A number of influential residents are in the process of airing their grievances on council's ceasing of the Hepburn Hub at The Rex project.

A passionate and parochial group of movie-lovers has reacted with dismay.

In an initial response upon learning of the outcome of the recent council meeting, Daylesford Community Theatre president Gina Lyons declared her sadness.

"Tonight, the death knell was sounded for Daylesford Cinema," Ms Lyons said.

"Needless to say, the Daylesford Cinema committee is absolutely devastated by this decision. We know our community will be also."

Subsequent to the initial response, a comprehensive letter, formally complaining about the ceasing of the project, was written to council by Daylesford Community Theatre.

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The group made its feelings clear within the letter.

"Council's decision on Tuesday evening came as a huge shock," the letter said.

"We were not expecting you to abandon the project because your public statements about the Rex have been positive."

The letter contained a number specific concerns, including financial worries.

"The council paid $6 million for a building worth $3 million; another $3 million was spent on it," it was outlined.

"If you sell for $3 million, you will be locking in a cash loss of $6 million with nothing to show for it."

Former councillor John Cottrell, who served on council from 2016 and 2020, is also critical of the decision to sell the property.

"(To) sell as is is a drastic move," Mr Cottrell said.

"The history of the project is public and will be taken advantage of by any prospective purchaser, resulting in a savage discount."

Mr Cottrell is frustrated with the turn of events.

"For over four years, shire staff and the community have been promised this centrally-located administrative and community complex," he said.

"Now, after the pain of having addressed all the structural building matters and so close to completion, the project is to be dumped."

The absence of future options for the cinema was also outlined in the theatre group's correspondence.

"Council has effectively killed off the cinema because you will only be focusing on alternative arrangements for staff offices and the library," the letter said.

"There is no other building in Daylesford which lends itself to being used as a cinema and which is available for this purpose.

"Moving a cinema is not like moving a gift shop. It has particular requirements in terms of height, space, (and) soundproofing.

"That is why, after a huge community campaign to save the cinema in 2017, the council agreed to include it in the Rex redevelopment because they knew there was no other suitable building in Daylesford."

The letter went into a lack of consultation with affected parties.

"Our complaint is that the council should have consulted with Daylesford Community Theatre and the broader community about the intention to abandon the Hepburn Hub at the Rex and sell the building. I would refer you to Council's Community Engagement policy," it said.

"On any reading of the policy, the Hepburn Hub at the Rex meets the criteria of high strategic importance, high impact, and with high community sentiment."

Mr Cottrell is similarly conscious of the lack of community consultation.

"For a council elected on the platform of community engagement, the motion was silent on community input into a decision so significant in the shire's history that it will likely result in ratepayers forfeiting some $6 million," Mr Cottrell said.

Daylesford Community Theatre's letter closed with a request for a review.

"We are calling on council to revisit the decision to abandon the Hepburn Hub at the Rex and sell the building," is said.

If council does choose to reconsider its decision, Mr Cottrell suggests it looks at an "orderly exit" of selling the property and leasing it back.

"This process can achieve both delivery of the project and exit from the property," Mr Cottrell said.

"There are two options.

"(Firstly) to offer the property to market as is, with a long-term lease back to council on completion. This will provide an developer with the certainty of return on investment. The downside is the loss of control over the works to completion with potential for cutting corners to increase profit.

"(Secondly) council completes the project, brings the property to full operation and then offers the property for sale with a long-term lease back to the council.

"The latter option provides council with full construction integrity to completion and presents an attractive investment proposition, a completed and fully-functioning, prime, centrally-located property in Daylesford, offering an attractive commercial return on investment."

Council has previously outlined its commitment to work with Daylesford Community Theatre to find a temporary or permanent base for the cinema.

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