The scheme would have seen 201 new apartments, retail and office space built along with a 10-storey car park next door to the new "super hospital" being built in Smethwick.
However Sandwell Council has rejected plans due to deeming the 1,323 car parking spaces included "excessive" for the needs of the area.
The company behind the plans said it had included the car park in a bid to ease congestion at the Midland Metropolitan University Hospital - despite the hospital still being under construction as part of a separate development.
The plans were first unveiled in 2019 and would have seen a van rental site demolished on Land off London Street and Cranford Street, directly next to where the delayed hospital is being built.
A decision on the plans had twice been delayed by councillors, who welcomed the planned offices and shops, but were concerned over the level of parking.
The transport planning and highway departments at Sandwell Council suggested that the proposal would encourage the use of cars and increase congestion, which would go against national and local planning policy aimed at promoting sustainable travel.
The department was also concerned about ‘fly parking’.
Metropolitan Holdings, the applicant, suggested the car park would not in itself be a “traffic generator” and trips to the car park would be made by people drivers be on the highway infrastructure.
They cited other hospitals, such as Queen Elizabeth Hospital, Sandwell General and City Hospital, where parking is an issue to justify the number of spaces needed at the car park.
They ‘compromised’ with the council by only allowing the ground floor and up to six storeys for car parking initially with the option to open up other floors if parking issues developed in the area.
But the department argued there was enough parking planned at the hospital which will have fewer beds to provide high care to the local population. The most widely used services such as the urgent care centre or the outpatient centre are staying at Sandwell General and City Hospital.
Despite this, according to the planning report circulated at the planning committee meeting, Metropolitan Holdings continued to justify the car park on the basis of demand created by the hospital.
Councillor Ellen Fenton said it was a ‘shame’ the application fell through.
She said: “We need regeneration in the area, for more schools, more housing, more shops.
“It is really unusual that this has been refused on the grounds of too much parking.”
Councillor Peter Allen questioned the amount of car parking proposed, saying: “There is obviously a bee in the bonnet about having this car park.
“The authority doesn’t want it for a better word. Why are you so set that this is essential to the project that you are putting before us rather than one that would have car parks that would serve the accommodation and the commercial aspects of your property?
“It seems we’ve got a very large car park for a very small benefit to the community that are going to live and have their businesses there.”
Rob Wells, director at Williams Gallagher, a town planning consultancy who represented Metropolitan Holdings, said: “Everyone knows what it's like to go to a hospital. The parking is generally considered to be problematic. Many hospitals have difficulty with parking around the local areas. There’s also positions whereby cars will have to travel around the area more to try and find a parking space.
“Nobody builds something for the sake of it, if we didn’t believe there was actually a need for this.”
Speaking after the meeting, Ismail Ahmad, managing director at Metropolitan Holdings, said: “I am very disappointed by this decision.
“I feel that the councillors did not take our evidence seriously, nor any of our rebuttals. I felt that Councillor Webb was reading off the planning application sheet.
“This was supposed to be an investment into the area. This planning application has been going on since May 2019, and we are now seriously considering taking this matter to the planning inspectorate and the secretary of state.”
Councillors voted unanimously to refuse the decision.