Melbourne City Council is “selling the farm to pay for the silverware” in its $55 million sale of a multi-storey car park to hospitality billionaire Justin Hemmes, according to a councillor who has publicly lashed out at his colleagues who supported the sale at a closed-door meeting.
Hemmes’ Merivale Group bought the eight-storey “Parkade” car park at 34-60 Little Collins Street to build a precinct with restaurants, cafes, bars, a hotel, retail and a “sky garden”. The sale was ratified by the 11-person councillor group in an in-camera meeting on Tuesday night, which passed seven votes to three.
Councillor Owen Guest says the council decision to sell the car park is ‘like selling the farm to pay for the silverware’.Credit: Justin McManus
Councillor Owen Guest – who was elected to the council in October as the endorsed Liberal candidate and is the head of the council’s finance, governance and risk committee – voted against the sale and told The Age he was “ropeable” about the decision to sell the car park “for a song” for “pet projects” while council debt is climbing.
Guest, Gladys Liu and Philip Le Liu voted against the sale, according to several sources who spoke on the condition of anonymity. Councillor Rafael Camillo abstained from the vote due to a conflict of interest.
Guest’s concerns about the sale are twofold: the price, and the fact the proceeds will be used for capital works – which Lord Mayor Nick Reece says will build community sport facilities – instead of paying down the council’s growing debt of $216 million, which was mostly accumulated during the COVID years.
The council received about 100 expressions of interest in the site, followed by “a very spirited bidding process”, according to Reece, who stood next to Sydneysider Hemmes on Wednesday morning during a press conference to promote the sale and Hemmes’ vision for a “hospitality, entertainment and creative wonderland”.
An artist’s impression of Hemmes’ plans for 34-60 Little Collins Street. Credit: Merivale
An investigation by this masthead three months ago revealed allegations of sexual harassment and a toxic workplace culture at Hemmes’ Merivale hospitality group.
Reece, who is a Labor party member, would not reveal the winning bid, saying only that it was “in excess of what three independent valuations told us”. The Age confirmed with multiple council sources that it sold for $55 million.
Guest said he and others were concerned the sale was rushed and worried the long-term asset had been undervalued. A week ago, the councillor group received a briefing from a developer about how land prices were depressed around 26 per cent in the CBD, he said.
“They’ve picked this up for a song, and I think that will be clear in the value of the land in years to come,” said Guest, who holds a doctorate in finance and is a former fund manager.
An artist’s impression of the planned Merivale development at Little Collins Street. Credit: Merivale
Liu, also a Liberal Party member, echoed the concerns of timing and price to The Age.
“The property was not sold at the right time and the right price. I believe it’s irresponsible to the ratepayers of City of Melbourne to undersell,” she said.
The previous councillor group, which did not include Guest, committed to selling the car park, with community consultation in March 2024 and the vote to proceed to market in May 2024.
Last year, industry sources suggested to The Age that $30,000 per square metre was the going land rate for the top end of the city, valuing the car park at $116.5 million. But Reece said the site had unique “encumbrances”, including a 40-metre discretionary height control and a major electricity substation embedded in the building, which powers the eastern end of the city.
Reece said the car park had been identified as “being surplus to council’s needs”, and that the sale was part of an “asset recycling program”.
“We are selling one asset so that we can invest in other assets … things like new sports and aquatic centres, which are urgently needed; new sports facilities around Royal Park.”
But Guest said the assets were not genuinely being replaced like-for-like in monetary terms, and said debt was forecast to continue climbing for the next two years with no proceeds of the car park sale offsetting it.
“I don’t want us to get to a point where we can’t pay for truly essential services because of the whims and wants of a few,” he said.
“In my opinion, it is selling a long-term public asset for unfunded short-term projects that shouldn’t have been promised.”
Local traders and venue owners have previously raised concern about the loss of the car park, but Reece said there were close to 8000 off-street parking spots within 300 metres of the site, including many where levels were currently roped off and underutilised.
“I’m not an anti-car lord mayor. I’m a pro-people lord mayor,” he said.
Hemmes has no planning permissions yet for his entertainment precinct, but Reece said the council works with “people with vision”.
Merivale chief executive Justin Hemmes.Credit: Steven Siewert
“We’ll go through a healthy and robust planning process on this project. But as I said, we’re a city of ‘yes’, and so I’m confident we’ll find a way.”
Last year City of Melbourne sold its rubbish services in a $110 million deal. Reece recently abandoned an election promise to sell the council’s share in the Regent Theatre.
Start the day with a summary of the day’s most important and interesting stories, analysis and insights. Sign up for our Morning Edition newsletter.