The hub was to incorporate a number of council services, including council offices, a library, a co-working space, a customer service desk, and a community auditorium. The iconic Daylesford building known as The Rex was purchased by council in 2016 at a cost of $6.345 milion and was to house the facility.

Building was undertaken within the structure prior to council engaging a contractor in 2020 to complete the works. However, council and the builder, Hutchinson's Builders, mutually parted ways in July 2021.

A subsequent tender process resulted in submissions from six tenderers. Council officers recommended the construction contract be awarded.

A project budget of $8.755 million was endorsed by council in June 2021, but based on the latest tender, the construction cost was forecast to be $9.658 million.

The total sum already spent on the site has been substantial as outlined by Hepburn Shire Council CEO Bradley Thomas.

"Council spent close to $6 million (on the building itself), incurred close to $2.9 million (in construction costs). By the time we wrap up the sale, it will be $3 million. It's a $9 million cost," Mr Thomas said.

In a motion passed on Tuesday evening, council determined not to proceed with the project and to request the chief executive officer undertake a process to sell, through a public process, the Rex building.

Mr Thomas is uncertain what price will be fetched.

"The market will determine that," Mr Thomas said.

"You can be assured council got an independent valuation to help it in its process of determining how to move forward."

IN OTHER NEWS

Mayor Tim Drylie is aware of the magnitude of Tuesday's decision.

"We've made a clear line in the sand with this decision after a series of cost blowouts and continuing unease about the finished cost and what that would end up being given the previous construction issues with the site," Cr Drylie said.

"It's been a difficult decision, one which we understand will have mixed feelings in the community, but a clear decision has been made with the best community interests in mind. Big decisions like this are not necessarily popular decisions, but they're responsible decisions."

Cr Drylie is committed to council being accountable, explaining financial factors were largely behind the decision to not proceed.

"Some of the background around the decision is the need for us to really think about the delivery of effective services and strong financial management and governance," Cr Drylie said.

"We've been hit by a series of external events outside our control in the past two years that's put significant stress on our financial resources. There's continuing uncertainty around our COVID recovery period, recent ongoing costs associated with storm recovery efforts, and a constrained rate cap environment.

"This has forced councillors to seriously review our capacity to proceed with certain projects and services in order to responsibly manage our finances and to be able to continue to deliver on both essentials and a diverse range of programs and projects across the entire shire."

However, there were other considerations at play for council as well.

"Part of the consideration was around the lack of depth of community consultation at the beginning of this project and concerns that stringent planning processes hadn't been done prior to the establishment of this project," Cr Drylie said.

"There was a lack of confidence over whether this facility would be fit for purpose at the end of it all."

During discussions, the elected members were conscious of the ramifications of the decision.

"Council has been very mindful of the impact on key stakeholders. That includes council staff, community members who might be using the library, and also the local cinema group," Cr Drylie said.

The concept of a hub in Daylesford has not been totally dismissed.

"I wouldn't say that it's gone," Cr Drylie said.

"We're very mindful of the needs of the community and particularly around groups coming together in a place to celebrate living in the Hepburn Shire, but we are going back to the drawing board to some extent and looking at all our options and to involve the community from the ground up."

The council has reaffirmed its commitment to work with the Daylesford Cinema group on the community cinema.

"In relation to the cinema group, we're happy to continue that conversation, whether that is finding another facility or other options that group might wish to pursue," Cr Drylie said.

The Rex building purchase and other matters relating to the project remain under investigation by the Local Government Inspectorate which monitors governance in Victorian councils.

The investigation is covering the period from when council purchased The Rex building in 2016 until works were suspended in 2018.

In October 2018, it was revealed previous council CEO Aaron van Egmond had commissioned artist David Bromley to paint two murals within The Rex for $30,000, although neither the council nor the public art panel had been consulted.

Council has pointed out it has cooperated with the investigation and is anticipating the release of the report, although the mayor indicated the council is disappointed it has not been completed.

Mr Thomas does not have the intention to push for a further independent review at this point, although he is adamant much has been gained from the matter.

"Lots of the learnings that council has got from decisions made in the past, we are already correcting those. We'll continue to learn from all projects we deliver," Mr Thomas said.

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