Cincinnati's City Manager said in a memo a disagreement with Duke Energy concerning the streetcar threatens to increase the cost and potentially delay the project.
The dispute could lead to a lawsuit.
The city and the company are at an impasse about who should pay to relocate the utility lines and pipes near the streetcar tracks.
Cincinnati officials argue under state law, it's Duke's responsibility to perform the work and pay for it.
The company disagrees and has a case pending before the Public Utilities Commission of Ohio to pass the relocation costs on to city rate payers.
Duke and the city have decided any line or pipe within three feet of the tracks must be relocated. That's one item that has been resolved.
The memo said the city is investigating a potential legal remedy to the situation as well as potential stopgap funding which would allow work to move forward while negotiations continue.
A city spokeswoman said in an e-mail that could include a lawsuit against Duke.
The city manager says it's still possible the project could be bid this fall which could allow construction to begin early next year.
The current target date for the streetcar to begin operating is the summer of 2015.