He says a perception in the council that problems will start to diminish now that the public hearing on designated sales has finished could be 'misplaced'.
In a copy of the annual management letter to the council obtained by LGC, Mr Magill says there are up to 11 objections outstanding and the flow of enquiries and complaints shows 'no sign of abating'.
The letter paints a picture of crisis management in the council as a result of investigations by Mr Magill.
Those officers who are in post 'devote a significant time' to dealing with the formal objections and a constant flow of member enquiries, the letter says.
'In my experience of observing organisations where top management is forced to concentrate its energies on fire- fighting there is a grave risk that the underlying financial and a management control over service provision, will break down,' said Mr Magill.
The letter questions the strength of the council's contract monitoring division and the 'adequacy of resources on the financial side'.
It says the Labour group has still not accepted the charter codifying the relationship between officers and members and the minority group is still questioning the impartiality of officers.
Mr Magill says the end of the public inquiry does not mean the difficulties faced by management arrangements will diminish.
He says it will be a 'number of months' before he makes a decision on the designated sales inquiry and points to the possibility of an appeal in the High Court.
Mr Magill also has to consider if any further action should be taken over the 'building stable communities' policy. The management letter has yet to be formally recommended by the council.
A special policy and resources committee meeting inviting all members has been arranged for 28 March to discuss Mr Magill's comments.