The city's most scandal-plagued council, and its most famous deputy mayor, Salim Mehajer, have been suspended by the state government ahead of a public inquiry.
The NSW Local Government Minister Paul Toole announced on Wednesday that Auburn council would be suspended and placed in the hands of an administrator, while its planning decisions are scrutinised by an independent reviewer.
Mr Toole had given the council two weeks to make the case for it why should be allowed to continue operating but was not convinced.
"Given the serious nature of the allegations the council is facing, it is clear that it is in the public interest to temporarily suspend the council during the course of the inquiry," Mr Toole said.
The 10 suspended councillors will not be paid and will need to hand over council laptops, phones and cars while the inquiry is completed - which could take up to six months.
Cr George Campbell, part of a minority bloc on council that often voted against Cr Mehajer and his allies said the suspension was regrettable but necessary.
"The culture on Auburn Council is one of mutual assistance, mutual benefit," he said.
The suspension follows Fairfax reports into a vote by councillors to sell a piece of public land to Cr Mehajer at an apparent $5 million discount to its market value.
Mr Toole said it would examine a range of "planning and development matters may have inappropriately benefited a number of councillors".
The NSW Opposition Leader, Luke Foley, said he welcomed the suspension but wanted action on the "systemic" problem of developers serving on councils.
"This is bigger than Salim Mehajer," Mr Foley said. "Let's clean up Sydney local government and get developers off council."
Mr Foley called for restrictions on donations and campaign expenditure in local politics and criticised the state government for a 2011 decision to allow councillors to vote on matters in which they had a direct financial interest.
"They had Dracula in charge of the blood bank," Mr Foley said.
Auburn councillor Irene Simms, said she had first alerted the Office of Local Government to problems in the council more than five years ago.
Mr Toole defended the government's record, adding that it was taking the "tough measures" needed to overhaul the sector.
"There's not a household across this country that hasn't heard of Auburn City Council or some of the councillors elected as a part of that council," he said. "[That] clearly shows that reform is needed in local government."
Viv May, a former general manager of Mosman Council has been appointed as interim administrator. Mr May had recently taken on the role of acting general manager for Strathfield Council.
Auburn's general manager Mark Brisby said Mr May would assume the responsibilities of the suspended councillors and services would continue as normal.
Wednesday's suspension comes less than two weeks after Cr Mehajer was himself suspended from office for four months for failing to disclose a conflict-of-interest. He is appealing that decision.
Cr Mehajer's wife Aysha last week appealed to Mr Toole not to follow through with his threat against the council, arguing that one of the family's companies would suffer "significant financial loss".
Cr Mehajer did not respond to a request for comment.
