To a chorus of interjections from observers, Hepburn Shire Councillors voted this week to sell the Rex building in Vincent Street. As they were in November, Councillors were once again divided. Crs Henderson, Hewitt, Hood and Simpson supported the motion to sell and Crs Bray, Drylie and Halliday opposed the motion.

The Rex has been a long running sore for the Council and the community. Originally built as a theatre in the 1920s, the building has had a varied history in private ownership. Following a failed attempt to turn the building into a shopping arcade, Council bought the Rex in 2016 as the venue for a community hub to include a new library, customer service centre, public toilets and staff accommodation.

Following lobbying from the local Daylesford Cinema, Council agreed to include a small auditorium in the community hub to give the cinema a home. The Cinema had, for a few years, rented space from the private owners of the Rex for a volunteer run cinema in the concrete extension under the carpark at the back of the Rex.

The Council bought the building and adjacent property for $6.3 million. Council then agreed to a highly unusual development plan budgeting less than a $1 million for a complex and difficult 2000+ square metre renovation, effectively acting as an owner builder to avoid requirements for a planning permit. Renovation costs for heritage buildings are typically two or more times the cost per square metre for a new building and not surprisingly, the budget soon blew out. It is unclear how the planning process and the budget were developed.

Aaron Van Egmond, then Council Chief Executive Officer, left Council under a cloud and acting CEO, Bruce Lucas, instituted an internal review and later an external review of the project by Crowe Horwath. A litany of mistakes and miscalculations uncovered by those reviews prompted the new CEO, Evan King, to contact the Local Government Inspectorate.

It is still not clear how such a costly decision was made with so little planning. The results of the internal audit and the Crowe Horwath report have not been released pending the outcome of the Inspectorate report. After more than three years waiting for the Inspectorate report, Chief Inspector, Michael Stefanovic, still refuses to release it. The Inspectorate has serious questions to answer about its competence. In this case, it has utterly failed its responsibility to ensure transparency and accountability of local government.

Despite the rocky start, Council forged ahead with the project. Completion of the renovation was subsequently tendered out to Hutchinson Builders for an estimated renovation cost of $7.1 million. However, Hutchinsons and the Council parted ways in July 2021 without work commencing following a protracted dispute about costs and site conditions.

Following the withdrawal of Hutchinsons, an updated cost estimate of $8.8 million was presented to Council which included rectification of the issues which formed the basis of the dispute with the contractor. The work was retendered in 2021 and the selected tender was  higher still at $9.7 million because of increasing labour and materials costs. The costs did not include costs to change the heating from gas to electricity or to repair the facade of the building. In addition to renovations, fit-out costs (floor coverings, new furniture and equipment) and the initial $6.3 million purchase cost led to an overall project cost in excess of $18 million.

In November last year, faced with massive cost blow outs and rapidly deteriorating Council finances partly resulting from storm events and COVID, Council determined, in a split vote, not to award a contract and to instruct the CEO to initiate a community consultation about selling the building and an alternate plan to provide the planned facilities. Following an agreement with the State Government, Council reallocated library grant funds of about $500,000 to a new library in Trentham instead. This retained the benefit of this grant without excluding future funding for a Daylesford Library.

The decision in November and the confirmation of that decision this week has divided the community. The Rethink the Rex Group (now Hepburn Matters) organised public meetings and voiced their opposition in local media. There were calls for the Minister for Local Government to sack the Council.

Submissions to the Community Engagement ran about 2 to 1 against selling the Rex. Those who supported the sale recognised the need to develop a library, auditorium, activity spaces, staff accommodation and customer service facilities but saw the Rex as a costly and inappropriate building for these purposes.

This week’s Council meeting saw a number of passionate community presentations in favour of keeping the Rex in Council ownership arguing the need for arts spaces, the library, a community cinema and activities for young people. There is no doubt that there is strong community support for these facilities to be developed even amongst those who think the Rex is the wrong place to do so.

Hepburn Matters proposed that Council delay its decision and enter into a community co-design process to develop the Rex. A motion from Cr Halliday along those lines was defeated at the Council meeting on Tuesday. Three Councillors, Crs Bray, Drylie and Halliday supported the motion to delay the sale and run a codesign process with the community. However, they provided little detail on what that would involve, whether it would lead to a different outcome or what it would cost.

In the end, concerns about the parlous state of Council finances, the unknown risks of renovating, further potential cost blow outs, Council inability to manage the project and the importance of maintaining basic services and assets, saw the majority of Councillors vote to continue with the sale of the Rex.

Despite nearly a decade of poor planning, mismanagement and waste, no one has been held accountable for the Rex fiasco. There is no new library, auditorium, arts spaces, customer service centre or youth opportunities. There is no staffing plan and no plan to accommodate those staff. Many in the community have lost confidence in Council management and there is no apparent plan for moving forward.

The divisions within Council on this issue have fuelled community divisions. Councillors and Council officers need to overcome their differences and developed an internal consensus about the best way forward. They need to work with key stakeholders in Council and the community to explain the problems and look for alternatives to deliver on at least some of these needed, and long overdue, facilities.