Causeway Coast and Glens Council has rejected a planning application to build a new recreation centre in Dungiven, Co L'Derry.
Sinn Féin has hit out at the decision and said it was based on "sectarian attitudes" rather than "financial implications".
Councillor Sean McGlinchey said he was disappointed given the fact that money has been secured from the Department of Culture, Arts and Leisure.
Councillor McGlinchey said: "The Council has now rejected a £2.5m investment and I believe that this was based solely on the fact that Dungiven is a Nationalist area.
"The excuse that the Council could not afford the £300,000 needed in match funding rings hollow as maintaining and repairing the existing facility will cost more in the long term.
"The decision sends out a bad message that sectarianism is a motivating factor in decisions by the Council and will deprive residents from a much needed sporting facility.
"Unionists need to move on and realise that the days of domination are over and not coming back and work together with their Nationalist neighbours in providing the best facilities for the entire community."
(CD/MH)
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