Because of a high selling price offered by the city of New Haven, a Yale proposal to build townhouses on a parcel of land in the Dixwell neighborhood may be losing momentum.

Located on the corner of Canal and Lock streets, the 1.3-acre plot of land was eyed by Yale as a potential location for a 25-unit townhouse complex expected to revitalize the blighted area. But after a recent city-commissioned appraisal valued the property at $900,000, the fate of the proposed development seems less certain.

“The University, the city and the neighborhood all agree that they would like to find some additional use for that acre that would enhance the neighborhood,” said Bruce Alexander, Yale’s vice president for New Haven and state affairs. “There have been a series of proposals in conversations. [But there are] no firm plans for the city parcel.”

Alexander said Yale and the city are currently in a discussion stage, and that financial concerns will play a significant role in how the property is developed.

“As we talk to the city about how best that parcel can be used, clearly economics need to be considered,” he said. “At this point it’s entirely open as to how that parcel might be used and by whom.”

The appraiser, Charles Wisnioski of O, R, & L Appraisal and Consulting in Branford, declined to comment on the contractual negotiations. He deferred to Henry Fernandez, New Haven’s economic development administrator.

Ward 22 Alderwoman Mae Ola Riddick, whose district includes the Dixwell neighborhood where the proposed development would be built, could not be reached for comment. Riddick previously told the New Haven Register that it would not be economically beneficial for Yale to spend almost $1 million for the 25 units.

Nick Torneo, a former chairman of the Livable Cities Initiative, who currently works for the New Haven Housing Authority, initially ordered the appraisal. He did not return phone messages yesterday.

Despite the stalled negotiations surrounding the Lock Street property, another development initiative is currently under way involving an adjacent 2-acre lot on the corner of Ashmun and Lock streets. The University is planning to build a Yale police station on the site that will include a community room and a learning center equipped with computers for local children, Alexander said.

He added that the Dixwell neighborhood approached Yale to take an interest in the property because of concerns over negotiations between the site’s owner and an asbestos removal company that left heavy equipment on the site at night. After a series of discussions over possible uses for the site, Yale agreed to purchase the property and build the station, Alexander said.

He said the neighborhood’s response was “enthusiastic” and that the move represented a way to “knit together the University and the community.”

A police athletic league will also be formed to help forge a relationship between Yale and the Dixwell community.