Cr Tom Weyrich moved a motion at the council meeting on Tuesday, September 22, to give notice to terminate the current lease on Lot 3 Line Road, Moama and advertise a lease on similar terms with a view to obtaining a higher rental return.
As previously reported in the Riv, MRC bought the land for $1.219 million in 2018 for Murray River Energy to build an ethanol plant.
Council signed a lease back to the previous owner for $15 an acre for five years, with the option for a further five years.
A valuation obtained by council from registered valuer Eishold, in July, found a rental price between $50 and $75 an acre was possible.
At last month’s council meeting, MRC acting chief executive Brian Barrett revealed the low lease price was part of the deal to buy the land from an “unwilling seller”.
Cr Weyrich said the motion was “pretty straightforward”.
“The return that council is receiving is just not acceptable, it’s way below what the market expectations are,” he said.
“The longer this goes on, the worse it gets.”
Cr Weyrich said he believed council would have to pay out the remainder of the lease, however Mr Barrett said his understanding of the lease terms was it could be terminated with three months notice on council’s behalf.
“The only condition on that is if council does not allow sufficient time for the lessee to tend and harvest his crops, then we have to pay a commercial value for the crops,” Mr Barrett said.
“My understanding is three months notice was selected because that would give sufficient time.”
Due to a lack of clarity around the lease terms, Cr Weyrich withdrew his motion and council will instead seek a report on the implications of terminating the current lease before making a decision.
In discussion, Cr Wise said he thought the motion was going too far.
“This deal with the ethanol plant hasn’t really been finalised yet,” he said.
“I don’t know why you’re trying to play with the lease for a few grand when in under 12 months (the company) could pay out the property and away they go.
“I think a lot of people have come to the opinion that it’s all over, but it’s still going. This deal is still in motion.”
Mr Barrett also revealed council had not yet received an interest payment on the $900,000 loan to Murray River Energy.
“Interest is payable every three months. We only invoiced in the last month and that interest payment is currently outstanding,” he said.
“The loan is due at the end of the two-year term, which commenced at the first draw down of the loan which I think was March 2019.”
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