John Peirce lives next door to the Macauley Street property earmarked for the $1.11 million mixed use development and aired shadowing and privacy concerns to Albury Council this week.

Planning staff recommended approval for the proposal in a mixed use zone, but Cr Murray King successfully moved the plans be rejected with councillors John Stuchbery, Graham Docksey, Darren Cameron and mayor Kevin Mack in support.

Mr Peirce said overlooking into his backyard would come from a balcony at the rear of the next door property and extensions of the building would result in shadowing.

"The viability of the business doesn't require balconies, but the addition of a six metre wall severely impacts on me," he said.

"The wall would be 31.1 metres in length, 6.85 metres in height and cover 62 per cent of my northern boundary and I would be living in constant shadow."

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Cr King said Mr Peirce's objections were reasonable.

"If this was your house and this development was reducing your sunlight by a significant amount and creating a balcony would what councillors do? he said.

"The issues raised by are quite relevant."

Cr King cited the rejection of expansion plans at the Star Hotel due to privacy concerns among precedents from the present council.

The applicant amended plans to provide screening and a planter box on the rear balcony to prevent overlooking into the neighbour's backyard swimming pool area.

Cr Alice Glachan supported the staff recommendation.

"The area that was raised by the speaker earlier about the potential of overlooking is not a direct overlooking potential," Cr Glachan said.

"But an overlooking to the side.

"Should people wish to look into the neighbour's property from the manager's residence they would need to go to considerable lengths to do so.

"It is not a natural opportunity."

Council planners stated : "The most recent amendments have included angled louvres and a recessed area behind a planter box and obscure balustrade to address the overlooking of the adjacent property to the south.

"It is acknowledged that the applicant has endeavoured to address this issue in a manner that does detrimentally impact the future amenity of the manager's residence, which will be permanently occupied."

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