Three cottages and a building adjoining the World War I Napier soldiers' club may be demolished to make way for a multi-level apartment block.
The plans are for a five-level development of 21 apartments, across the road from the Ocean Spa swimming complex.
But it is open to possible challenges because the height of the building at the northern end, nearest Napier Port, would exceed limits set by the Napier City Council in its Napier Hill Character Zone.
It requires a fully notified resource consent application.
The development is proposed by Lotus Marine Parade Ltd, but Hawke's Bay Today had been unable to contact director Byron Duncan for comment.
It was not clear from material available yesterday what role would be played in the development, if any, by the heritage-protected former soldiers' club, designed by Napier architect Louis Hay and built in 1916.
It is thought to have been the first club in New Zealand purpose-built for servicemen.
But with membership declining after the 1914-18 war it was sold and and extended prior to the 1931 earthquake and used as a private hotel.
It survived the quake with little damage, becoming known as the Spa Hotel.
In more recent years, it has featured restaurants with names such as the Hairy Cactus, the Deco City Diner and Mussel Boys. The historic building is currently partly used for budget accommodation.
The Napier City Council website says it is the latter addition which will be demolished along with three cottages if the development goes ahead.