Inspectors Louise Crosby and Elaine Worthing advised the council in April that the plan should be withdrawn from examination because of the council's failure to meet the duty to cooperate in relation to matters including the proposed allocation in the document of a site earmarked for for a strategic rail freight interchange (SRFI) for a 2,300-home development.
Policy S6 of the submitted version of the plan allocates the green belt site for the "Park Street Garden Village Broad Location", with a minimum capacity of 2,300 homes.
But the two inspectors found that the council had failed to adequately engage with neighbours before allocating the site for housing.
However, they said they would not reach "an absolute or final position" until the council had been given a chance to consider and respond to the letter.
In July, St Albans Council's spatial planning team replied to the inspectors proposing a main modification to the plan that would "acknowledge the status of the SRFI and would remove the PSGV [Park Street Garden Village] allocation".
The council had been pursuing its plans for a garden village despite failing in its bid to overturn a secretary of state decision granting permission for a rail freight interchange at the site back in 2014.
Officers also sought to address concerns raised by the inspectors that the council had proposed the allocation of green belt sites for development despite failing to engage with neighbouring councils on their ability to accommodate St Albans' unmet housing need.
"The reality of the position is that it has always been clear that none of the southwest Hertfordshire authorities have the ability to meet any other authorities' housing requirements," officers said, advising that further discussion would have been ineffective.
But the inspectors have now advised the council that it has not been able to address their concerns. A letter sent by the pair to the local authority this week makes clear that the duty to cooperate "cannot be remedied once the plan has been submitted for examination".
The letter states: "...we note that the council now concede that this is a strategic matter and are seeking to allocate it through a main modification to the plan. It must follow therefore that it should have been a matter for [the duty to cooperate] during the plan preparation stage, in addition to housing."
It said: "Whilst it may not have been possible for other local authorities to accommodate the SRFI, they may have been able to assist with accommodating some of St Alban's housing need.
"Moreover, it is quite feasible that constructive engagement at the plan preparation stage might have led to the council reaching a different conclusion on allocating the site as an SRFI, especially given this is now the council's intention."
The letter also advised that paragraph 137 of the National Planning Policy Framework requires that, before concluding that exceptional circumstances exist to justify changes to green belt boundaries, "the strategic planning authority should be able to demonstrate that it has examined fully all other reasonable options for meeting its identified need for development, including through discussions with neighbours".
However, the letter added, St Albans Council "carried out a green belt review and reached conclusions about exceptional circumstances without first having asked its neighbours if they could accommodate any of their housing need".
"In these circumstances, meeting housing need is clearly a strategic cross-border issue and there is no evidence of cooperation having taken place as required by the duty", the letter said.
The inspectors added that it was "clear that the council did nothing constructive with its neighbours to explore addressing unmet housing need, so it could provide the SRFI or indeed potentially release less green belt land, during the preparation of its plan and there is no contention that it did so".
Whilst the discussions "may not ultimately have fully resolved the strategic matters, given the constrained nature of the neighbouring authority areas", the letter said, "they should nonetheless have taken place in order to satisfy the legal requirement of the duty to cooperate; namely to engage constructively, actively and on an ongoing basis in the preparation of development plan documents, so far as relating to a strategic matter".
The inspectors advised that the council now has two options: withdraw the plan from examination "or we can write our report recommending that it not be adopted because of a failure to discharge the duty to cooperate".
Councillor Jamie Day, portfolio holder for planning at St Albans City and District Council said: "The council will now need to consider the detailed points made by the inspectors in their latest letter and determine what action to take.
"It is little wonder that the government's recent Planning White Paper has proposed to abolish the duty to cooperate requirements given the complexities involved".
Day added: "It is extremely important that we progress our local plan as soon as possible so we can manage the district's growth, and provide much needed housing for local people, in a sustainable and positive way, as well as acknowledge the increasingly pressing issues raised by the climate emergency."
The council said that the matter now will be considered by its Planning Policy Committee on Tuesday (8 September).
David Bainbridge, planning director at consultancy Savills, said: "Unfortunately the writing has been on the wall for this plan for some time. The council did adopt a conciliatory tone in response to the initial findings, but, as the inspectors have said, failure on the duty to cooperate cannot in law be remedied through the examination process".
A Planning feature examining the issues around St Albans Council's failure to meet the duty to cooperate can be read here.