The project will span either side of the banks of the River Foyle in Lifford and Strabane.
The decision by the Special European Union Programmes Body (SEUPB) to turn down a funding application for the Riverine Project in Lifford and Strabane has been described as a devastating blow for Lifford and Strabane.
The proposed Riverine concept plans comprise 47 acres covering two currently unused open natural spaces, including a partially covered outdoor public events space, community building
If taken to the next stage the area will also benefit from greatly enhanced infrastructure with a new cross-border greenway network connecting Lifford and Strabane as well as a cross-border pedestrian bridge linking the towns.
Sinn Féin Councillor Gary Doherty said he was shocked after it was revealed that the project narrowly missed out on the scoring threshold for funding allocation.
“This decision by SEUPB not to advance the Riverine Project to the next stage of the application process is a devastating blow for the towns of Lifford and Strabane. I am absolutely shocked and saddened that the project was not deemed worthy enough to progress to the next stage of the process, and I simply cannot understand the rationale for the decision. So much effort and time has been put into this project by Council officials, elected members and the wider community who were part of the evaluation process late last year and is it such a disappointment for everyone involved
"However, since becoming aware of this decision, I and my party colleagues have been in contact with officials from both Donegal County Council and Derry City and Strabane District Council and we remain hopeful and confident that the project can still progress.
"The bulk of the funding under the 'Peace IV - Shared Spaces Programme' has yet to be allocated, and we are aware that a new funding call will open next week. Therefore we are confident that the Riverine Project can get over the line at that stage. Nevertheless, the disappointment across the towns of Lifford and Strabane is tangible this afternoon as we digest the news of this latest setback."