A housing developer has submitted plans to build 61 homes on the former site of The Parks special school in Oakham.
Bellway Homes wants to develop the land, which is owned by Rutland County Council, and part of a field, owned by Tresham College.
The council would keep a small piece of its land and has submitted a planning application to build a car park with 18 spaces for residents living in Barleythorpe Road.
Part of the field would be kept as an open space, which could be managed by Oakham Town Council.
If the Bellway Homes application is approved, there would be 21 affordable homes on the site, which would be accessed via Huntsman Drive.
The 61 homes would be mainly two-storey with two to five bedrooms. There would be a total of 138 car parking spaces on the development, which would also have a lagoon and a playarea.
The county council is proposing the car park following negotiations with residents. They have had concerns parking in the area since The Parks School moved to its new home at Oakham CE Primary School in Burley Road in 2011.
The residents had a long-standing agreement with The Parks School allowing them to park there outside opening hours and are worried that if new homes are built on the site, it could make parking problems in the area worse.
If the application for the car park for residents is approved, the council would consider painting double yellow lines along Barleythorpe Road to avoid traffic backing up as a result of the railway crossing.
Deputy council leader Terry King (Con) said: “After ongoing consultation with the residents over the redevelopment of the former school and day centre site it was apparent that there would be insufficient off-street parking in the area as well as the potential for on-street parking changes which would impact on residents.”
He said the council would manage the car park, which would be for designated permit holders only.
John Learoyd, one of the residents living in Barleythorpe Road, said residents were still unhappy with the proposals.
He said: “We had quite a heated meeting with the council a week ago. All along we have said there needs to be a minimum of 21 spaces so there still could be several people with nowhere to park their cars.”
He said residents had been told that the permit charge could be £185 a year per space and that they were told there would be nowhere to park between April and August when the demolition of the current buildings on the site could take place.
But Coun King said details of the parking arrangements had not been confirmed and that talks with residents were ongoing.