Millions of pounds for community projects such as schools, roads, libraries and leisure centres across Norfolk are at risk because of the limbo stopping thousands of homes from being built.
Officials have warned the block on getting houses constructed because of environmental concerns means the amount of money going into a pot to be used for such schemes has dropped by 50pc - and will do again next year.
But the money going into the pot has slowed drastically, because of a directive from government advisor Natural England preventing some Norfolk councils from granting planning permission for new housing.
Tens of thousands of homes are on hold until mitigation is in place to prove wastewater from such schemes would not add to pollution amid concern nutrients and phosphates could damage the River Wensum and the Broads catchment areas.
Council officers have confirmed that the amount of CIL money going into the Greater Norwich Growth Board's pot of cash to distribute has fallen - and, because it could take some time before construction gets fully under way again, it could take some years to recover.
The Covid pandemic, Brexit and the war in Ukraine had already affected housebuilding, but the nutrient neutrality issue is also having a major impact.
READ MORE: How two words left Norfolk's plans for thousands of homes in limbo
Council officer Grace Burke, the Greater Norwich project team leader, told a meeting of the Greater Norwich Growth Board, made up of Norfolk, Norwich, South Norfolk and Broadland councils, that the amount going into the pot had dropped by 50pc this year.
She said: "With the effect of nutrient neutrality, we are in an unknown territory when it comes to knowing when the income will arrive.
"In the current year, we have had a drop of 50pc and we are expecting another drop of 50pc.
"We are forecast to receive about £3m into the fund next year. We do not know how quickly it will recover."
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Councils are taking action to try to unlock the stalled housebuilding, with a joint venture with Anglian Water, through which housebuilders will be able to 'offset' the impact of developments by buying 'credits' to fund mitigation measures.
As part of that, council officers recently struck a deal that acres of farmland on the outskirts of Norwich - either side of the A47 southern bypass - cannot be used for pig farming.
The farmer was paid about £1m in compensation not to use the land for pigs for 70 years, to stop run-off from the fields from causing pollution in the rivers Yare and Tas.
Kay Mason Billig, leader of Norfolk County Council, said: "It is difficult to find ourselves in this situation.
But at least we are working towards a solution and we can see the long-term prospect is good - that we will end up back where we should be."
WHAT PROJECTS HAS THE CASH FUNDED?
Millions of pounds, which was generated through the Community Infrastructure Levy, have been spent on Norfolk projects since the introduction of the 'tax' on developers in 2008.
The most recent Greater Norwich projects to benefit were announced recently.
They include a new gym, a school expansion, a library extension and new changing rooms at a popular park.
Wymondham High Academy will get £2.5m for its proposed expansion, planned for 2025/26, to meet the growing pupil demand from the housing development in the town.
The board also agreed to award £400,000 to Aylsham Gym and Fitness Hub - a proposed community centre at the town's high school site.
In Norwich, just over £330,000 was earmarked for Eaton Park, to renovate the changing rooms in the central pavilion and almost £200,000 awarded for an extension to Plumstead Road Library, in the east of Norwich.
In previous years, it has also been used to make improvements to the Marriott's Way footpath, to introduce the Kett's Country Long Distance Trail, an expansion for Ormiston Victory Academy in Costessey and to create Broadland County Park.
But the money is also used for major roads. A sum of CIL cash is due to go towards the costs of the Long Stratton bypass and the money also paid partly for the Hempnall roundabout.
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