A trader who invested £14,500 in his shop claims the council has offered him a £1,200 "pittance" to leave if Park Hill flats are redeveloped.
Sandwich-maker Kenneth Hopkins, who runs Dane Snacks with his wife Margaret, is one of several traders who have been told they could be served with a six-month notice to vacate within the next 18 months.
Sheffield Council is exploring the possibility of a 40 million redevelopment of the Park Hill complex, featuring flats to buy and rent and office space.
English Partnerships has already committed cash to pay for a feasibility study on the scheme.
Mr Hopkins took over his shop on The Pavement four years ago and invested 14,500 to refurbish the premises and has since gradually built up the business.
Now he says he has been offered a refund of one year's rateable value to quit the shop if the development goes ahead - and he would get just 1,200.
He said: "I am absolutely gutted. This shop is my only source of income.
"We have invested heavily to bring the place up to European standards and to be offered just 1,200 to quit is insulting.
"What makes it worse is the only assistance the council has given us to find somewhere to relocate is a list of local estate agents."
A spokeswoman confirmed the council had been speaking to all Park Hill traders in advance of the proposed redevelopment. But she refused to be drawn on what offers had been made to traders.
"We are talking to people on an individual basis with a view to giving as much advance notice of any need for them to relocate," she said.
"But these discussions are still ongoing and there is nothing definite as yet. It's very early days."
If the 40 million scheme goes ahead, a huge refurbishment of the flats' interiors would be accompanied by a major clean-up of the exterior and the surrounding environment.
Already, major commitments have been made by the city council and various regeneration agencies, including government-backed English Partnerships.