Melbourne Council Moves Fast on Street Upgrades as Budget Crunch Looms

Melbourne City Council has fast-tracked a $12 million renewal program for Chapel Street in South Yarra, marking the most significant streetscape investment in the precinct since 2019. The decision, finalised at Wednesday's planning committee meeting, will see widened footpaths, improved drainage, and new median gardens rolled out over the next 18 months.

The move comes as traders along the retail corridor reported declining foot traffic and rising vacancy rates. Latest figures show shop vacancies on Chapel Street have climbed to 8.2 per cent, up from 5.1 per cent two years ago. The council hopes the upgrade will revitalise the strip, which has long competed with Fitzroy's Brunswick Street and Southbank's dining precinct for visitors.

However, the approval came with a cautionary note from Lord Mayor James Merlino, who warned that council reserves are under mounting pressure. Municipal rates revenue has grown just 2.3 per cent year-on-year, while maintenance backlogs across the municipality have ballooned to an estimated $340 million. "We're making strategic choices," Merlino noted, "but ratepayers need to understand the trade-offs ahead."

Separately, the council rejected a development proposal for a 28-storey residential tower on Elizabeth Street near Flinders Street Station. The decision, which split the council 7-5, cited concerns about overshadowing of the State Library forecourt and strain on local parking. Developers have indicated they intend to appeal to the Victorian Civil and Administrative Tribunal.

In neighbourhood news, Coburg residents will vote next month on a controversial proposal to convert a heritage-listed former industrial site on Bell Street into a mixed-use precinct with 350 apartments and a public plaza. Community groups remain divided, with some welcoming new housing while others fear increased traffic on already congested local roads.

The council also announced new funding for three community centres in the northern suburbs—Broadmeadows, Coburg, and Glenroy—to expand youth mental health programs. The $2.4 million investment responds to rising demand for counselling services, particularly among teenagers aged 13 to 18.

Next week's full council meeting will consider a motion to declare the municipality a "climate emergency zone" and commit to net-zero emissions by 2035. The proposal has support from the Greens and progressive Labor councillors but faces resistance from conservative members concerned about implementation costs.

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