Letter to the Editor
Last week the Wombat Post published an article on the release of the Local Inspectorate Report which we also are anxious to see.
However, our own research shows substantial areas of Council practice needs an overhaul regardless of the findings. There are many concerns, including the use of pseudo consultations and Expressions of Interest, market valuations, cost estimation and due diligence that should be addressed. We have outlined these issues with examples from controversies surrounding the Rex building in Vincent Street Daylesford, 59 Main Road Hepburn Springs and 1 Bleakley Street Daylesford.
The Rex History
Key elements of the Council planning practice in relation to the purchase of the Rex building in Vincent Street are summarised below. The Rex has been the subject of a long running controversy and the Local Government Inspectorate Report which has not been released.
- On 14 July 2016-Hepburn Council (HSC) signed 6-week option to purchase The Rex in from Leon Theoharopoulos
- A Press Release was released 11 days later. No Real Estate Agent was involved and the values used based were on CIV (Capital Improved Value). This was not market value and did not identify possible issues with the property.
- In June 2017 the property was transferred into the Council name
- On the 16 August 2016 HSC agreed to buy the Rex to develop the Hepburn Hub across two sites – the Town Hall and the Rex. Council agreed to Expressions of Interest to sell and/or lease five HSC properties to finance and consolidate The Rex land acquisition which cost $5,995,000 as well as the acquisition of 8 Duke St acquisition for $350,000. Fit-out of Library and offices at The Rex were estimated to cost $1,250,000.
There are significant concerns Council did not conduct a proper valuation and due diligence for the purchase and that costs for the development of the community hub were significantly under-estimated. Subsequently, the Rex developed dragged on for six years and was then abandoned and the Rex put up for sale, despite considerable community opposition.
Sale of Hepburn Depot 59 Main Road Hepburn Springs
There has been considerable controversy over the development of the former Council Depot at 59 Main Road Hepburn Springs. It is a large parcel of land with iconic views. We briefly summarise Council practice in relation to this site below.
- On 17 March 2017, a Contract of Sale for 59 Main Rd was signed by Council with developer Leon Theoharopoulos with settlement due in June 2017
- In May 2017 the Council Seal was affixed.
- On 20 July, 2017 a contract of sale was signed by Leon Theoharopoulos on behalf of Purchaser KD Property Pty Ltd as Trustee for the Rex Property Trust 93 Wells Rd Chelsea Heights.
- On 30 April, 2018 a 2nd Planning Permit was lodged by the developer for 10 lot subdivision and construction of buildings
- On 23 January, 2019 a planning permit was issued for an estimated cost of $24M. The proposed use was to subdivide into blocks and build houses and units. These were to be smaller type low cost for affordable rent and consideration would be given to putting in a public toilet and small rest area for bus stop. However, 10 lots at a cost of $24 million doesn’t sound like low cost housing.
- In April 2020 variations were lodged and updated permit issued – 3 years after signing first document
- On 13 July 2020 settlement of $790,000 ($712,360.13 to Council after legal fees etc.) occurred, This was the original asking price and still no building has occurred in 2022.
Sale of 1 Bleakley Street
The housing developed at 1 Bleakley St is on the corner of Vincent and Bleakley Street opposite the BP service station in Daylesford has been withdrawn from sale. Although information on why this has occurred is hard to find, it is likely that there are concerns about the impact of mine shafts and water on the development. We summarise the history and Council involvement below.
- In 1985 The Defiance Tunnel was registered as a local historic site. The Daylesford Water Board transferred the land to Shire of Daylesford and Glenlyon.
- In 1995 when the new municipality of Hepburn was created the commissioners Noel Harvey, Graeme Orr and Margaret Giles decided not to sell the two lots in Bleakley Street due to the impact of mining and water on the site.
- In 2006 Lot 1 was created through a Council subdivision of Lot 14A to divide off Lot 1
- In 2006 an encumbrance/Restriction on the Title for Lot 1 was put in place so that it not be developed without consulting the water and sewerage authorities.
- A 2017 Plan shows a waterway running through Lot 14B. Lot 1 and Lot 14B make up 1 Bleakley Street now. The 1985 listing as a local historic site is missing from the Vendors statement.
- On 30 October 2017 a contract to sell for $297,500 was forwarded to Leon Theoharopoulos representing KD Property Holdings PL + PB Property Services PL
- In March 2018 a planning permit for four buildings with an estimated value of $1,500,000 was lodged
- In October 2018 a planning permit for four buildings was withdrawn
- In November 2018 a planning permit for four buildings with an estimated value of $1,500,000 issued
- In August 2019 the transfer of land from HSC to Leon Theoharopoulos representing KD Property Holdings PL + PB Property Services P/L was settled.
Consequences of the Debacle
We have concerns about Council practices in purchasing and selling assets. This includes their EOI and community consultation processes, market valuations, cost estimations, and due diligence practices. For example, it is unclear whether Council took into account that Leon Theoharopoulos the Melbourne director involved in the developments summarised above was convicted of obtaining financial advantage by deception in 2003.
The Rex an iconic heritage building has been boarded up since 2017, looking like a derelict building with an unpainted, sad hoarding until the sale of the building was announced and only then was the hoarding was painted. The Cinema, previously conducted at the Rex, was, of course, lost to the community in the process, and no community hub has been built.
A large parcel of land in Hepburn Springs was sold off in a village that has no public spaces left, with planning for an ugly townhouse development, more suited to suburban Melbourne in an area with one of the iconic views in country Victoria. A proposal now withdrawn from sale after three years.
Examples of another Community Asset not available to the community
There are other examples of poor practice we know of. This includes the multi-purpose facility at Victoria Park which has a unusable community meeting room with a reverse cycle system and TV because it is needed as a storage room for tables and chairs from the multi-purpose room
As well Cricket honour boards are languishing in the room and we are told Council won’t let them be hung in the multi-purpose room because it is available for the community to hire.
A Victoria Park User group was mooted when it was built but either has not been created or if created not supported enough to be ongoing.
Where did we source our information?
- HSC FOI request 1 Bleakley Street & 59 Main Road Cost $344 Received 1,485 pp of which 1,053 pp were redacted. We may be given more on 30 Jan 2023.
- HSC Minutes of Council Meetings
- HSC Financial Reports – End of Year and Progress Reports
- HSC Capital Project & Operating Project Reports
- HSC Planning Permit Database
- Title Searches
- Sales History reports
- Financial Standard News Paper
Jenny Beacham and Donna O’Mara, members of Hepburn Matters