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The evolution of student-intensive neighbourhoods within walking distance of the campus is seen as a major strength in attracting enrolments, the university's campus master plan says.
But the "squalid nature" of many flats, the accumulation of rubbish and the lack of gardens had resulted in a "ghetto" feel to the neighbourhoods.
The concentration of students also meant any civil disorder was blamed on students, whether they had caused it or not, the report said.
More overt joint action from the university and the Dunedin City Council was required to beautify, clean up and patrol the student quarter.
While any proposals were outside the scope of the master plan, six initiatives were suggested:
• Upgrading the landscaping of streets
• Introducing a levy on landlords to fund improved rubbish removal, management and security
• Supporting the "quality rating" system introduced for student flats this year
• Relaxing off-street parking requirements and encouraging landlords to reinstate gardens
• The university acquiring the most run-down properties and restoring them or demolishing them and rebuilding
• The city council amending its planning regulations to reduce the density of housing in student neighbourhoods.
For the longer-term, it was "fundamentally important" the city council develop a plan for growth in the student neighbourhoods, it said.
On the university's enrolment growth predictions, an additional 4000 student beds would be required over the next 25 years, with 3000 of those at second year and beyond, when students usually lived in flats.
That meant 500-700 more flats of traditional size would be needed by 2035.
An alternative was to create "student villages" - multistorey apartments with a central courtyard and some shared facilities, the report said.
The villages could be developed by the university, by private developers, or in joint ventures.
Potential sites were in Leith St-Dundas St, Clyde St, Union St, the former Wickliffe Press site on Albany St, the college of education site on Union St East, Anzac Ave, and the Abbey College site in Cumberland St.