A vacant block in Barton, which is a known habitat for threatened flora and fauna, has been put up for sale by the federal government.
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The Department of Finance is selling the 11,560-square-metre site at the corner of Sydney Avenue and National Circuit.
The land could be redeveloped to host up to 425 apartments, or a mix of housing, offices, a hotel and cafes, according to preliminary concept plans.
The prime real estate has gone undeveloped because it is home to a population of critically endangered golden sun moths. The land also includes natural temperate grassland, which is recognised as a threatened ecological community.
The site's environmental significance has been debated since the department applied to the National Capital Authority in 2017 to rezone the land to allow for residential and commercial development.
In a report prepared on behalf of the department, Purdon Planning said clearing the site would result in the loss of moth habitat and grassland.
It said Commonwealth-owned land in Hall could be used to "offset" the loss. The proposed site-clearing works were referred to the Department of Environment and Energy for approval in August 2017.
The proposal sparked a backlash from local environmental and residents' groups.
In a submission to consultation on the proposal, the Friends of Grasslands group said the project would "totally destroy" the site. It questioned the department's capacity to manage the habitats in Hall, predicting there would be a net loss in golden sun moth numbers and grassland as a result of the sale. The ACT government's conservator of flora and fauna believed it was "unlikely" that federal environmental approval would be granted for the "destruction of the significant site".
The planning changes were approved in December 2017. But the environmental approvals were only granted on February 21 this year, subject to a range of conditions.
The department will be required to compensate for the loss of moth habitat and grassland at Barton by maintaining habitats in Hall. It will also have to provide $100,000 towards implementing a moth management plan.
As part of the initial application, the department commissioned Cox Architecture to model options for a redevelopment of the Barton site.
One option showed the site with up to 425 units. Another modelled 199 units, along with a five-storey hotel and offices.
Deloitte Australia is managing the sale on behalf of the department. It is marketing the site as an opportunity to develop a "significant office, hotel or residential or mixed-use project of considerable scale".
Deloitte's real estate director, Stephen Hynes, said the next finance minister would have to approve the sale after the federal election. He stressed Finance had made it clear it did not need the land, meaning it was unlikely a deal would be vetoed.
The federal government's 2019-20 budget outlined plans to sell more Commonwealth land in the ACT in the next two financial years. The budget papers did not specify the properties earmarked for sale.
Mr Hynes said the department had put a reserve price on the sale, but would not disclose it.
It could expect a significant windfall based on recent high-profile land sales in the area. The ACT government last month sold a 12,080-square-metre portion of Griffith's former Stuart Flats for $40 million.
