The Statesman Hotel has put plans to the ACT government for a 12-storey building on its site at the Curtin shops, and another next door, including units, serviced apartments and shopping.
But the plans have run into a hurdle with the release of the draft master plan for the Curtin shops in November which envisages development of no more than six storeys on the site.
Lobbyist Peter Conway, speaking for Statesman owner Gary O'Donnell, said limiting the proposal to six storeys would make it unviable.
"We disagree profoundly," Mr Conway said of the proposed height restriction. "If they were only to go to that height, it's financially unviable and won't work."
Mr O'Donnell wants 12 storeys on the Statesman site for residential development and underground carparking. He also wants to buy the neighbouring carpark, proposing a 10-storey building, including apartments focused on over-55 independent living, shopping on the ground floor, and offices on the first floor.
Mr Conway said two developments, which each had a the $50-$60 million price tag, would help revitalise the centre and were in keeping with the government's own in-fill policy.
The government had asked the hotel to provide more detail of its plans, but the hotel was unwilling to spend money pursuing the project until the master plan was finalised with the necessary height limits.
"Masterplans have to be more than statements of nice feeling. They have to be in line with economic realities as well," Mr Conway said.
"If you want to make Curtin vibrant and you want people off the roads, using public transport, then you turn it into a hub, and the only way to do that is to make your planning arrangements attractive as well."
Mr O'Donnell is also urging a decision on the long-prepared master plan in the coming months, worried that delays will see it put on hold till after the election year.
The new draft master plan stresses the need to maintain the existing height limits of two storeys in the central area to protect the human scale, with some room for higher buildings adjacent, including, it says, up to six storeys on the Statesman Hotel site.
Redevelopment would help provide nighttime activity in the centre, improving security, the master plan says.
It points to Curtin's much older population than other parts of the city, with a median age of 41 compared with a median for Canberra of 34, and a significantly higher proportion of retirees. It also has a much higher proportion of single houses, at 85 per cent, than the wider city, at 73 per cent. The population is expected to grow by just 242 people between 2014 and 2031.
It says while cycle links to the city are good, the connections into the Curtin shops are difficult, and better east-west cycling and pedestrian access is needed. It points to concern about the speed of traffic on Theodore street and the barriers created by major roads such as Yarra Glen and Carruthers Street.
Limited nighttime activity make the shops appear unsafe and unattractive at night and the centre looks tired and lacks a presence from the street.
It says Carruthers Street could include medium density and supportive housing. Better east-west cycle and pedestrian links are needed, along with better pedestrian access across Strangways Street and improvements to the layout of car parks.