R2025-114 Resolution Authorizing a Cash Rent Farm Lease with Craig Hill for Two DeWitt County Farms

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Public Works DATE: 1/21/2025 MEMO: TO: Honorable Mayor and City Council Members FROM: Tim Gleason, City Manager Matt Newell,Director of Public Works Robert Weil,Water Production Manager SUBJECT: Resolution Authorizing a Cash Rent Farm Lease with Craig Hill for Two DeWitt County Farms SUMMARY RECOMMENDATION: It is recommended that the City Council approve the attached resolution authorizing a cash rent farm lease with Craig Hill for two DeWitt County farms. BACKGROUND: The City owns DeWitt County Wellfield(Farm#1)with 120 acres that have been farmed for several years by Mr. Hill. The City purchased the second DeWitt County Farm(Farm#4)in late 2023 with 82.91 acres. First Illinois Ag Group (the City's farm management consulting firm)recommends that Mr. Hill be retained to farm both properties since he has successfully farmed the wellfield for many years including incorporating the City's sustainability practices into our farming operations. In 2024, the DeWitt Wellfield yielded an average of 246.5 for corn and the new farm yielded an average of 68.4 for soybeans. In both cases, yield was above the US averages for corn and soy, which were 183.8 bushels per acre and 53.1 bushels per acre, respectively. In 2024, net income for Farm#1 was $29,290 and for Farm#4, $23,591. Since the soil quality of both farms is high, the leases are on a cash rent basis, with a bonus rent based on actual crop production and average market price, to maximize City income. Due to recent commodity price increases for corn and soybeans, First Illinois Ag Group also recommends that the base cash rent be increased by $15 per tillable acre to $340 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$965 per acre for corn and $700 per acre for soybeans. This may slightly decrease the amount of bonus rent income that the City may receive compared to last year. All these recommendations are common in cash rent farm leases in our region. Farm#2, which has poor soils and is located on the land surrounding the Oakley Sediment Basin, had a loss of $5,324 in 2024, and a different approach is being pursued for 2025. A contract with FDC Enterprises to plant sedge grass, will be brought to Council for consideration at a later date. LEGAL REVIEW: The lease was provided to the Legal Department for review on December 6, 2024. PRIOR COUNCIL ACTION: 1. January 17, 2023- The City Council authorized a similar Cash Rent Farm Lease with Craig Hill for the DeWitt County Wellfield(Farm#1). 2. January 16, 2024- The City Council authorized a similar Cash Rent Farm Lease with Craig Hill for the