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Woolworths has been accused of exploiting an affordable housing development scheme and creating a separate entrance dubbed a 'poor door'.
Under the 2022 National Housing Accord, the New South Wales and Victorian state governments introduced a fast-track scheme for housing developments.
The scheme was introduced to help state, territory and federal governments fulfil their pledge of building 40,000 social and affordable rental homes by 2029.
Developers can apply for approval directly with a state government if they allocate 10 per cent of the new build to affordable rental housing.
Woolworths has been accused of using a loophole to seek approval for at least 10 new developments across Australia - some of which had been previously blocked by local councils and even a state planning tribunal.
As part of the retail giant's push into the residential property market, it has proposed mixed-use developments combining a supermarket and apartments.
The development in Melbourne's Glen Iris was initially proposed as a five-storey apartment complex with 58 units as well as a new supermarket.
In a revised proposal, Woolworths added a separate annex building to the development which includes six affordable rental units with a separate entrance.
Australian Housing and Urban Research Institute Managing Director Michael Fotheringham has compared Woolworths' plan to developments in London and New York that received intense backlash for having a 'poor door'.
'It will have very clear visual signals to everyone in the community that this is lesser, that this is poorer housing, and therefore the people living in it are somehow not as worthy as the people living in the main building,' he told the ABC.
The Victorian Civil and Administrative Tribunal (VCAT) and local councils have blocked two Woolworths projects for three years running.
The projects were rejected over concerns about traffic, that the development would overshadow existing buildings and was not in keeping with the suburb's character.
However, Woolworths was able to circumvent the decision for one of the projects after submitting minor changes to the development's original plans.
Dr Fotheringham accused Woolworths of taking advantage of the housing scheme.
'Using that to get fast-track approval seems exploitative,' he said.
'It's clearly not the intent of these schemes.'
In 2020, Woolworths' application for the Glen Iris complex was rejected by Stonnington Council.
Two years later, VCAT upheld the decision after a 12-day hearing which found the 'overall scale, form and massing of the built form' was 'unacceptable'.
Woolworths submitted a revised planning application to Victoria's Development Facilitation Program last June.
Victorian Planning Minister Sonya Kilkenny approved the project in October.
If the minister approves a development it cannot be appealed through VCAT.
Woolworths' revised proposal showed the supermarket conglomerate addressed some of the concerns outlined by VCAT including including lowering the building height and cutting units from 80 to 58.
However, the rendered drawings showed the complex's main building towering over the separate three-storey affordable housing annex.
Planning permits stipulate that a community housing charity must own or manage the three-storey annex once it has been built.
In the plans, only three car spaces are allocated to the residents living in the six affordable units - that's one space for every two units.
Meanwhile, 120 parking spaces will be made available for the 58 units in the main building - about two spots per unit.
Developer Time and Place, which is Woolworths' partner in the projects, defended separating the main building from the affordable housing.
A spokesperson explained the affordable housing component was designed in 'consultation with community housing providers' in a statement to the ABC.
'We developed the design of the affordable housing component of this development in consultation with community housing providers,' it read.
'The feedback from these providers was that offering the affordable housing in the main building would increase their overheads - they would have to pay higher strata fees, insurance and other overheads.
'By separating these units onto another title, we have been able to keep those costs down for the community housing provider that will eventually operate them.'
Woolworths did not comment on the criticism it has faced with its proposed plans but told Daily Mail its main focus was to provide housing alongside a supermarket.
'We’re always looking to deliver connected customer experiences through stores that are tailored to the needs of each community,' the spokesperson said.
'While our main focus is building for retail, across the country we own inner city sites that provide an opportunity for us to include housing alongside a supermarket.
'These mixed-use developments cater to increased demand for people to be able to shop, work and enjoy themselves all within a close proximity to where they live.
'In line with federal and state government policies, we’ll continue to navigate the inclusion of affordable housing to unlock good urban infill development.'