THE Mornington Peninsula Shire Council’s payout of $350,000 to end its financial commitments to the Peninsula Aero Club has been described as secretive.
The payout released the council from a 173 agreement signed in 2002, which had tied the council to a 20-year commitment to assist the club with certain “financial accommodation” in relation to maintenance.
Those obligations – which included paying for the cost of resurfacing the airport’s runway — was apparently reliant on the airport paying an annual maintenance fee of $400 to the council.
Freedom of Information documents show the PAC did not make any of the required payments between August 2002 and January 2021, nor were the required five-yearly meetings to review the contract ever held.
Tyabb resident Peter Davis, who lives near the airport, has accused the council of making the payout “in secret”.
Davis said he was concerned that ratepayers were not notified or “advocated for” in the decision to make the payout.
He said it was “an extraordinary” amount to extinguish an agreement that partly expired on 5 August 2022.
“There is and was no transparency and the money has already been paid,” Davis said.
The primary purpose of the 173 agreement was to provide money for the PAC to seal the north-south runway at the airfield, but the agreement also included obligations on the PAC to develop and implement a business plan, share the profits of air shows, allow the airfield (now classed as an airport) to be used for various emergency services, and actively pursue funding.
In turn, the council was obligated to support and encourage activities associated with the airfield, pay for the cost of sealing the runway, and pay for some maintenance and inspection requirements.
Parts of the 20-year agreement expired in August, although some elements of the agreement did not have an end date.
Council documents note that the payout was preferable to being exposed to the “potential risk, legal exposure and costs associated with being bound by the agreement”.
The council did not respond to Davis’s claims that none of the annual $400 payments to council that were written into the agreement had been paid by the aero club.
The mayor Cr Anthony Marsh said the payout released the council from ongoing and expensive obligation.
“Council entered negotiations to end the 173 Agreement to remove all potential ongoing obligations and liabilities in the long-term interests of ratepayers,” he said.
“As you would expect, we deal with these decisions and negotiations confidentially as per the Local Government Act.
“Council’s decision to negotiate and the final settlement amount of $350,000 is on the public record. We are pleased to have successfully terminated the 173 Agreement and that the shire no longer has any obligation or liability under this legacy agreement.”