In short:

The ABC understands NSW Premier Chris Minns will be referred to the state's corruption watchdog over his relationship with one of the key figures behind the redevelopment of Rosehill Racecourse.

The decision concerns Mr Minns's relationship with Steve McMahon, head of government relations at the Australian Turf Club, the organisation which owns the site. 

The NSW Premier Chris Minns says a decision by a parliamentary committee to refer him to the state's corruption watchdog is "disgraceful" and based on "completely unsubstantiated" allegations.

The ABC understands the parliamentary committee inquiring into the re-development of Rosehill Racecourse has voted to refer the premier to the Independent Commission Against Corruption (ICAC) over his relationship with one of the key figures behind the project.

The decision concerns Mr Minns's relationship with Steve McMahon, the head of Government relations at the Australian Turf Club, the organisation that owns the site.

The premier described the claims as "based on no fact or evidence".

He publicly acknowledged at a budget estimates hearing in June that he's known Mr McMahon for more than 20 years.

In a statement issued on Thursday night, Chris Minns said "it's completely disgraceful to politicise the ICAC with unsubstantiated rumours".

"There is absolutely no evidence or even an attempt to quantify what rule, practice or procedure has been breached," he said.

"This is an old-fashioned smear from a group of politicians opposed to changes at Rosehill.

"But while opposing a policy may be understandable, unsubstantiated allegations of corruption is a cynical attempt at political point scoring."

The premier was asked at the budget estimates hearing who had come to him with the proposal to redevelop the racecourse.

"It would've been — I can't remember his position — but Steve McMahon at the ATC," Mr Minns said at the time.

"I have known him a long time".

Mr Minns said the matter was not "outrageous".

"Obviously, when you're in government, people come to you and say, 'Look, we've got an idea. We think this would be good for our organisation'," he said.

"They might make a pitch that it'd be good for the state as well."

Mr Minns said he made the announcement about the redevelopment "not long" after Mr McMahon approached him.

The parliamentary committee looking at the development proposal has voted to make the referral in its report, which will be released on Friday.

Project would convert track into 25,000 homes

The controversial Rosehill redevelopment would see the historic Parramatta track converted into 25,000 new homes in a bid to "re-shape Sydney".

Mr Minns has continued to defend the proposal, and previously said Sydney would be "stuck in the mud" if institutions like the ATC were not open to change.

When it was announced in December last year, a spokesperson for Mr Minns said it was the "biggest thing we will ever do as the government. If this comes off, put it that way".

High-profile racehorse trainer Gai Waterhouse has previously testified the racing industry is "incensed" by the plan and said she was confident that ATC members would never agree to the sale when it goes to a vote.

In July, she told the parliamentary inquiry into the racing industry the ATC had no right to agree to the sale without a vote from its members, who she said would never sell the historic race track.

"We would not be here today to discuss the sale of the cricket ground the SCG, or Bondi Beach, but yet we are here to discuss the sale of Rosehill," Ms Waterhouse told the inquiry.

"The members are who own Rosehill. If they put it to the members now for a vote, it would be overwhelmingly against the sale."

The ATC maintains it has the right to agree to the sale.

Racing NSW boss Peter V'landys also gave evidence at the inquiry, and faced off against independent MP Mark Latham amid a number of allegations including that Racing NSW intended to keep the money from the sale of the site for themselves, which Mr V'landys denied.

Mr V'landys told the inquiry the regulator did not intend to keep the money but wanted there to be impendent oversight of how it is spent by the ATC.

"We wanted oversight to make sure they are spending the money on racing infrastructure," he said.

"We didn't want the money spent on members' indulgences like ski chalets and resorts in Fiji and resorts in Paris."