I think Kane will be sold, but if City are seriously waiting for Levy to lower his price, then forget it. I don't think that is really City's position though - it is just that this is how the dance goes.
Levy has built a reputation of being difficult to deal with when Spurs are selling. This helps Levy in two ways; 1) you rarely see clubs trying to "lure" players away from Spurs because they know it is no point 2) when a bid comes in it is high.
Additionally, it would be impossible for Levy to get the average fan to accept Kane of all people being sold cheaply. Kane is on a complete different level to Berbatov, Keane, Carrick, Modric and probably even Bale when it comes to connection with the fans - by being a "local boy".