BALLINA Booking Service (BBS) - the organisation which manages the Ramada Hotel - has withdrawn its support for an application to change the use of the penthouses from tourist accommodation to permanent residences.
The application for the change of use was lodged with the council in December last year.
On behalf of the penthouse owners, Lennox Head-based planner Steve Connelly said the properties would be "ideal" to live in.
"There is a demand for high-quality penthouse type units in the Ballina CBD," he told The Northern Star last month.
But BBS says the proposal includes the private use of common property, which is "not acceptable".
In a letter to the council, BBS director Robert Righetti wrote that the application would not pass the owners' corporation because "on our advice the consent of each proprietor on level 6 will at the very least be required for a by-law to be passed giving exclusive use of this area.
"That will not be achieved," he wrote.
In another hurdle, the owner of The Point Restaurant, John Cordina, has also written to the council expressing concerns about the future of the penthouses.
He said the Ramada was an iconic tourist development and that its integrity "should be maintained".
Approval could "set a precedent", according to Mr Cordina.
His letter also raised concerns about the liquor licence, which covers the entire hotel, including the penthouses.
"Clearly the licensing issue is a legal minefield, exacerbated by the varied ownership structure of the hotel," he wrote.
The application for the change of use is currently being assessed by the council.