Dubbo MP Dugald Saunders says the city's sports hub "remains on track", despite Dubbo Regional Council cutting financial ties to the project.
Plans for the facility were announced in September 2018.
At the time, it was proposed the $44.5 million sporting hub would have 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.
It was a joint project between the NSW government, council and PCYC. But on Monday night, council took a step back from the precinct, deciding its role was only to provide advice.
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Mr Saunders has reassured the community that the hub will proceed.
"Dubbo Regional Council was not a major financial contributor to this project, which only last November received a substantial $10 million top-up from the NSW government," Mr Saunders said in a statement.
The NSW government has provided $19.3 million for the project so far. It's in addition to $4 million given to the PCYC which has been allocated to the sports hub.
"I thank Dubbo Regional Council for its contribution to the project control group to this point, and I look forward to their continued support of the project in an advisory capacity," Mr Saunders said.
The design of the indoor multi-sport facility is expected to be completed by March. It will be built at River Street, adjacent to the Charles Sturt campus.
The first phase of construction is expected to begin in January 2021.