Council has again substantially underestimated the cost of the Hepburn Hub at the Rex project. An additional $900,000 dollars will be needed to finish the project if it proceeds.

Council will consider a revised budget and a tender offer for the Rex project to build Council offices, a library and a cinema at the Rex in Vincent Street at its meeting on Tuesday night.

A revised budget of $9.6 million for the construction phase – up from $8.7 million in June – is now being requested by Council Officers. This follows termination of the earlier contract with Hutchinson’s Builders when contract disputes over cost variations could not be resolved.

The budget for the building works was originally less than $ 1 million. The project budget is now 10 times more than the original proposal put to council in 2016.

The construction budget has gone up $2.5 million above the contracted price with Hutchinson’s Builders which was terminated earlier this year.

Cost have blown out again because the tender offer is higher than anticipated and project consultants costs have gone up. If the project proceeds, it would not be completed until at least August next year.

The Rex project budget has grown steadily since 2016 when Council bought the building for $6.3 million. If agreed on Tuesday night, the total cost of the project will be over $15 million.

There are significant financial implications for Council if the revised budget is approved. An additional loan of $2.5 million will be required. Further costs of $300,000 associated with sustainability initiatives could also be added.

The Rex will delivery 2050 square meeting space at a proposed cost of $4,600 per square metre – 80 per cent higher than the average cost of new construction. Even for heritage building renovations this is high.

The average cost of new construction in Melbourne at the moment is $2,576 per square metre. A new building of the same area would cost around $5 million, about half the cost of the proposed renovation of the Rex. Local real estate agents estimate the Rex could be sold for about $3 million to $5 million to fund the purchase of a new site. However, starting over would set the project back several years.

Council officers maintain that starting afresh would result in similar or greater financial implications, but no details or analysis of Council office needs and alternatives have been made public.

There is clear community benefit in the establishment of a community hub with a library, auditorium and Council services for Daylesford and Hepburn Springs. There are also benefits for Council Office staff in having new offices. But there has been little consultation with the community about whether the ever growing cost increases continue to justify the benefits to staff and the community or whether there are alternatives that should be now be considered.

Council has declined Wombat Post requests for meetings and Freedom of Information requests to better understand decisions about the Rex citing commercial in confidence considerations.

A community project reference group for the project is proposed. But it has not yet been established and has therefore not considered the decision whether or not to proceed with the project.

Editorial Committee note: Tim Bach, co-editor of the Wombat Post, has nominated for a position on the community project reference group.