UPDATED: Planning red tape frustrates Manuka Hotel developer

Stage two of the Manuka Hotel project is being strangled in red tape and might never make it through the planning process, the developer has warned.

The fenced off Capitol Theatre building bounded by Franklin Sreet, Furneaux Street and Manuka Circle/Canberra Avenue, has lay idle for years, while the first stage is proceeding to completion.

The proposal for a six-storey building with 120 rooms, ballroom, dining and bar facilities, multiplex with five cinemas, and groundfloor shops and restaurant was approved conditionally in July 2021 but it has since been tied up in disputes.

Seven years since first proposing what was meant to be an iconic development in 2016, developer Sotiria Liangis said on Wednesday that she was fed up with all the delays and red tape and that the second stage of the project might never proceed.

She said the process had been exhausting and she might choose to update the theatre building and lease it out instead.

The project had been dogged by bureaucratic delays marked by inconsistent and contradictory advice, lack of continuity in staff dealing with the project, and agencies not talking to each other, Mrs Liangis said.

Although a dispute about an approval requirement for an entrance on Manuka Circle had been resolved, there had been one issue after another, the latest being the amount of lease variation charge to be paid.

The six-storey, 58-room first stage on the Flinders Street end of the block remains fenced off although a paved footpath, access road and landscaping has been completed.

Mrs Liangis could not say when the European-styled building would open, indicating the stage two impasse was holding up its progress.

A Planning and Land Authority spokesperson said the 2021 stage 2 conditional approval went to the ACT Civil and Administrative Tribunal (ACAT) where the matter was mediated, with ACAT varying some of the conditions on 11 February 2022.

Under the terms of the mediated conditions the Crown lease must be varied, including the payment of any lease variation charge.

“The Authority is currently engaging with the Lessee to finalise the determination of the lease variation charge,” the spokesperson said.

The Lessee had three years to commence the development from the date when the approval took effect, and three years to complete the development once commenced, the spokesperson said.

The property industry has longed call for reductions in lease variation charges, which are assessed on the improved value of the land due to the change of use.

Inner South Canberra Business Association chair John-Paul Romano urged the ACT Government to do anything it could to expedite the approvals process for stage two of the project, which would drive the rejuvenation of the Manuka shopping precinct.

“We want to see that development happen,” Mr Romano said.

“We’re talking hundreds of hotel rooms, with new customers every day who need to have coffees, who need to eat breakfast, lunch and dinner and will shop most likely in local shops.”

He said the old theatre site was not a good look for the precinct.

“It’s certainly a detractor to have an abandoned building with no active frontages there,” Mr Romano said.

But the new stage one hotel building was a great development, he said.

“They’ve just got to get on with opening it and activating it because that’s what will bring people to the area, new money, economic growth and development not just to Manuka but all of Canberra,” Mr Romano said.

The project has not been without controversy. In 2019, a large London plane tree that had sprung up between buildings held up stage one until the Liangis family went to ACAT to challenge a decision by the conservator of flora and fauna, Ian Walker, to maintain its protected status.

It was agreed the tree could go if the family supported local Landcare groups and included a ‘green’ wall in the hotel project.

The Capitol Theatre cinemas closed their doors at the beginning of the COVID-19 pandemic in 2020.