Residents living near The Old Market in Hove have objected to plans to build penthouse flats above the venue.
They believe the Grade II listed building in Upper Market Street, Hove, should be preserved in its present form.
Last month the venue applied for planning permission to build two glass penthouses designed by architect Nick Lomax, who created the Jubilee Library in Brighton, to help tackle its £900,000 debts.
At a meeting of the city's Conservation Area Group (CAG) planning officers were shown scores of objections to the planned development.
Tom Chavasse, chairman of the Friends of Brunswick Square and Terrace, said the CAG had recommended to Brighton and Hove City Council that the plans be refused.
He said: "The conservation argument now has to be included in the planning officers report for consideration."
Campaigners said the Old Market's cultural importance should not be used as an argument for altering the architectural importance of the building.
But Old Market trustee Stephen Neiman said the centre had no choice but to develop the building to repay ten-year-old debts.
He said: "The Old Market's activities are breaking even, but it is unable to pay off the old debts.
"Developing the flats would be one way to pay off the debts, a grant from the council would be another.
"We have been desperately asking the council for arts council funding but have been told it is not of strategic importance.
"This development is vital to keep the Old Market going.
"The two penthouse flats are on the roof so won't disturb the building in any way."
Julie Gibson, of OLM Pavilion publishers, who have just moved into offices on the site, said: "It would be dreadful for us if it did go ahead."
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