A STRIP club owner is threatening legal action against Melbourne City Council and Russian property developers who are about to demolish a notorious "bombsite".

The asbestos-riddled former power station on the corner of Spencer and Lonsdale streets is earmarked for demolition in January, and the removal of its 50-metre chimney stack will force the closure of part of Lonsdale Street.
The proposed four-month closure of the west-bound lanes between King and Spencer streets during the work has angered Men's Gallery owner Peter Iwaniuk.

"I would like to know how and why the council allowed this dangerous and contentious work to proceed with such haste and secrecy, and whether any independent verification of the works has been undertaken," he said.

Barricades will be erected in front of the strip club near the corner of Lonsdale and King streets, affecting the club and the recently opened Direct Factory Outlet in Spencer Street, Mr. Iwaniuk said. "They say it will only be four months, but we know how the building industry works, and it could stretch out to 12 months."

Mr. Iwaniuk said the Russian consortium that owns the building had not obtained planning permits for the removal of asbestos and other toxic materials or the demolition of the building. Neither had demolition company Guilfoyle Wreckers, he said.

The Russian consortium, Soldis Capital, paid $7.6 million for the derelict power station in June and is planning a large-scale office and retail precinct for the site.

Soldis Capital spokesman Florin Burhala said the developers had satisfied all planning requirements during the decontamination of the toxic site.

"We have informed all the businesses in the surrounding area and there has been no other opposition to our plans to rejuvenate one of the city's worst eyesores," Mr Burhala said.

City councillor Catherine Ng said a building surveyor's report had recommended immediate demolition in the interests of public safety, which abrogated the need for a planning permit.

Cr Ng said the closure of Lonsdale Street was necessary for public safety while the chimney stack was dismantled.

A report last year by environmental science group EnviroProtect described the Spencer Street site as one of the most contaminated and hazardous sites in Melbourne, riddled with asbestos, synthetic mineral fibres and polychlorinated biphenyls.