Dubbo Regional Council will no longer have a financial role in the development of the Dubbo Indoor Multi-Sport Facility.
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The proposed facility was announced in September 2018.
At the time, the plan was for the $44.5 million sporting hub to be a 10-court multi-sport facility suitable for netball, basketball, gymnastics, indoor hockey and cricket training, with tennis courts and space for rugby league and rugby union.
There was also a plan for the future of the development to include a FIFA-standard synthetic football pitch and an additional 24 outdoor courts.
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At Monday night's council meeting, the councillors will vote to 'formally withdraw from the Regional Sports Infrastructure Fund agreement'.
The sports hub is expected to cost $44.5 million in total. So far, $19.3 million has been contributed by the NSW government and another $4 million from the PCYC to get the project under way.
In a report on the facility, council's director livability Skye Price said the parties involved in the hub - that is NSW government, Charles Sturt University and PCYC - all agreed with council withdrawing its support.
"Council is not prepared to be accountable for cost overruns pertaining to the construction of operation of a facility. Council should not incur the risk associated with such an initiative," Ms Price said.
"While council strenuously advocates for facilities which can accommodate differing sports, inclusive of basketball, netball, tennis, soccer and the like, as well as significant tournaments for the broader region, council's ambiguous participation in the project control group potentially hinders the facility's ability to progress and gather momentum."
Council will still play a role in the development of the facility, but only to provide advice to the project control group.
Ms Price said it was "integral" for Dubbo to be a conduit between those directly involved in the project and the broader community.
The design of the indoor multi-sport facility is expected to be completed by March. It will be constructed at River Street, adjacent to the Charles Sturt campus.
The first phase is expected to begin in January 2021.
The $23.3 million phase will consist of the indoor sports stadium with basketball courts, the new PCYC centre, and outdoor components. When finished it will be able to host local, regional, and national sporting matches.
The hub is scheduled to be finished in August 2022.