Yass Valley Council's general manager Sharon Hutch has handed in her resignation after less than 12 months in the role.
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She accepted the role in September 2018 and her last day will be on July 19.
Sources close to Mrs Hutch say she has accepted a senior management position at Singleton Council.
The chance of Mrs Hutch taking the general manager role at Singleton Council has, however, been ruled out by the council's deputy mayor Godfrey Adamthwaite.
He said the council had not been told that its general manager Jason Linnane was leaving, but that a recent reshuffle had made an executive position available.
"There is a meeting next Monday. Perhaps they were waiting for an acceptance to let us know," Cr Adamthwaite said.
"But I can categorically say our general manager isn't going anywhere."
Yass Valley Council's director of planning Chris Berry will step up as acting general manager until the position is permanently filled.
Yass Valley Council's acting mayor Nathan Furry said the council was seeking quotes for an independent recruiter.
Whether that recruiter would be tasked with replacing the director of planning or general manager role was unclear.
The councillors are due to be re-elected in September 2020 and will need to decide whether they or the new council should appoint the next general manager.
Cr Furry said Mrs Hutch had been a hard-working and efficient member of the council's executive team, and that members of the public had made it known to him and other councillors that this announcement was a shock.
Mrs Hutch joined the council in 2016 as a business improvement specialist and was the council's acting director of finance and corporate services before becoming the general manager.
She said it was with great regret that she was leaving the Yass Valley, where she lives, as well as the councillors and the council's staff.
"Being general manager has been the most rewarding experience and this is definitely due in part to the fantastic leadership of our community," Mrs Hutch said.
Yass Valley mayor Rowena Abbey said it was sad to see Mrs Hutch leave.
"Sharon stepped into her roles with enthusiasm and I would like to thank her for all her hard work and commitment to the Yass Valley over the last few years," Mayor Abbey said.