Plans for 20 affordable homes on former school grounds in Carmarthenshire are now on hold after "last minute" concerns about phosphate pollution.
Barcud, a housing association, wants to build the houses and bungalows at the old Coedmor Primary School, Cwmann, near Lampeter.
Planning officers recommended the scheme for approval when it came before the council's planning committee on March 3.
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According to officers' report to the committee, regulator Natural Resources Wales (NRW) was satisfied that the scheme, as submitted, was unlikely to increase the amount of polluting phosphates entering the catchment of the River Teifi.
This was important because NRW is worried that phosphates, mainly from agricultural run-off and sewage, are damaging river water quality. It has published targets to reduce river phosphate levels in special areas of conservation (SACs) in Wales.
And these targets affect the River Teifi SAC catchment area, in which Cwmann is located.
But NRW has now revised its position to say that, based on the details submitted, the development did have the potential to increase the amount of phosphates entering the catchment area.
NRW has asked the county council to seek further information about how Welsh Water would deal with sewage from the 20 properties.
"Provided this advice is followed and you are able to conclude that the development is not likely to have a significant effect on the SAC, we would have no objection to the proposal," said NRW.
Addressing the planning committee, planning officer Gary Glenister said this latest advice had followed discussions between the authority and NRW and had "come in at the last minute".
He said further work was now needed, and his request for a deferral was approved by the committee.
There are objections to the application, including from Pencarreg Community Council, which cited phosphates and sewage capacity among other things.
After the decision was deferred, planning committee chairman, Cllr Alun Lenny, said planning was being "paralysed" by the phosphate issue.
He said cleaning up river quality was a "most worthy" intention, but that councils had not been given any clear information or guidance regarding phosphates.
As a result, he said, many housing developments were on hold in Wales.
"Planning is paralysed in these instances," he said.
Cllr Lennny said the council has developed a "phosphate calculator" to help developers and planning officers assess if a scheme would increase phosphate levels in SAC catchment areas.
But he said millions of pounds would have to be spent upgrading water treatment works so they could remove phosphates before they entered watercourses. Some treatment works already do this.
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Cllr Lenny said he was concerned the phosphate issue would affect the council's aim of providing a certain number of affordable homes in the county.
"I really hope that we will get answers," he said.
Last month, members of the council's cabinet were told that some sites allocated for housing in SAC catchment areas in Carmarthenshire may even have to be struck off because of the ongoing phosphate issue.
The new phosphate calculator - said to be the first of its kind in Wales - is being accompanied by a set of mitigation guidelines developed by the council. The authority has also established a phosphate stakeholder group.
Cllr David Jenkins, whose cabinet role includes planning, said: "We have already written to the Welsh Government outlining our concerns about the impact on development and made it clear that we wanted to find a solution as quickly as possible.
“We want to work with people to find solutions that improve the condition of our rivers, that are feasible and can be implemented quickly and successfully."
