Ottawa's new rapid transit plan faces a potentially costly hurdle from the agency responsible for federal lands in the Ottawa region, CBC News has learned.

The National Capital Commission is refusing to give up land it owns in the city's greenbelt that the city had been counting on for future rapid transit projects in the west end, according to documents obtained by CBC News on Tuesday.

"The NCC cannot accept the preliminary preferred option … based on analysis to date," said a letter sent from the NCC to deputy city manager Nancy Schepers six weeks ago. "It should not be assumed that NCC property is available for new projects."

The city had planned to use the strip of land north of the Queensway between Bayshore and Moodie Drive known as the "red corridor" for bus and future rail projects as part of its western transitway extension.

In its Aug. 14 letter, the NCC said it had not been involved in the city's decision to use the corridor, and suggested a different route, between the highway's eastbound and westbound lanes.

CBC News has been told that if the preferred corridor is not available, the city must resort to one of two very expensive options: building over the Queensway or tunnelling under it.

City councillors only learned of the NCC's letter Tuesday and the city did not respond to it until late Tuesday afternoon.

The city's written response to the NCC insisted it kept NCC staff informed. It added that it will work hard with the NCC to acquire the greenbelt lands in question for future transit projects, but alternative routes are still being considered.

NCC reaction 'preliminary': city

In an interview with CBC News on Tuesday, Schepers downplayed the NCC's initial reaction.

"NCC has given us some preliminary feedback," she said. "And is reminding us of that very important bar that we're going to have to meet if we require, or the recommended alternative is use of Greenbelt lands."

Schepers added that correspondence from the NCC like the Aug. 14 letter are part of its everyday working relationship with the city, and city staff often do not share such letters with city councillors until a response has been drafted.

However, councillors who learned about the NCC's letter Tuesday didn't hide their frustration.

"I'm not sure who's trying to pull the surprise here," said Coun. Eli El-Chantiry, who represents West Carleton-March, a rural ward in the city's west end. "But whoever it is, enough playing games with the city's master transit plan. Either get on board or get off."

Clive Doucet, councillor for Capital ward in central Ottawa, said the letter was "another nail in the coffin" for the new plan to replace the previous light rail plan cancelled by city council in 2006.

"To my mind, I can't see this new plan ever going ahead."