The Northern Distributor Road could become a state road transferring the responsibility for maintenance and funding from Orange City Council to the state government.
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The news comes after Minister for Roads Paul Toole released an Independent Panel's Interim Report into road classification and the transfer of local council-funded roads to state ownership.
A proposal from Orange City Council to transfer the Northern Distributor Road to state ownership was among a list of roads the panel accepted.
Orange City Council has campaigned for years for such a transfer and more funding, and mayor Cr Reg Kidd welcomed the government review.
He said it would be a sensible decision if the Northern Distributor Road became a regional road to relieve the burden on ratepayers.
"Orange City Council has done the hard yards to get this key piece of infrastructure built," Cr Kidd said.
"While other regional cities are still deciding whether or where to build these important bypass roads, the people of Orange have been enjoying the lack of heavy vehicles such as cattle trucks in the main street for years."
"With assistance from other tiers of government, we got it built and its now hot-mix asphalt from end-to-end. It takes thousands of car and truck movements every week out of residential areas of Orange."
According to a submission put before the council in October last year, of 10,000 vehicles per day that use the Northern Distributor Road, an average of just over 3000, or 30 per cent, are heavy vehicles. Comparatively of 10,000 vehicles per day on Summer Street, only about 600, or six per cent, are heavy vehicles.
"That heavy flow of traffic shows that it's already becoming a de facto leg of the Mitchell Highway, but the cost of maintenance comes back on rate-payers. The road from Chinamans Bend through to Escort Way is a crucial piece of infrastructure," Cr Kidd said.
"I welcome the Roads Minister's decision to work with local councils to explore the next steps. There'll be a thorough consultation period with councils and government departments. Orange City Council will make a further submission on this interim report and we look forward to a final decision in due course."
The road was listed in the priority round for reclassification but, from last week, all NSW councils could submit proposals for reclassifications in the main round.
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