 [9]).
Economic and social impacts
In resolving to prepare a draft LEP the council relied on economic predictions of Mr Haratsis of MacroPlan Australia, that were summarised in the report to the council meeting of 12 August 2002 (see particularly par 59 [6], [10] above). In his subsequent report dated September 2002, Mr Haratsis estimated the economic value per 100 rooms to be approximately $37 million, and the direct and indirect employment affected would be 360 jobs. This evidence was challenged by the applicant through the cross-examination of Mr N Hemmings QC and through the evidence of Mr Dransfield, considered below.
We were impressed with the evidence of Ms K Ware. From her evidence, which we accept, we note the following. On completion of the buildings, a hotel commenced to operate on the subject site on 6 November 1988 known as the “Kestrel Hotel on Manly Beach”. And about a year later it received accreditation with the Radisson chain, and the word “Radisson” was added to the name of the hotel.
Ms Ware and Mr Dransfield both gave evidence concerning the four-star rating of the hotel. Under the AAA Tourism National Classification Scheme, the hotel narrowly achieved a four-star rating in 2001 on the basis that funds were allocated to be spent through the 2002/2003 year. The officer strongly recommended that in order to maintain a four-star rating, a full refurbishment of all rooms and guest areas was necessary.
The hotel is also not up to the standard required to retain the “Radisson” brand name, and unless renovations are carried out the hotel will lose an important international connection.
According to the evidence of Ms Ware, a capital expenditure of $3.425 million would be required for both the subject building and for the Ashburner Street building to maintain its four-star rating. This expenditure comprises: $30,000 on average for each of the 83 rooms, a major item being the bathroom renovation; $500,000 for fire and safety; and $435,000 for other capital works, including hotwater supply re-piping. From our inspection of the hotel, we agree that extensive refurbishment would be necessary in order for the hotel to maintain its four-star rating. (The $3.425 million for the refurbishment or renovation of the two buildings of the hotel for the continued use of the building as a quality hotel is to be contrasted with the expenditure in excess of $16 million for the proposed redevelopment of only the subject building at 8–13 South Steyne for the purpose of converting the building into 17 luxury apartments.)
Ms Ware said that the owner of the hotel had always given her impression that it would be prepared to spend the $3.425 million to continue the use as a hotel.
As mentioned earlier, the Ashburner Street building of the hotel does not have facilities or amenity as good as the subject building. Ms Ware was of the opinion that if the subject building ceased to be used as a hotel, the Ashburner Street building would lose its Radisson brand name. Among other things, a four-star hotel must have a 24-hour room service, and it is not feasible to have staff employed to provide the service for only 39 rooms. And the Ashburner Street building does not have a restaurant. If the subject building ceased to be used as a hotel, Ms Ware said that the Ashburner Street building may function as a motel, although she thought it was more likely that it would be changed to serviced apartments. Alternatively, an application might be made to strata subdivide the building (for residential flats). By itself, the Ashburner Street building would not be a four-star hotel.
Mr R. Drummond, the development manager for the applicant company in respect of the subject property, also gave evidence. He said that any expenditure has to be approved by him. Since the company purchased the hotel in December 2000, the applicant has spent $358,000 on the property. He said that if the subject application was approved, the Ashburner Street building would be sold. He was of the opinion that financially speaking the highest and best use of the subject building was for the proposed residential apartments, the next best use after that would be for serviced apartments with the present configuration of the subject building, and then the next best use would be as a hotel. Mr Drummond agreed that another alternative might be to sell both buildings so that a new owner could continue the hotel use.
Although approval is not required to close the hotel, we think there is a good prospect that the subject building and the Ashburner Street building would be renovated for their continued use as a single hotel entity if the present application is refused. While we have insufficient financial information to accept the proposition that the subject building is more likely to be used for the purpose of serviced apartments rather than as a hotel, we note that if the subject building was used as serviced apartments, this would be consistent with the consent for holiday accommodation. And it would be consistent with the important location of the subject building in the tourist area designated by LEP 1998, and it would give recognition to the fact that the building was approved with a bonus floor-space-ratio incentive because of the its intended use for holiday accommodation.
The economic-impact evidence for the applicant was principally given by Mr Dransfield, and Mr Snashall also gave some evidence on the issue as well as on the social impacts. Mr Dransfield’s evidence is mainly contained in a 32-page report dated 16 September 2002 with voluminous annexures. The council did not have this report before it when resolving to make the draft LEP.
Mr Dransfield’s report contains the following executive summary:
This report focuses on an assessment of the economic impact of converting 44 of the 83 rooms in the Radisson Kestrel Hotel on Manly Beach into 17 luxury residential apartments. This is from the perspective of whether it reduces the attraction of Manly as a destination for domestic and international tourists and secondly whether there will be adverse economic impacts in the locality.
·The majority of the 8 million tourists to Manly each year are day visitors. Less than 1.4% of visitors stay overnight in Manly’s hotels.
- The majority of visitation is domestic rather than international. International visitors to Sydney tend to stay in Sydney City and visit six or seven places including a strong desire to travel on the harbour and go to a beach.
- The majority of visitors to Sydney stay in rented houses and flats rather than hotels and motels.
·Domestic day visitors spend almost as much, at $80 per day, as international visitors do, at $82 per day, if you exclude the packaged component and international airfare from the international tourist expenditure.
·The 44 hotel rooms in the Radisson Manly are a small part of the commercial accommodation market in Manly representing about 5% and there is a significant range of alternative restaurants and conference facilities available.
·There is a substantial substitution effect expected by the replacement of 44 hotel rooms with 45 luxury bedrooms and the transfer of existing visitors to other facilities in Manly which have capacity.
- There has been a decline in demand for hotel rooms in Manly.
- There has been a decline in occupancy and the economic performance of the Radisson Manly.
- There have been increases in supply.
·Manly has a long history of accommodation room supply being introduced, withdrawn and modified. This process is likely to continue in the future.
·Based on Bureau of Tourism Research estimates, day trippers to Manly could generate $640m in direct expenditure, much of which would be in the locality. As against this, the maximum gross loss of expenditure from guests staying in the 44 rooms at the Radisson Manly is $1.36m, all of which is expected to have substitution from alternative facilities.
The proposed development will not therefore have an adverse economic impact on tourism in Manly, Sydney or Australia as it will not substantially reduce the attraction of Manly Beach as a destination for domestic and international tourists.
Manly’s core attraction is the beach and method of access by ferry over the Harbour.·Key support infrastructure is the retail and restaurant precinct rather than accommodation.
·44 rooms at the Radisson Manly are not a key attraction to the 8m visitors p.a.
The proposed development will not have unacceptable adverse economic impacts in the locality. (D2)
[Our references to parts of Mr Dransfield’s report, exhibit A, are given by a “D” followed by the page number of the report. For example, the executive summary, which is at page 2 of his report, is D2.]
In our opinion Mr Dransfield underrates some of the economic impacts. In his introductory paragraph of the executive summary, he says he focuses on the conversion of 44 of the 83 hotel rooms of the Radisson. But there will also be the downgrading of the status of the rooms that remain (par 77 above). In the light of other economic data given by Mr Dransfield, we expect that the international guests at the Radisson would spend much more than the average of $82 per day; and we do not accept that the maximum gross loss of guests staying in the 44 hotels units of the subject building is only $1.36 m (2nd and 6th bullet points). And some other statements in the executive summary have to be qualified.
While international tourism has decreased following the September 2001 terrorist attack, the Tourism Forecasting Council forecasts domestic visitor nights in Australia to grow by an average of 1.8% each year in the period 2002 to 2010 (D6). At the Radisson Hotel Manly, 32.5% of guests were from overseas and 67.5% came from within Australia for the financial year 2001–2 (D8, D21).
Mr Dransfield says: “Less than 1.4% of visitors stay overnight in Manly’s hotels” (par 81 1st bullet point). The 1.4% figure is taken from the table at D10. The number of room nights occupied in Manly represents 1.4% of total room nights in the Sydney Tourism Region in 2001. How big is that region? The Sydney Tourism Region analysed by the Australian Bureau of Statistics (ABS) comprises 27 precincts. These include separate precincts for Sydney City and Manly. The Sydney Tourism Region is bounded by the East Coast, Hunter, Blue Mountains, Capital Country and Illawarra regions of New South Wales (D10). In 2001 there were a total of 7,810,600 room nights spent in the Sydney Tourism Region, and 110,321 visitor nights or 1.4% of the total spent in the Manly precinct.
While what happens in the broad Sydney Tourism Region may be taken into account, of prime importance is the question of the economic and social impact of the proposed development “in the locality” (s 79C(1)(b) of Act), that is, in Manly. To say that the loss of 44 hotel rooms at the Radisson Manly represents just a very small percentage reduction in the number of room nights occupied in the Sydney Tourism Region does not answer the question of the impact of the proposed development in the Manly locality.
Looking then at the Manly accommodation market, it is more important to compare the Radisson with Manly’s larger hotel and motels, rather than with smaller establishments. The ABS data only includes hotels, motels, guesthouses and serviced apartments with 15 or more rooms. In the year 2001 there were in Manly six such establishments, including the Radisson. The average performance of these establishments is given in the following table (D11):
A major recent increase in room stock in the area has been the opening of the 120-room Travelodge in Brookvale. This supply was only included for one quarter of 2001 when its “soft opening” occurred (D11).
The next table gives key performance indicators and a summary of profit and loss of the Manly Radisson itself (D19):
From these two tables, it can be seen that the Radisson has substantially higher room rates, higher occupancy rates and a substantially higher yield than the average of all the major establishments at Manly. Although average occupancy rates have declined in 2001 in all hotels, there has been a smaller decline at the Radisson. The superior performance of the Radisson is all the more remarkable notwithstanding the fact that the owner of the Radisson has deferred or not carried out the needed major refurbishment of the hotel. The owner was intending from before April 2001 (when the first discussion with a council officer occurred) to redevelop the subject site for large luxury apartments.
It is not disputed that on a yearly basis there were 23,399 room nights occupied in the Radisson. For the six major establishment (including the Radisson at Manly) the room nights occupied totalled 110,321. The Radisson thus accounted for 21% of the total room nights occupied.
Mr Dransfield says that the 44 hotel rooms in the Radisson are a small part of the commercial accommodation market in Manly representing about 5% (par 81 3rd bullet point). However, this 5% figure was arrived at by including 425 rooms of 19 self-catering and bed & breakfast establishments in the total commercial accommodation available in Manly (excluding hostels and private rentals). It seems to us that a comparison of the Radisson with self-catering establishments is not altogether appropriate. The major hotel establishments, and in particular the Radisson and the Parkroyal (having four-star ratings and having large conference facilities), are in a different market and cater for tourists whose needs or expectations are different from tourists seeking self-catering accommodation.. There is clearly a greater difference between the 13 hostels (providing accommodation, it seems, mainly for backpackers) and the major hotels, and these hostels were rightly not included in the comparison.
At least from a social point of view, the loss of one of the only two 4-star hotels at Manly is likely to be more significant to the Manly community and to the high-end tourist accommodation market in Manly than if one of the many backpacker establishments closed down. It seems desirable for a healthy and vital tourism industry at Manly that there should be a variety of choice in accommodation to cater for the wide spectrum of socio-economic needs and expectations of all tourists who might be attracted to stay overnight at Manly, whether it be in backpacker accommodation, or in 1.5-star or 4-star hotels, or in self-care apartments or other forms of holiday and short-term accommodation. As mentioned above (par 57), one of the aims of Manly Council’s Tourism Policy is: “To facilitate a diverse range of quality accommodation.”
Of the estimated eight million tourists who visit Manly each year, day visitors significantly outnumber overnight visitors. But this fact should not be used to belittle the socio-economic importance of Manly’s tourist accommodation, particularly that of major hotels. As Ms Cooper stated (exhibit 8 pp 7, 10) hotels are an integral part of the tourism industry and (quoting MacroPlan) she lists various benefits to the community. Also, hotel guests add to the evening cosmopolitan atmosphere of Manly. Some of the negative impacts of tourism—such as poor traffic conditions, lack of parking, litter—are generated particularly by day trippers.
On behalf of the applicant it was said that the Manly Pacific Parkroyal had excess capacity to supply for the loss of the 44 rooms of the Radisson. The Parkroyal has 164 rooms. The Parkroyal building is about 20 years old. However, about 54 rooms have recently been constructed and have not been put on the market.
Certainly, the supply of hotel rooms elsewhere is a matter to be taken into account. However, there have been relatively high occupancy rates by the major establishments at Manly, and during the peak summer holiday season the Radisson operates at the practical maximum occupancy rate of 90%. The figure for the Parkroyal was not available. The cyclic nature of the tourist industry also has to be taken into account. International tourism could continue to grow, if not next year, then the year after. The Tourism Forecasting Council has forecast strong growth of 5.35% and 5.1% in 2003 and 2004 respectively (D7). The continued existence of the Radisson would offer tourists a better choice of accommodation. There are more suites with kitchenettes at the Radisson than at the Parkroyal.
There was no first-hand evidence before the Court as to the intentions of the owner of the Parkroyal. A newspaper article in the Manly Daily dated 1 August 2002 (attached to Mr Fleming’s statement of evidence) quotes Mr Wong of the Parkroyal as saying that it is intended to convert 31 units into prime residential apartments. And the Parkroyal will retain at least 145 of its hotel rooms, and the hotel will be transformed into a five-star boutique hotel with associated facilities, the report says.
If the council were to approve the conversion of some of the rooms of the Parkroyal to prime residential accommodation, the size of the remaining hotel portion would enable it to feasibly operate as a four-star hotel. (We express no view on the merits of whether such a conversion should be approved, and at the time of the hearing no development application had been made to the council.)
However, if the 44 rooms of the Radisson were to close, the Ashburner Street building with the remaining 39 rooms would lose its international Radisson brand name. Apart from that, the more limited facilities of the remaining part of the hotel would result in a downgraded star rating. The loss would be, not 44 rooms, but 83 rooms having a four-star rating and also there would be a loss of conference facilities for up to 200 persons. The importance of the subject building as a hotel is also indicated from the hotel management’s figures. For the financial year 2001–2, the average room rate for the both towers of the hotel was $188.64 with a yield of $145.70 (D19). However, looking at each tower separately, the subject building (which is proposed to be converted to large apartments) far outperformed the Ashburner Street building (D20):
| Radisson Hotel | Average room rate | Occupancy | Yield |
| Subject building | $224.68 | 80.64% | $181.19 |
| Ashburner St building | $185.63 | 74.15% | $137.64 |
Mr Dransfield said that around $1,367,625 or 21% of the Radisson’s total revenue of $6,496,964 is spent in Manly for supplies and for the wages of employees of the Radisson living in Manly (D22). There are 71 part-time and full-time employees, of whom approx. 50% reside in the Manly Council area. If the subject building is developed, there would be an assumed 70% reduction in employees (D23).
Mr Dransfield does not mention at D22 that the hotel guests would also have expenditure in Manly in addition to what they contributed to the Radisson’s revenue. Such expenditure would include expenditure for food and beverages in restaurants in Manly, transport, shopping and tourism activities.
Analysis by the Bureau of Tourism Research shows that 9.8 jobs are created per million dollars of tourist expenditure (including expenditure for non-prepaid accommodation)—see Mr Haratsis’s September report at p 22. Mr Dransfield agreed with this.
At D27 Mr Dransfield adopted a different methodology to D22 referred to above. At D27 Mr Dransfield said that the gross impact from visitor nights lost as a result of the closure of the northern tower of the hotel is estimated to be a maximum of 55% of the current guests at the Radisson. He then calculated the gross loss to be only $1.36 million as follows:
The total expenditure in the country per visitor night of $132.10 is merely an average (see Travel by Australians 2001 by BTR p27). It in no way reflects the likely expenditure of a guest at the Radisson. The non-prepaid accommodation per night at the northern tower (where the yield is $181.19) alone is substantially in excess of the $132.10. In addition, there is the expenditure in Manly outside the Radisson. The BTR figure relates to all overnight visitors, including those who might be spending much less than the guests of the Radisson, such as visitors who are staying with friends and relatives. As submitted by Mr McClintock SC, the figure used in the calculation should be much higher than $132.10, and probably higher than the business average of $219.50 (which includes on average only $55 for accommodation).
We agree that the substitution effects referred to by Mr Dransfield would offset some of the gross economic loss: there would be guest redistribution to other accommodation, some of the alternative accommodation being in Manly; there would be some visitors who would stay with owners of the proposed apartments, and a small number may be rented out on a short-term basis; there would be the expenditure of the permanent residents of the apartments; and during the course of the construction of the apartments, there would be short-term local employment and spending of workmen. Mr Dransfield estimated that the substitution effect would cater for a minimum of 50%–70% of any gross loss and more likely over time 100%. We are not satisfied on the evidence that the substitution effect would be 100% over a reasonable period of time.
We do not accept the quantum of lost expenditure predicted by MacroPlan, whose figures related to the closure of a total of 100 rooms at the Radisson and the Parkroyal. However, it seems likely that there would be some overall adverse social and economic impacts that are sufficient on a merits assessment to refuse the application. On balance, we have not been persuaded by the applicant’s evidence that the social and economic advantages would justify the proposed conversion of the subject building that was built with bonus incentives of floor space and height, in order to provide holiday accommodation in the designated tourist area of Manly.
Orders
For the above reasons, the orders of the Court are:
1. The appeal is dismissed.
2. Development consent is refused for alterations and additions to the building at 8-13 South Steyne, Manly for the purpose of using the building as a residential flat building.
3. The exhibits may be returned.
| _____________ A J Nott Commissioner of the Court | _____________ J Murrell Commissioner of the Court |
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