The Council failed to make a decision on the permit within its appointed 60-day deadline and Shayher took the matter to VCAT earlier this year.
On Wednesday, councilors voted against the application at VCAT, arguing that three more storeys than the preferred height would make the development too bulky and cast too much shade.
The proposal also did not include ground-floor commercial or retail space to activate nearby courtyards as envisioned in the master plan.
AP planning consultant Annabel Paul, who spoke on behalf of the Shayher Group at the meeting, argued that building heights in the master plan were not maximum limits and that plans for retail and commercial space had contained the disclaimer “subject to market conditions”.
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“While we agree that the overall vision for the entire Pentridge site includes a range of uses, this does not apply to all buildings in the precinct,” he said.
“It's just not viable or desirable from our point of view to offer retail in every building on the site.”
Paul said the proposal was generally in line with the masterplan and would provide 245 new homes in Coburg that were clearly needed in a housing crisis.
The Victorian Government has pledged to deliver 80,000 homes a year over the next decade, arguing the increased supply will address the state's housing affordability crisis.
Greens councilor Mark Riley said that while there was a housing crisis, the design should not be “so tall and so bulky, behind bluestone Pentridge walls”.
“There are huge buildings near the fence … it will really change the feel of this street with these towering buildings,” he said.
The vision for the future Pentridge Precinct as set out in the 2014 Masterplan.Credit: Pentridge Coburg Masterplan 2014
Socialist Alliance councilor Sue Bolton said there was “no fantastic element to this development that would justify the developer just trying to make money to get over the height limit”.
The towering bluestone walls imprisoned some of the state's most infamous criminals for nearly 150 years, including Ned Kelly and Chopper Read.
Shayher Group did not respond to requests for comment. The matter returns to VCAT on May 31.
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