A Leith hotel's bid to build an extension has fallen through following a dispute between owners and the council over a payment of £55k towards the trams.
Constitution Street's GPO Cafe and Rooms was granted planning permission last year for a two-storey extension to the b-listed building, which until the 1960s housed Leith's post office.
Approval was given for the work, which would have added 13 additional rooms to the existing 24-room three-star hotel, on the condition that £55,643 'developers contributions' was paid to the local authority for the new tram line to Newhaven, which passes through Constitution Street and is set to open next year.
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However, planners said hotel owner Cameron Guest House Group has disputed the figure and the two sides have failed to reach a legal agreement despite extra time being allowed in an attempt to find a solution.
The application returned to the planning sub-committee on Wednesday (October 26) - over a year after councillors voted in favour of the extension going ahead.
Graham Nelson, solicitor for Edinburgh City Council, said: "From seeing some of the email correspondence my understanding is that they already had a six month period lapse and it was only once there was an extension from the chief planner for a further three months that an email was written disputing the sum, saying that we should apply a simpler formula to pay a lesser sum.
"It was then clearly set out to them why the figure was what it was in terms of the supplementary guidance and how it was calculated.
"No further progress has been made in terms of entering into the legal agreement on that basis."
The stalemate left councillors with no other option than to reverse the previous decision and refuse the hotel permission - but the situation left some members baffled.
Jo Mowat, Conservatives, asked: "On what grounds are they saying that they don't need to pay a tram contribution? It's practically on the tram tracks!"
She added: "I can think of few things that are going to be a benefit more, which is what the reasoning behind the tram contribution is - it's right next to a stop."
GPO Cafe and Rooms was approached for comment.
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