The four-member Independent Hearing and Assessment Panel unanimously recommended that the development on the former Helensburgh Workmens Club site be refused. The final decision rests with Wollongong City Council's administrators.

The club sold the site to a developer to help finance its move to a new building in Boomerang St.

The panel, which met last week, found the 24 residential units, five retail shops and three commercial suites were an "overdevelopment of the site".

They found the application did not comply with minimum setbacks on either Walker St or Club Lane, would receive inadequate sunlight in living rooms, and did not provide appropriate arrangements for delivery vehicles. It did not fit within the existing streetscape or the objective of its general business zone.

JBA Urban Planning Consultants, which lodged the application on behalf of the developer, yesterday declined to comment on the ruling of the independent panel.

Resident Dr Geoffrey Sykes, who spoke at the IHAP meeting, said the decision was a "pleasing result".

"There was widespread concern in the community about the impact of these three storey buildings and our concern was that any building there must be strictly within the DCP codes. That would regulate setbacks, common areas and things like amenity."

Mr Sykes said residents had feared the development would set a precedent in the main street and the panel agreed.

"I can't see why they can't come up with an attractive and reasonably styled building," he said.

Neighbourhood Forum 1 convenor Pauline Smith said the residents only wanted to achieve the best possible outcome for the site.

"With the setbacks the IHAP thought, as residents did, that it would open the way for adjacent properties to do something similar."

Ms Smith said she hoped the administrators would agree with the panel and reject the development application.

"We aren't against commercial and residential on that site," Ms Smith said.

"We do need units in that area, but what was proposed was too much for the site."