Port Stephens Council considers cost of pulling out of Cabbage Tree Road sand mine lease

INDEFENSIBLE: Even if Port Stephens Council wanted to revoke a lease to Williamtown Sand Syndicate the costs would run into the tens of millions.
INDEFENSIBLE: Even if Port Stephens Council wanted to revoke a lease to Williamtown Sand Syndicate the costs would run into the tens of millions.

Hopes that Port Stephens Council might tear up its lease with the Williamtown Sand Syndicate and spare Cabbage Tree Road neighbours further heartache appear dashed.

The state government gave the mine a green light last week despite the presence of PFAS chemicals in the Williamtown surrounds that threatened to derail the project entirely. As recently as March the council resolved to investigate the cost of revoking the lease and residents remained hopeful it might back out, given the cumulative impacts of living in the red zone.

The Examiner understands that councillors have now been confidentially briefed on the likely costs that are said to represent a $58 million hit to council's bottom line  - about $20 million in lost rental income and the balance comprised of damages should Williamtown Sand Syndicate sue for lost income and win.

NO WAY: Cr Paul Le Mottee

NO WAY: Cr Paul Le Mottee

Cr Paul Le Mottee would neither confirm nor deny the figures but said he was firmly opposed to breaking the lease.

"We would actually be reneging on a contract, it would leave us exposed," he said. "The law is very clear,  there's an agreement in place and there are precedents where damages have been paid."

Cr Giacomo Arnott launched the investigation at the March 27 meeting with his notice of motion. 

Seconded by Cr John Nell the resolution directed staff to; prepare a report detailing options relating to the proposed sand mine on Cabbage Tree Road; include the estimated cost of revoking the lease awarded by the previous council, including cost implications; and deliver the report within four weeks. 

Cr Arnott confirmed that council had done this but when asked if he would press ahead with a request to revoke the lease he said it was "inappropriate to comment on a confidential item".

He was pleased however that council might soon be able to deliver meaningful rate relief  for red zone residents.

Cr John Nell wouldn't put a figure on the potential loss but said the staff's assessments "had to be in the ball park".

"I will say that it is very, very serious money," he said.

"Council only earns $40 million from rates. You can never be sure that anyone will sue but it's a reasonable assumption."

TOO LATE: Cr John Nell said approval of the mine had only strengthened Williamtown Sand Mine Syndicate's standing.

TOO LATE: Cr John Nell said approval of the mine had only strengthened Williamtown Sand Mine Syndicate's standing.

Cr Nell defended his interest in the cost, though he hastened to add there was "no way" he would support tearing up the contract.

"To get the information, yes, I don't think there's anyone who would not have wanted to know," he said.

"But now I have the information, no way. I doubt any councillor would support this but if council somehow did adopt a rescission, I would expect that council to be sacked the next day."

Cr Nell said the ship had long sailed on revoking the lease, established by the previous council. Put beyond doubt, he said, with last week's approval.

"They have a real asset now, you bet they could sue us," he said. "I am sorry for the neighbours but we have a responsibility to the rest of our ratepayers."

A council spokesman confirmed “confidential discussions had been held with councillors” about the “possible outcomes of unjustly terminating an agreement for lease” but would not confirm the estimated cost.

In the mine’s approval, the state’s Independent Planning Commission found there was no evidence the mine would contribute to the spread of firefighting chemical contamination from Williamtown RAAF Base.

Half a million tonnes of sand will be extracted each year under the $4.7 million proposal. The original plans for the sand mine have been pared back - in response to dozens of objections by residents - shrinking its footprint from 68 to 42 hectares. 

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