Council solar plan pays $4.3m for land worth $800k in 2012
SUNSHINE Coast Council has paid more than $4.3m for a flood-prone piece of cane land arguably worth less than $800,000 on the open market as it chases uncertain energy cost savings from a proposed $30m solar farm project.
The real cost of the land to ratepayers is likely to exceed $5m when all outgoings, including council's defence of a legal challenge to its right to build a solar farm on the site, are taken into account.
Documents lodged with the Planning and Environment Court reveal that in a series of transactions, in which council is the end purchaser, the cost of the 49ha of flood-prone idle cane land has escalated rapidly from just $770,000 when it was purchased by Gruenenergy in September, 2012.
Immediately after that sale by the original owner to Gruenenergy it on-sold the property to Akerman Enterprises for $1.1m.
However the month before on August 8, 2012, it signed a 20-year agreement with Akerman as well as three, ten-year options to lease the land for $95,000 a year increasing three percent annually.
That lease included an option to purchase the property at any time for $1.5m or market value which ever was greater.
Crucially it gave Gruenergy the right to transfer the option to purchase to another party.
A series of documents council has lodged with the Planning and Environment Court to prove it is in sole control of the land show that on May 2 this year it paid $1.65m including GST to purchase the Valdora property.
They also reveal council first had to pay Gruenenery $2.38m in two equal amounts of $1.19m for the option to buy the land.
In all Gruenenergy appears to have pocketed a total of $2.68m from the transactions without turning a sod.
At council's December, 2012 meeting - just two months after the series of transactions between Gruenenergy and Akerman Enterprises - Cr Steve Robinson seconded by Cr Tim Dwyer moved that its CEO John Knaggs report to council on the progress of the solar farm project, approval for which had been granted in August 2011 to Energy Parks Australia, a company controlled by former council planner Jason Hague.
On January 31, 2013, Mr Knaggs presented council in closed session with a business case to take over the solar farm project arguing that it would save council $9m in energy costs over 30 years.
From that business case which claimed that the solar farm project was the only viable alternative energy proposal that could save council money and that the land at 909 Yandina-Coolum Road was the only suitable site, council committed to the $30m project which had failed to attract any commercial support.
The true cost of council's purchase has been exposed because of a challenge by consultant and developer Noel Covey to the original development approval.
That appeal, which is still being heard, may leave council unable to proceed with the solar farm project it announced with much fanfare in January last year.
The council documents show it signed in June last year the $2.38m call option to purchase the property paying a $300,000 non-refundable deposit.
It bought the land on April 2 this year committing ratepayers to $4.3m in expenditure plus all costs associated with the transaction just over a week after the planning and environment court allowed Mr Covey's appeal to proceed.
Council now faces legal costs of up to $500,000 as it fights to retain the development approval it granted Energy Parks Australia on August 8, 2011 despite objections from 85 residents concerned about the project's impact.
Each of those objectors were entitled to notification of council's decision to approve the material change of use from cane land to major utility - solar farm.
However only 84 reached their correct destination. The 85th, to Mr Covey, was sent instead to Mr Hague who failed to either on forward the document or return it to council.
Mr Covey became aware of the approval only last year. He eventually received the document on July 22, 2013, and exercised his right to appeal the decision in the statutory 20-day period he then had to do so.
On March 21 this year Justice Robertson agreed Mr Covey's appeal should be heard.
Despite that, and rather than seeking to extend its option on the land - which was permitted by the contract - until the matter was resolved council went ahead with the purchase.
Council also faces stiff community opposition to the project with Valdora resident Jim Perry set to hold a public meeting to question the viability of the project which he claims on the the original business case, will result in a $9 million loss rather than $9m in savings.
His figures are based on the current federal government's renewable energy policy.
Mr Perry said the farm would project the glare from 40,000 solar panels through his bedroom window on a summer's morning.
Council's own documents describe the glare as less than that experienced looking directly at the sun.
He has already met with senior council staff claiming he was told that they were not going ahead with extensive community consultation recommended by the business case because "they didn't want anyone to know what they were doing".
- AUGUST 8, 2011: Council approves Energy Parks Australia bid for material change of use at 909 Yandina-Coolum Road from flood prone cane land to major utility
- AUGUST 9, 2012: Gruenenergy signs 30-year lease with Akerman Enterprises on cane land neither owns.
- SEPTEMBER 9, 2012: Gruenergy buys land for $770,000 immediately on-selling to Akerman for $1.1m.
- DECEMBER, 2012: Council asks CEO to report on progress of commercial solar farm approved for the site
- JANUARY, 2013: Council receives business case to take over project
- JUNE 28, 2013: Council pays Gruenenergy non-refundable $300,000 deposit for the right to buy out option to purchase the cane land and aggress to pay Gruenenergy's annual lease fee of $95,000
- MARCH 21, 2014: Noel Covey right to appeal against development approval allowed
- APRIL 2, 2014: Council pays Akerman $1.65m for cane land and Gruenenergy $2.38m for the right to purchase it.
- APRIL 3, 2014: Council pays Locality Planning Energy $10,000 for the transfer of all benefits of development approval.
- MAY 2, 2014: Council receives land title.
A COUNCIL SPOKESMAN:
"There are currently legal and contractual issues being addressed and it is not appropriate for Council to make any comment at this time."
THE DAILY'S QUESTIONS
- Council paid a non refundable deposit of $300,000 last year and a further two payments of $1.19m this year for the right to the option to purchase flood-prone cane land at Valdora for another $1.65m. Did council seek an independent valuation of the property before committing ratepayers to expenditure of $4.33m.
- Court documents show that council exercised the call option without availing itself of a right implicit in the contract to extend it, despite knowing the validity of the attached development approval was still to be tested by an appeal. Will council explain why it did not limit ratepayer risk by extending the option?
- Will council release the modelling it has relied on to develop the business case to proceed with the solar farm project?
- Who provided the advice that 909 Yandina-Coolum Road and the particular alternative energy project i.e. solar farm were the only means of achieving council's energy cost objectives? How was that advice tested?
- Valdora resident Jim Perry attended a meeting with council officers in which he says he questioned whether the extensive community consultation recommended in the business case presented to councillors in January last year would go ahead.
Mr Perry says he was told the consultation would not take place because "they didn't want anyone to know what they were doing".
- how does council respond to that allegation?
- what community consultation is planned in relation to the project, particularly in the Valdora district?