Donegal County Council says it is actively seeking to address pollution at The Pines Estate in Churchill.
Cllr Michael Mc Bride told a recent Municipal District Meeting that there is a serious issue with waste water flowing in a public area, but a number of issues need to be addressed before the council can take over the area.
The development company is in liquidation, and officials have told Cllr Mc Bride that its laboratory has issued a Section 12 prosecution action.
In the meantime, the council is in discussion with the Management Company which controls part of the development.
Cllr Mc Bride says it seems the issue is finally being addressed: