Plans for new homes on the Calthorpe Estate are under threat after developers could not agree financial contributions to the scheme with Birmingham City Council.
The project in Edgbaston would see the demolition of three 1970s offices blocks in Highfield Road and 43 residential units built in their place.
It was originally awarded planning permission in April but a new submission has been lodged by applicant Taylor Wimpey Midlands after the city council asked for a financial contribution which was considered so high that it threatened the viability of the scheme.
Known as a Section 106 agreement, a payment of £180,000 has been requested to go towards affordable housing in Edgbaston and/or Ladywood and a further £62,400 for public realm work.
Taylor Wimpey has deemed the payments too steep so has resubmitted an application for exactly the same development at Highfield Gardens but requested that it makes a new financial contribution of around £100,000 less.
A planning obligation statement has been published in response to the city council's Section 106 request by Shirley-based Bridgehouse Property Consultants.
It said: "The site has an existing commercial use and, using permitted development rights, an implementable alternative use.
"To come forward for residential development, the price paid for the site has to incentivise the land owner to sell. We have undertaken appropriate, reasonable and prudent appraisal testing based on the development proposals.
"The viability assessment demonstrates that planning policy objective cannot be met if a viable scheme is to come forward for residential development.
"Our testing suggests that, for the scheme to be viable and breakeven, the maximum financial contribution (it) can generate is £138,160."
Taylor Wimpey wants to build seven four-bedroom houses and two blocks containing 15 one-bedroom and 21 two-bedroom flats on the land which is jointly owned by Calthorpe Estates and Wesleyan Insurance.
The housebuilder said in a statement to the Post: "We received planning permission for our proposed development off Highfield Road in April....there has since been a legal challenge from a third party in respect of the local authority's decision to grant permission.
"We have recently submitted a new application for consideration which includes amendments to the Section 106 agreement taking account of changes in the scheme detail and passage of time."
A spokesman for Birmingham City Council said the authority would not comment on a current application as it was now subject to the planning process.
Pictures: Residential schemes in Birmingham