Chapel Street traders to wage legal battle with council over $5m ‘special fees’

Chapel Street traders have launched a legal fight against Stonnington Council over more than $1 million of annual levy fees they pay on top of rates, as concerns grow over the future of the iconic Melbourne precinct.

A group of 10 traders, including the operators of popular restaurant Mr Miyagi and Chasers Nightclub, is challenging the Chapel Street special rate paid by 1600 businesses located on or near the two-kilometre stretch from South Yarra to Windsor through the Victorian Civil and Administrative Tribunal (VCAT).

Pawn & Co bar owner Josh Lefers, also involved in the action, said parts of the precinct had become a “disaster” and is concerned about vacant shopfronts, antisocial behaviour and a general feeling the area is unsafe.

“Traders have definitely been let down,” Lefers said.

“We’re forced to give the money with no voice to talk about where our money is being spent.”

A public notice for the scheme shows Chapel Street businesses pay up to $2500 per year for one property and receive a 50 per cent discount on secondary properties. The levy is predicted to net the council $4,955,000 over 4½ years.

Print Express owner Justin O’Donnell was president of the Chapel Street Precinct Association leading up to the introduction of the levy in 2024, and is now leading the push for it to be scrapped.

He said traders believed the money was intended to be spent on marketing and promoting the precinct but is now also instead paying for things that should be covered by rates, such as street cleaning and graffiti removal.

“We just don’t think it’s right to be double-dipped, charged twice with something we’re already paying for when it’s meant to be going towards marketing and promotion,” O’Donnell said.

He said that since the levy was introduced, a negative perception of Chapel Street had set in.

High-profile criminal incidents including a firebombing at a notorious nightclub and hooning have attracted significant attention, while police recently launched a three-week crime crackdown, and residents formed a movement to “reclaim” Chapel Street.

“The whole state has seen an increase in crime, it’s not limited to just Chapel Street, however Chapel Street is a major, well-known brand,” O’Donnell said.

At a VCAT hearing last week, a lawyer for the council disputed that marketing and promotion was the primary purpose behind the levy.

The council’s Chapel Street Precinct Improvement Plan shows $735,000 of $1.1 million in levy fees raised this financial year are allocated to strategic marketing and “activations”, $315,000 will be spent on cleaning and $50,000 on a Salvation Army partnership to deliver a new outreach program for vulnerable people.

The legal fight is just the latest development in a years-long rift between some traders and the council.

Chasers owner Martha Tsamis, also involved in the VCAT case, said Chapel Street was on track to become a shadow of its former self like Richmond’s Bridge Road. She said the 15 per cent vacancy rate in the street was partly attributable to “astronomical” rents.

“This is one of the best streets in Melbourne. But if we don’t jump on this and fix things it’ll end up one of the worst,” Tsamis said.

Tsamis suggested any extra funds raised through a special levy be used to revive the Chapel Street Festival, which drew big crowds to the area in the 1990s.

“When you spoke to owners that had the festival back then, they said that they’d make enough money to keep their overheads covered for the year, just about,” Tsamis said.

“We need to have a street party, every other municipality has it.”

In 1999, the Chapel Street Festival attracted 250,000 people, but in 2000, an organiser told this masthead “intoxicated partygoers” had spoiled the fun and that prompted a heavier police presence.

In 2022, the Chapel Street Precinct Association won a $450,000 state government grant to back a revival of the family-friendly festival. However, it was postponed in 2024 and again in 2025. Of the grant, $100,000 was released to the festival, while the remainder was redirected to other local events.

Sam Koulis, the owner of menswear shop Sam & Ko for 30 years, said he no longer saw any new faces in his store.

“Do I love my locals? Yes. But it’s not enough,” he said.

“We need the other people that used to come here that are going to Chadstone, that are going to the centres because there’s security guards there, there’s more people there, a more buzzing environment.”

Koulis, like many traders, is pinning hopes for greater foot traffic on the $3.75 billion Jam Factory redevelopment due to open in 2029.

Soak Bar owner Carlie Lansdown said she didn’t believe Chapel Street was declining. Rather, she said it was shifting from a retail precinct to a destination for food, drink and experiences like beauty services.

“I feel like Chapel Street isn’t dying, it’s refining itself,” she said.

“On my side, the South Yarra side, I feel like we’re only getting more construction, more businesses, more growth.”

Stonnington Council chief executive Dale Dickson said the vast majority of funds raised by the 2025-26 levy had been allocated towards marketing and promoting the precinct. He said the council had committed $4.38 million in the current financial year to the precinct improvement plan and would commit a similar amount next financial year.

Dickson said the council was deeply engaged with Chapel Street businesses and property owners, and considered the overall relationship to be positive and constructive “with the exception of a small number of vocal individuals”.

“Council is proud of the work we and the Chapel Street businesses have delivered to uplift the precinct this year, and we look forward to continuing these efforts,” he said.