City Square cash deal

By Shane Scanlan

Fears have been allayed that the City of Melbourne may not have the cash to buy back the City Square when the Metro Tunnel project is complete.

The council earlier this year sold the square to the State Government for around $67 million and it was feared the money would be spent on the Queen Victoria Market (QVM) renewal project.

In April 2014, the council resolved to establish a fund to pay for the QVM.

It also resolved:  “Commencing from 1 July 2014, all profit proceeds from the sale of any other surplus or redundant City of Melbourne land holdings will be deposited into the fund.”

But Deputy Lord Mayor and finance chair Arron Wood says funds received from the sale of the City Square will be held in trust to an agreed amount currently under negotiation with the Valuer-General.

“As part of the arrangement we have come to with the state is to establish a fund in trust so money is available to buy back the public space when the time comes,” Cr Wood said.

He said it was not known when the Metro Tunnel project would be finished using the City Square to build the CBD South station.

“It could be five years, it could be six years, or it could be longer than that,” Cr Wood said.  “But, one way or another, we’ll have the cash to buy back the public space.”

Cr Wood said the council decided the sale and repurchase of the square was the cleanest way to deal with the matter because it was not known what condition or remaining parts of the square would be available when the rail project was completed.

“We don’t know at this stage exactly how much of the square will be used for Metro Tunnel,” Cr Wood said.

“We know there will be less public open space, but not the absolute final design. However, the City of Melbourne is working with Metro throughout the entire process to ensure the final design is mutually beneficial for everyone, most importantly the residents, workers and visitors to the city.”

“The cleanest way is to sell the lot and negotiate the repurchase when the time comes at the mutually agreed value, providing it is in line with the approved masterplan.”

“It was impossible to negotiate a binding agreement when there was so many unknown variables.”

The signed deed states that: "It is envisaged that upon completion of the project the authority (DEDJTR) will retain ownership of the below ground lots together with any of the surface that is occupied by any of the new station entries. The remainder of the surface lot will be purchased by council subject to the design and functionality of the public space being to the satisfaction of council."

Cr Wood said the structure of the sale agreement was the best way to protect the interests of the citizens of Melbourne whilst also facilitating the project.

“We are huge supporters of the Metro Rail project for the obvious benefits it will bring the city, but we reserve our right to protect the council’s financial interests,” he said.