Residents in the Co Sligo seaside village of Strandhill are angered by the refusal of the Minister for the Environment to meet them over the area's exclusion from the town renewal scheme.
In a letter to Sligo County Council, Mr Dempsey has declined a request for a meeting on the matter. The Minister points out that the decision not to include Strandhill in the lucrative tax-break scheme was made by an expert advisory panel.
The Minister adds that the Minister of State with responsibility for Housing and Urban Renewal, Mr Bobby Molloy, has indicated he does not consider that an appeals system is necessary, feasible or practicable.
Strandhill was one of only two out of around 100 areas in the State which were turned down for the scheme last summer. It was rejected, the panel explained, as it lacked a clear focus of development.
Ambitious local plans for hotels, supermarkets, and housing schemes were shelved as a result. The Strandhill Development Association estimates the village stands to lose out on millions of pounds of investment by not being included in the scheme.
"We're very disappointed with Minister Dempsey's attitude," said a spokesman for the association. "We met with the Taoiseach before Christmas on the matter who informed us that Minister Dempsey would be in touch with us."
Rather than contacting them directly, Mr Dempsey wrote to Sligo County Council.
"There are a lot of potential investors who were willing to avail of the scheme, but it appears now as if our case is dead in the water."
The Mayor of Sligo, Alderman Sean MacManus, one of the Strandhill area public representatives, described Mr Dempsey's refusal to hold a meeting as scandalous.