R2023-08 Resolution Authorizing Cash Rent Farm Lease with Craig Hill for DeWitt County Wellfield

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Public Works Memorandum NO. 2023-02 DATE: January 17,2023 TO: Mayor Julie Moore Wolfe and City Council FROM: Scott Wrighton, City Manager Matt Newell,P.E.,Public Works Director Keith Alexander,Water Production Manager Jennifer Gunter,Watershed and Lake Manager SUBJECT: Resolution Authorizing Cash Rent Farm Lease with Craig Hill for DeWitt County Wellfield SUMMARY RECOMMENDATION: It is recommended that the City Council authorize the Mayor to sign, and the City Clerk to attest, to the Resolution Authorizing Cash Rent Farm Lease with Craig Hill for DeWitt County Wellfield at no cost to the City. PRIOR COUNCIL ACTION: On March 15, 2021, the City Council authorized a similar Cash Rent Farm Lease with Craig Hill for the DeWitt County Wellfield. BACKGROUND: The City owned DeWitt County Wellfield has 106.21 tillable acres that have been farmed for several years by Mr. Hill. First Illinois Ag Group recommends that Mr. Hill be allowed to continue farming the wellfield since he is very knowledgeable of the unique characteristics of the property and has successfully farmed on it for many years. Since the quality of the soil at the wellfield is high, the leases have been on a cash rent basis, with a bonus rent based on actual crop production and average market price,to maximize City income. In 2020, the City's net farm income at this location was $26,611.09. In 2021, the City's net income was $41,787. The difference in net incomes is due to higher grain prices in 2021. Due to recent commodity price increases for corn and soybeans, First Illinois Ag Group also recommends that the base cash rent be increased $15 per tillable acre to $325.00 per tillable acre. This will provide the City with slightly more base cash rent income than last year. Due to the increased cost of crop production compared to last year, First Illinois Ag Group also recommends that the basis for the bonus rent payment for corn be adjusted to a breakeven profit point of$1,075.00 per acre and $750.00 per acre for soybeans. This may slightly decrease the amount of bonus rent income that the City may receive compared to last year. Both recommendations are included in the lease. Since the City is more proactively involved in Lake Decatur water quality improvements,the lease also includes the requirement that a winter cover crop (cereal rye) be planted to reduce soil erosion from fall crop harvest through spring crop planting.