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Joint Standing Committee on the National Capital and External Territories - 13/03/2013 - Allocation of land to diplomatic missions in the Australian Capital Territory

ACOSTA, Mr Marcel, Executive Director, National Capital Planning Commission

DETTMAN, Mr Shane, Senior Planner, National Capital Planning Commission

SCHULYER, Ms Anne, General Counsel, National Capital Planning Commission

Committee met at 08:05

Evidence was taken via videoconference—

CHAIR ( Senator Pratt ): Good morning. Thank you for joining us—late in the afternoon for you. We would like to thank Mr Marcel Acosta, Executive Director, because we note that you have assisted us in the past with other inquiries, noting our inquiry into the memorials ordinance and your input. It was very useful to our ultimate report, which the committee brought down. Hansard will record the videoconference so that the committee can use the information in its report and, for this reason, it is designated as a public hearing. On opening the meeting, we are interested in knowing about the similarities between the two cities, noting the management of diplomatic missions that both the cities of Canberra and Washington need to undertake and noting, of course, that we are both planned capitals with large diplomatic presences. Mr Acosta, I am very pleased to ask you to make some opening remarks, but I do of course note that you have provided us with a very comprehensive statement and, indeed, a lot of very useful background material.

Mr Acosta : Washington DC, as the seat of the United States government, is host to over 160 foreign missions. A foreign mission, in Washington DC parlance, is considered to be the collection of residential and nonresidential facilities associated with the diplomatic mission of a particular country. Regulation of foreign mission locations, especially chanceries in Washington DC, dates back to the late 1950s and early 1960s. In 1964, the United States Congress passed the Fulbright Act which established the first set of federal regulations pertaining to the locations of foreign missions in the District of Columbia. This early set of regulations placed restrictions on chanceries when proposed to be located in residential areas, as delineated by the local zoning regulations, and subjected these proposals to review by the District of Columbia Board of Zoning Adjustment, or BZA. The BZA is a five-member, quasi-judicial body composed of federal and local representatives. Established by congress in 1938, the BZA is empowered to grant relief from strict application of the DC Zoning Regulations. It also approves certain uses of land, hears appeals of certain types of local government actions and, as we will discuss later, presides over certain applications to locate a chancery in the District of Columbia.

In 1982, congress passed the Foreign Missions Act which established the current framework under which locations of foreign missions on non-federal land are regulated. I should also note that most of the chanceries or diplomatic missions are located on private property in the District of Columbia; only a small percentage are located on federal land. With the Foreign Missions Act, congress found that the operation of foreign missions in the United States is a matter of federal jurisdiction and established a policy to facilitate the secure and efficient operations of foreign missions within the United States. In general terms, the Foreign Missions Act defines two areas in which chanceries can locate, commonly referred to as 'matter of right areas' and 'non-matter of right areas', and I will take up the few moments to explain what the differences are between matter of right and non-matter of right.

The Foreign Missions Act also established the Office of Foreign Missions within the US Department of State whose mission it is, in part, to regulate the activities of foreign missions in the United States in a manner that will protect the foreign policy and national security interests of the United States and provide the appropriate privileges, benefits and services on a reciprocal basis to the foreign mission community in the US.

In terms of defining matter of right areas, those refer to areas in the district zoned for commercial, industrial, waterfront and mixed use types of development. Within these specific areas, foreign governments are free to locate chanceries or chancery annexes as these areas are already considered suitable for general office or institutional uses under the local zoning regulations. There is no special review of those chanceries in those types of district. However, prior to establishing a chancery in one of these areas a foreign government need only receive clearance to proceed from the US Department of State Office of Foreign Missions so no land use reviews of that are looked at or required of it, although they do require a special permit from the US Department of State.

Non-matter of right areas refer to those areas zoned for medium to high, or high-density residential uses and any other areas within the District of Columbia determined on the basis of existing uses. In those cases, if a chancery wants to locate in a residential area, for instance, it does have to go through a special land use review process. Foreign governments that aspire to locate a chancery within these areas are first subject to review by the DC Board of Zoning Adjustment in a public hearing. Due to the heightened federal interest associated with these types of proceedings, the Foreign Missions Act prescribes the exact composition of the Board of Zoning Appeals to ensure that two of the five sitting members are federal representatives. The other three are basically local members or local residents appointed by the mayor and the city council.

In making its determinations concerning the location of chanceries, the Board of Zoning Adjustment is bound to specific criteria for review contained in the Foreign Missions Act. Generally, these criteria relate to: the international obligation of the United States to facilitate acquisition of adequate and secure facilities for foreign missions, historic preservation issues, the adequacy of off-street parking and public transportation, the ability to provide adequate security, and other municipal and federal interests. For the convenience of foreign governments the Foreign Missions Act processes and requirements are summarised above for locating chanceries within matter of right areas, and non-matter of right areas are outlined in a booklet entitled Foreign Missions and International Organizations Real Property Manual, which was jointly prepared by the United States Department of State, the National Capital Planning Commission and the District of Columbia government.

In addition to the framework established by the 1982 Foreign Missions Act, which leaves the responsibility of identifying and acquiring sites for chanceries with the foreign governments under free market conditions with limited regulations depending upon the desired location, there are examples of the US government also taking a more proactive role in providing foreign governments with sites for chanceries and other related facilities. In 1968, congress passed the International Chancery Center Act. This act identified a specific area of land already owned by the US government, presently referred to as the International Chancery Center or ICC, and it also authorised the Secretary of State to apportion the land through sale or lease arrangements to foreign governments and international organisations.

In accordance with the International Chancery Center Act, developments carried out within the ICC are not subject to local zoning or building requirements. Rather, these developments are subject to review and approval by the National Capital Planning Commission, the central planning agency for the federal government in the National Capital Region. In order to help guide the development of the ICC, NCPC and the United States Department of State worked together to develop a master plan for the ICC and an accompanying set of development controls that take into consideration the policies of the Comprehensive Plan for the National Capital, which was developed by our organisation and the District of Columbia government; the special character and development potential of the ICC; and the character and quality of the surrounding area.

In general, the development controls establish a uniform set of guidelines for the design and construction of chancelleries at the ICC. While this process has taken a bit longer than anticipated, the ICC has already reached its full development capacity, within the last 10 years. The development controls served as a primary review device used by NCPC during the ICC development.

With the ICC at full capacity, the United States Department of State is in the process of acquiring a recently closed federally owned military installation for purposes of establishing another foreign missions centre. Similar to the existing ICC, proposals for chancelleries and similar facilities within the new foreign missions centre will be subject to NCPC review and approval. Therefore, NCPC is working closely with the U.S. Department of State to develop a master plan that will guide the new development. In addition, it is anticipated that a set of development controls will be prepared that will take into account not only the policies of the Comprehensive Plan but also the programmatic needs of the diplomatic community.

We have learnt a lot in terms of the lessons learned from existing ICC. The future development plans of the local government, impacts to the surrounding community, historic constraints, and sustainability goals and objectives will also be incorporated as part of the new master plan for the new foreign missions centre.

CHAIR: That was very helpful. Has the availability of land in the free market made the supply of chancelleries more sustainable. One of the issues we have here is that we have quite limited land releases, probably more around the style of ICC style availability, which has meant that the government needs to find new zones and release them. In regard to the availability of land, or houses or other kinds of premises within particular pre-approved zones, as I understand it they need other kinds of approvals but that has been successful and it is easy to manage?

Mr Acosta : I think I will answer that in several ways. One is that we have been well served by the private market in terms of providing adequate stock and buildings for our various foreign missions. However, what we have also found over the course of the last 10 to 15 years is that, firstly, security requirements have made it more difficult for many of these chancelleries to either remain in their current facilities or be able to retrofit their facilities to meet their security needs. Second, we have also found that many of our foreign missions have a main building but they also have a lot of satellite buildings. A lot of them want to consolidate into a single building, which leads to a second issue, which is that to do that they have to acquire a large tract of property to develop that sort of structure. In our city that is a very difficult thing to do unless you have a large piece of vacant land that you could subdivide, like at our International Chancery Centre, and then offer the sites up for new development. China, for example, had a very large facility in one of our neighbourhoods, but they have also moved to the International Chancery Centre because they needed the security and because they are growing. They also wanted to consolidate their many satellites. So I do think we have been well served, but the market has changed in terms of the needs of the embassies, and that is one of the things we have been seeing recently.

CHAIR: What about for smaller missions? Is there a demand for people to collocate at all or do people like their own visible presence?

Mr Dettman : I would say that, in general, the foreign missions do enjoy their own visible presence and they tend to like to locate in very prestigious neighbourhoods in close proximity to each other. We do have a couple of examples of smaller countries, mainly Caribbean countries, that have co-located in certain areas. I would say that the original intent of the International Chancery Center was to provide sites for smaller countries that did not have the financial resources to acquire an expensive property in the city. However, as Marcel had noted, largely driven by security interests, the larger countries were able to move into the International Chancery Center and get the larger sites. We are hoping that, with the new foreign mission centre that the state department is in the process of developing a plan for, it will provide a range of different sizes of sites in order to accommodate smaller and larger countries in a more urban typology.

Ms BRODTMANN: Thank you for the excellent presentation. This is an issue that is causing a bit of angst amongst the local Canberra community and so I welcome the fact that you have got the guidelines, but also the fact that you do engage in community consultation when you are looking at new developments—so thank you again for your time.

I have got a couple of questions. Firstly, during the hearings we have heard from the Australian Federal Police who look after the security of the missions, and when we were discussing the option of moving to new enclaves or to peppering missions throughout the community—particularly in one particular region—they suggested that that would compromise security. I am just wanting to get your view on the fact that you do have your missions spread throughout this leasehold arrangement, but also in commercial and other properties and historic buildings throughout the city. I just wanted to get a sense from you about how you manage the security of that, whether there have been any security issues and whether you have had any feedback from the missions as to whether they feel as if their security has been compromised.

Mr Dettman : With regard to security, there is an overarching layer of security provided by the uniformed division of the US Secret Service. So at the International Chancery Center, there is a building and they have a permanent presence on the street. For those foreign missions that are located throughout the city in facilities that they own—for example, in an area of the city called 'Embassy Row'—you will often see the Secret Service patrolling the area by vehicle, but you will also find that a lot of the individual chanceries, or foreign missions, have their own security. They might have a security detail on premises. Some of them have fences or gatehouses that control access into the property. I would say that there is a combination of different types of security that you would find.

Ms BRODTMANN: Have there been any incidents where security has been compromised by this disparate spread of missions throughout the city?

Mr Acosta : Not that we are aware of. Obviously we can go back and check with the Department of State to see if they have had any record of that—but not to my recollection.

Ms BRODTMANN: If you could, I would appreciate that. There has been a suggestion from the AFP that that would be the case so I am just keen to learn of your experience. The other question I have is on the foreign mission centre, which I think is a fabulous idea and one that we have been toying with here. Getting back to that notion of missions wanting a visible presence, and often a street-type presence: have you had any feedback from the diplomatic community on that mission centre? Are they comfortable with the idea? Do they feel as if they are going to have enough visibility?

Mr Dettman : In the area of the city that I referred to called 'Embassy Row' where there is a lot of existing and very historic building stock, that in and of itself provides the prestige that the foreign missions are looking for. Just being in such a historic neighbourhood and in such a high concentration of foreign missions, where their individual identity comes from displaying their flag out front, provides the prestige. In the international centre, the development controls were purposefully developed to be kind of loose and to define a general envelope within which a foreign government could come and build and express their own architectural identity native to their country. So you would find—and we would be happy to send you images of the international centre—the architectural styles are very diversified. That provides their own presence in that way.

Ms BRODTMANN: But, with this foreign media centre that is currently being considered, the way you are describing it sounds like it is going to be a strata-title arrangement. It is going to be a sort of commercial block where people will lease, say, a floor—where missions will lease a floor. I just wanted to get a sense from you about that. No? That is not how it is going to work? How will it work?

Mr Dettman : Basically it is a large plot of land which is subdivided and each could be over, in American terms, an acre or larger. Each country would develop their own building on these parcels, so it is not one large building where they would lease a floor. It is not like a condominium where they would lease a unit. It is a series of buildings on a large plot of land.

Ms Schulyer : We noticed that in the materials we read there is reference to the development of a type of high-rise building as a potential proposal in Australia, with individual countries renting space within. We have nothing like that and I do not think we have anything like that envisioned. We are talking more about freestanding dwellings separated from their neighbours, each dwelling belonging to an individual country.

Ms BRODTMANN: Is it one acre per mission? Is it a high-density arrangement? Because you just said it is not like a condominium arrangement. I am just trying to get a sense of what it would look like.

Mr Dettman : The current international centre, which is filled to capacity, has a range of sites but each individual site is a stand-alone building assigned to a particular country. The range of sites is about half an acre to 1.4 acres and so it is about 0.2 to 0.6 hectares. In working with the State Department on the new international centre that is currently being developed they are contemplating looking at about an acre per site; but what we would like to see, in order to accommodate a range of different countries, small and large, is perhaps a different type of topology that has maybe a taller building that could be separated vertically and then individual countries could lease a floor, and also have some stand-alone sites for the larger countries that are looking for those larger types of facilities.

Ms Schulyer : Shane, do you know how many total units are up in the ICC based on acreage? Why don't you give them that—they will get a sense of density.

Mr Dettman : Just a couple of additional numbers for the existing international centre, and we can get you others if necessary. There are currently 21 lots—21 total parcels—in the international centre. There are 18 chanceries. There are a couple of countries that required a larger lot so they combined lots. At full capacity there are 18 countries up there and, like I said, the range of site size is somewhere around half an acre to 1½ acres.

Ms Schulyer : Do we know the total acreage of the site—of the whole thing?

Mr Dettman : I can get that.

Ms Schulyer : Okay.

Senator HUMPHRIES: I just wanted to ask if you could give us examples of any planning problems which have arisen from a proposal to locate particular chanceries in particular areas of Washington and whether that has generated problems with local residents? What is the nature of those problems, typically, and how are they resolved?

Mr Dettman : I would say the majority of the planning issues that have come up relate to traffic. We do have a neighbourhood that is considered to have an overconcentration of chanceries in a residential neighbourhood. The traffic that those office functions generate, both on a daily basis in conducting their business and also at larger events such as national day celebrations—it is traffic, it is parking—impacts on the public space. You might find visitors parking across sidewalks or in areas where they are not supposed to be located. Some issues are related to noise, oftentimes associated with a large celebration. We have had to address issues related to countries that have relocated to a new facility but retain ownership of the old one and it sits there vacant. They can see that it leads to overgrown yards and is falling into disrepair. The countries perhaps do not have the resources to maintain that property, and that has caused those types of issues in neighbourhoods.

Senator HUMPHRIES: I was thinking particularly of problems with the initial location of a chancery building and all the construction of a chancery building. Do residents often object to such buildings going up in a neighbourhood that is a mixed-use, residential neighbourhood?

Mr Dettman : In terms of construction related activities, I have not seen that but, again, it depends on the neighbourhood. If there was another proposal to put a chancery in this particular residential neighbourhood that has an overconcentration of them, you might see an objection by the residential neighbourhoods simply because of the magnitude of the impact of the number of facilities that are already there and the concern that it is going to lead to additional traffic concerns and additional parking concerns. If it is a residential neighbourhood that does not have that type of concentration—maybe it is just one singular facility—I guess it depends on the individual circumstances, but you may not see the level of objection that we might see in another neighbourhood.

Senator HUMPHRIES: I see you have an area called Reservation 13 for future chancery locations. Have you got any chanceries there at the moment?

Mr Acosta : No, we do not.

Senator HUMPHRIES: What do you anticipate would be the requirement for land for chanceries over the next half century, for example?

Mr Dettman : That is hard to predict. I think, again, obviously with our second foreign mission centre the Department of State has actually determined that there is more need for new facilities on an international style campus—a chancery centred kind of campus. How many units or buildings would that probably yield—

Mr Acosta : It depends on how it is parcelled out.

Mr Dettman : It will depend on how that will be parcelled out. We saw a slight bump up in the 1990s because of the break-up of the Soviet Union which required more space. It is hard to predict in terms of whether there are going to be additional countries formed. We are seeing, as I mentioned before, the issue of consolidation and security which, I think, has led to some of the existing countries wanting to have a new facility, which would be accommodated in the foreign mission centre. That is probably the extent of the combination of additional demand. It is really for the additional foreign mission centre. We may see some shifting of existing chanceries, not to new but to other facilities in a neighbourhood, which we have seen before. In a lot of cases, we are just seeing basic renovation, restoration and site expansion of their current buildings. We are in the process of planning a second one. That is the Walter Reed Center. It is not at Reservation 13 but the concept is the same. We do feel there is a need for additional land to accommodate these needs.

Dr LEIGH: I want to ask a couple of questions around financing. What share of missions own their own land and what share are leasing, in rough terms?

Mr Dettman : We have that information. We can provide it to you following this meeting.

Ms Schulyer : Could I ask for some clarification?

Dr LEIGH: Sure.

Ms Schulyer : When you talk about leasing, are you talking about a private market lease or leasing from the United States government?

Dr LEIGH: I am interested in all the different arrangements you have. We have a variety here in Australia, and some of it seems to reflect historical accident rather than design. I am trying to get a sense as to how your system works and whether we can learn from it.

Mr Dettman : The numbers we have with us—there are about 195 chanceries located in Washington DC. Of those 105 only nine per cent are located on federal land, and that is up at the International Chancery Center. That nine per cent were established under a long-term 99-year ground lease with the federal government. The remaining 91 per cent are located on sites that they either own or lease. That is the information we can get you later on. We do have a breakdown on the number of countries that own their sites as opposed to leasing office space inside an existing commercial office building.

Dr LEIGH: Leasing from the US federal government sounds like it is a relatively rare arrangement—just that International Chancery Center. How is the rent determined there? Is it benchmarked off private rental rates?

Ms Schulyer : My understanding is it was based on an appraisal of the land value and they then accepted lease payments in the form of either an annualised lease or an upfront one-time payment of the net present value of the full leasehold over the 99 years.

Dr LEIGH: So it sounds pretty close to being commercial arrangements. Do you have missions that discover they have too much land and want to sell some back? I understand office space in DC is running at about $100 per square foot at the moment, so I would imagine some missions might be keen to do a sell back. Do you engage in that or do they simply go to the private market if they want to do that?

Ms Schulyer : If they have purchased the land on the private market it would be a sale back through the private market. If they have leased from the international centre, I imagine that would be a negotiated arrangement between them and the United States' state department.

Dr LEIGH: I guess I should not be surprised but your system looks a whole lot more like a free market than ours.

Ms Schulyer : I think you are right.

Dr LEIGH: On the security question that Ms Brodtmann asked before, you have some missions that are quite a ways out. You have got down in the south-west Costa Rica and Albania, and Germany is near the Potomac. How do you manage in a city with a lot of traffic to provide adequate security to those missions using what I assume are a specialised subset of the DC police? Is it just the regular DC police force that provides security to all missions and whatever car is down in the south-west would take care of a call to the Albanian Embassy?

Ms Schulyer : Security is provided by a combination of the uniformed division of the Secret Service, which is a federal service that protects the property not the people. It also includes the local police, who have a responsibility to protect people and property within their jurisdiction. The Secret Service provides the level of security that it deems appropriate working with the particular embassy, regardless of the location. Clearly, in what we call our embassy row or areas where there is a high concentration it is easier because they can have patrols working in tandem. For the outlying areas that you have defined, they still have the responsibility and must provide that security.

CHAIR: I think it is probably notable that the security in chancelleries here are not allowed to be armed in any way and they have to rely on the Australian Federal Police here for protection. That is one of the reasons it has been consolidated into specific zones, which has constrained the supply of land quite considerably. You have indicated very strongly that there is a demand for stand-alone lots that can be freely developed. If people have limitations on being able to access those opportunities, do you need to encourage countries to look for alternatives in some of the zones that have housing, commercial or retail opportunities or are countries just happy to go and do that work themselves?

Mr Dettman : We have done some work with the US Department of State and specifically the Office of Foreign Missions in the past. Particularly back in 2004 when we were updating our comprehensive plan, we talked about the idea of directly engaging the diplomatic community, in a sense, to promote the areas that were available as a matter of right and to try to encourage them to locate there as opposed to locating in residential areas that were already burdened, or seeking a large tract of land on the outskirts. We would say that there is an abundance of available sites in matter of right areas but a large number of those sites are in areas that are not very attractive at this time. But the lot of them are being looked at for redevelopment, or are undergoing revitalisation, and our hope is that as new residential and new mixed-use go into those areas, it will become more favourable or more enticing for chanceries to locate there on their own.

CHAIR: Do you envisage that there will be conflict in the future in relation to chanceries wanting to build, if you like, large stand-alone buildings in those environments where they are alongside things of a more residential character? Do you get that conflict between the commercial use sitting alongside residential areas?

Mr Acosta : I think, as I explained earlier, we regulate foreign missions as we regulate other types of buildings as structures, that is, context, preservation issues, scale, size are all under the purview of the zoning code and they have to build to that zoning code. We do not initially approve anything out of scale with the existing neighbourhood. We use the underlying zoning as the baseline and work from that. I think that it is pretty well understood that that is the issue—

The videoconference signal was lost between 08:41 and 08:43.

CHAIR: Hello. You were cut off midstream there. I was not sure whether you were speaking into the vacant air. Please feel free to pick up where you left off.

Mr Acosta : Yes, we did see a black screen. We were talking about issues of private development and its relationship to neighbourhoods. Again, the Board of Zoning Appeals ensures that things are kept to the zoning envelope. We have had cases like the Embassy of South Africa where even things like the height of the fence, which was an issue for a lot of the neighbourhood residents, was addressed as part of our order, because it was a preservation issue.

In a lot of cases we also look at the parking needs of the various facilities and we will either limit or require them to find additional off-site parking in order not to take on-street parking which is valuable for neighbourhood residents. So we do have a process in place which has worked for many years and addresses both local neighbourhood issues and federal issues. We have to maintain good relations with these foreign countries and we also have an obligation to make sure they have adequate sites available to them. This is a balancing process.

CHAIR: One of the things this committee could consider doing is to expand the zoning of existing areas to include some residential areas where you might look to make available some of that kind of redevelopment because there are areas already adjoining quite high concentrations of diplomatic zoning. But clearly there would be some residents who would have some sensitivities around changes like that. Are there further questions?

Ms BRODTMANN: I want to go back to the breakdown between leasehold in the traditional areas and the free market, so to speak—the nine per cent and the 91 per cent. Do you have any instances of where that leased land, that nine per cent, has been subdivided by a mission?

Ms Schulyer : They cannot do it.

Mr Dettman : I am not aware of any examples. For those facilities that are leased, typically it is happening inside a commercial office building where they are leasing a certain amount of space from a private landowner and that is what they occupy.

Ms BRODTMANN: I mean the nine per cent who are on federal leased land. I want to know whether any who are on that land have said: 'This is too much land. I don't need this much land. I want to subdivide it.' Do you have any examples of that?

Ms Schulyer : I do not think we have examples, but they really would have to go and work with the State Department, as they are on the lease through the State Department. And they would have to reach agreement. They could not unilaterally undertake the subdivision to procure a subtenant.

Senator HUMPHRIES: I assume that in a place like New York most of the foreign missions would lease space in high-rise buildings. Those sorts of arrangements would be common in a setting like that, would they not?

Mr Acosta : I am not sure. We could double-check with our Department of State to see what types of buildings foreign missions are located in in New York City. Washington has had embassies since the time the city was founded. The basic typology and image of the embassies of this city has always been detached dwelling type units on these lots, within a neighbourhood fabric. We have not tended to see vertical office space being the preferred choice. For a lot of countries it is about image. As Shane mentioned, they want to express their image through the architecture of the building or through the ability to host their own events. We see cultural events at a lot of the embassies here. So it is part of the tradition of this city at least to have embassies in detached structures.

CHAIR: In that context, the experience of countries in Washington DC influences their expectations around the rest of the world, certainly in the city of Canberra. They are therefore here with similar expectations because, in a sense, DC has defined the cultural experience of what embassies are supposed to be.

Mr Acosta : It is interesting.

CHAIR: I do not think we have any further questions. I would very much like to thank you. We always find our engagement with the National Planning Commission very helpful. You were certainly very helpful to our previous inquiry and, based on this morning's discussion, you certainly will be very helpful to this one as well. Mr Acosta, Ms Schulyer and Mr Dettman, thank you very much for your participation and speaking with us this morning. It is very much appreciated.

Ms Schulyer : Thank you. And we will forward the additional information to you.

CHAIR: Is it the wish of the committee to authorise the publication, including publication on the parliamentary database, of a corrected transcript of evidence given at the hearing today? There being no objection, it is so ordered.

Committee adjourned at 08:50