Julian McLaren wants to know why the council is loaning money to a company when a bank will not and why they are bending over backwards for one particular private business.

The loan will be repayable over a period of 15 years at a fixed interest rate of 6.8 per cent for the purpose of partial funding of the construction of an aircraft hangar, concrete slab and sprinkler system.

The loan will be secured with a mortgage over the hangar and the company will sub-lease an area of land at the airport from council for 13 years – council’s lease on the land runs for that long.

“It can burn down and they don’t own the land,” Mr McLaren said on why it was an unsecured loan and therefore deemed by banks to be a higher risk than security over actual land.

“Why is Wagga council the lender of last resort?” he said.

He also noted that the building – which will be used for painting planes – will have its value depreciate over time.

“I don’t like it, there should be a clear line between public and private business,” he said.

Wagga City Council’s director of commercial and economic development Peter Adams said that Douglas Aerospace had approached council about the business venture and they had not approached other businesses about the opportunity.

He said that they were in a more stable position to provide the loan than a bank because they were leasing the land and that external advice had been sought.

“The difference in security is that the hangar will be on our premises,” he said.

He said he did not think Mr McLaren was right to

categorise the loan as an unsecured loan.

“The resolution specifically states there is security over the hangar and there is a personal guarantee from the principal,” he said.