Developers are proposing to build on this vacant lot and on top of the adjacent mall. (CBC)

The future of a new $35-million hotel and office complex in downtown Charlottetown is up in the air over parking spaces.

Two weeks ago Mayor Clifford Lee signed development agreements for an 80-room, nine-storey hotel to go on a vacant lot on Queen Street and on top of Confederation Court Mall and a six-storey office tower on Fitzroy Street.

City council had agreed to add two storeys and 80 spaces to its Pownal Parkade to make room for more vehicles.

But the developers, Dyne Holdings and Homburg Investments of Halifax, are not happy with the parking arrangements.

"Why would you invest significantly in putting two more floors on for parking in a parkade that is 50 per cent vacant?" asked Homburg project manager Cliff Campbell.

"We know from talking to our tenants that it's probably not a place that's desirable for them to rent space for parking."

Homburg's Cliff Campbell worries the city's parking spaces will not be desirable. (CBC)

Homburg wants a new parking garage, built either next to the Charlottetown Hotel or on land behind the Queen Street Parkade. City council rejected that idea this week.

"Terms and conditions were set down Day 1 by the city, CADC [Charlottetown Area Development Corporation] and the Homburg group and we met all those requirements," said Lee.

"We did everything they asked us to do, now at the last minute they've changed all the rules."

Campbell said he has approval to proceed with the project if the parking issue can be solved. The developers are due to break ground in March.