A LACK of land sales in the Windy 1100 subdivision has forced Bathurst Regional Council to make a request to borrow money so it can manage its cash flow.
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Since the first stage of land in the new Windradyne subdivision was released in early May, 2024, the council has sold just 9 lots.
Three dual service lots were sold prior to the ballot draw on May 9, and then the draw itself resulted in the sale of six single lots.
The remaining 66 single lots in the subdivision were then put on the open market, but so far no more lots have sold.
The council's projected profit from land sales, predominately from the Windy 1100 subdivision, was about $21.9 million.
However, after seeing the sales results to date, and with just a month to go to the end of the financial year, it's possible the projection could fall short by as much as $20 million.
With the sales results lacking, the council is now looking to borrow $25 million from its sewer fund so it can finalise the payments for contract works if the required land sales do not occur before June 30, 2024.
Initially, the council was planning to borrow $15 million, but then at its May 15, 2024 meeting, made the decision to seek a further $10 million.
The request to borrow from the sewer fund has been amended and is now under consideration by the Minister for Local Government, who is expected to make a determination before the end of the 2023-24 financial year.
During discussion at the May 15 meeting, councillor Marg Hogan said the need to seek a further $10 million demonstrated the council's financial issues.
"So, really, there's no escaping we have a cash flow problem," she said.
How the borrowing works
Bathurst council will need ministerial approval before any money in the sewer fund can be touched.
The council's director of Corporate Services and Finance, Aaron Jones, said the money could be taken from either the balance of developer contributions or the reserves in the sewer fund.
It will be at council's discretion as to where the money comes from.
Mr Jones said council's intention is to pay back the loan within five years, utilising the money from land sales as they eventuate.
"That loan was actually presented to the minister as a five-year loan to be repaid as soon as practically possible, with the commitment that as land sales realise, that those profits from land sales will actually go and start repaying that loan," he said.
"Our intention is to pay it off as soon as practically possible."
While money would be borrowed from the sewer fund, it would not deplete that fund entirely.
"We're not zeroing out the balance of funds sitting within the sewer fund, so there is that safety net, for want of a better word, to fund a major failure should one arise," he said.
He explained that it was better for the council to borrow money internally than to seek a loan from a major bank, citing the ability to negotiate shorter terms, different payment arrangements, and a reduced interest rate.
It also becomes an investment for the sewer fund, which sees a return through the interest the council would have to pay on the loan.
Mr Jones reassured that the sewer fund will continue to grow, despite money being borrowed from it.
"The sewer fund continues to operate at a small surplus, so the sewer fund will continue to grow until such time as we have a major asset spend in that sort of space," he said.
"Our intention is the sales from Windy 1100 will transpire in the course of the next 12 months - perfect world scenario - and then that money will be repaid in such a short time frame."
Should the council be unsuccessful in its request to borrow from the sewer fund, it will need to pursue a loan externally.
Rachel Chamberlain
I have been a journalist at the Western Advocate since 2014.
I have been a journalist at the Western Advocate since 2014.
