Clash over distillery rent

THE Derwent Valley Council and owners of the New Norfolk Distillery are at odds – with one side saying the operators have not paid rent in three years, and the operator saying they have invested in the facility which is an agreed offset to paying rent.

Tomorrow night the council will consider two key issues relating to the distillery.

The first is whether the council will agree to the sale of the Allonah and Occupational Buildings to the distillery for a valuation price of $450,0000 and the second is whether the operators will be forced to pay past rent, have their lease terminated or agree that nothing need be done regarding rent.

The council entered formal lease arrangements with the New Norfolk Distillery to lease the Alonnah and Carlton buildings at Willow Court for a five-year term in 2019.

The lease was agreed to on the basis that a range of services such as water, sewerage and electricity would be provided to the lot and that three new titles be established. Infrastructure works are scheduled for next financial year.

“Council cannot sell these lots until titles have been issued,’’ the agenda states.

“Council could not offer in-principle agreement unless it was heavily conditioned to protect council from the risk that no title ever issues.

“Even then the problem is that an in-principle agreement would bind council to do everything it can to get a separate title. Right now council does not know the full cost and other hurdles that may be confronted.’’

The agenda says rent for the past three years has not been paid by the distillery and $78,483.50 is owed.

Councillors will be asked to decided whether they should: Do nothing; discharge the unpaid rent; terminate the lease; send a notice of default to the guarantor; or make a payment arrangement with the distillery for the unpaid rent.

The lease contains a clause that the distillery is entitled to a set-off for the rent for expenses incurred towards capital works on the site.

“The distillery has provided invoices totaling approximately $178,000 that it claims are a set-off for the unpaid rent,’’ the agenda said.

“These expenses do not qualify as a rental set-off for the following reasons: Capital works means any and all works carried out by the distillery that improve the condition and value of the leased premises beyond its original state. The invoices were not for capital works. A recent valuation report states that there have been no improvements in the condition of the premises.’’