The BaseCamp building on Cardrona Valley Rd contains an indoor climbing facility and a Wanaka franchise of national restaurant chain Lonestar.
The building was granted consent for several commercial activities in 2006, including a cinema.
BaseCamp owner Willowridge Developments wants to build two "boutique" theatres on the ground floor of the building and applied last month for a consent to make alterations to cater for the planned cinema.
Willowridge director Allan Dippie told the Otago Daily Times consent was being withheld by the council's regulatory authority, Lakes Environmental, because of water-supply issues.
"Basically, we're being forced to come up with a solution to a council problem. They claim water pressure for firefighting purposes doesn't meet certain standards."
Supplying adequate water pressure to a building was the council's responsibility, "not ours", Mr Dippie said.
Lakes Environmental planning manager Brian Fitzpatrick said a different level of water pressure was required for commercial buildings as opposed to residential houses.
"We're not strictly talking about water pressure. It has more to do with the water flow and volume needed for commercial usages," he said.
While BaseCamp had resource consent for a cinema, the building still needed to be assessed by Lakes Environmental because of "an increase in activity" at the site, he said.
"They want two cinemas now. I understand they only have consent for one."
Lakes Environmental was "waiting for [BaseCamp] to come to us with a solution.
We raise the issue and then it is up to a developer to find the alternatives," Mr Fitzpatrick said.
An engineers' report, expected to be received "by the end of the week" would "help clear up the matter", he said.
"We are waiting for [BaseCamp] to match the new development to the water flows that are already there," Mr Fitzpatrick said.
