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Redfern revamp: Sartor seeks $36m - 11.04.2005

The two-month-old Redfern-Waterloo Authority, charged with redeveloping dilapidated inner-Sydney suburbs, is facing a $28 million cash-flow crisis because its original budget was flawed and "too optimistic".

To cover the gap, Frank Sartor, the authority's responsible minister, wants the NSW Government to give it nine annual loans of $4 million each, or $36 million. And he warns he may be back for more.

The authority was to get a single, interest-free loan of $7.75 million to sustain it before it could make money by developing public land. It is meant to use those real estate proceeds, rather than government grants, to change the face of Redfern.

But Mr Sartor submitted a minute to cabinet's budget review committee, seen by the Herald, in which he admits the authority "is currently unable to carry out these responsibilities due to insufficient funding".

The single loan is not enough because the "fundamentals of the budget", on which the Government based its decision six months ago to set up the authority, now need "revision", it says.

A Premier's Department report in October said the authority would be "a non-budget dependent agency". It was to fund the redevelopment of the area entirely by selling public land, save for the one-off loan.

But Mr Sartor's minute says that model failed to provide for the authority's administration costs and was "too optimistic" in estimating how quickly it could profit from its real estate business.

Its original budget required it to "generate significant revenue" in its first two years, by selling or developing the police station at Redfern and railway land at Eveleigh. It does not now expect to raise significant amounts for up to four years, blaming problems with public consultation, "highly contaminated" sites and "significant" heritage issues.

The minute does not blame the cash-flow crisis on a softer property market, but says that "as a matter of commercial practice and Government policy, the [authority] should seek to maximise the returns from these developments". Additionally, "the sale of government assets to fund operational cost could be interpreted as a lack of commitment towards the Redfern-Waterloo community".

Mr Sartor wants $36 million of loans, and permission to raid the budget of the existing Redfern-Waterloo Partnership Project, to cover the shortfall until 2014.

He wants to be allowed "to speed the sale" of "surplus government land" in the area, including significant railway landholdings in Redfern and Eveleigh, as well as the Redfern school, police station, courthouse and the Rachel Forster Hospital.

He played down the significance of his request yesterday and refused to say whether it had been approved. "I'm not at liberty to say," he said, directing the Herald to wait for the budget. He was not worried about the long-term viability of the project, which had only just begun. "I'm satisfied everything's under control."

His minute warns ministers he may soon be back asking for more. "It is recommended that cabinet notes the minister's view that Redfern-Waterloo remains under-resourced, and that supplementary funding may be sought to advance specific projects in future years," it says.

By Tim Dick, Urban Affairs Reporter SMH April 11, 2005


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