The future of the luxury lodge on New Zealand's South Island hangs in the balance after a senior planner for the local council said the tech billionaire's development should be rejected on environmental grounds.
The lodge will have adverse effects on the landscape, and Sarah Gathercole recommended that planning permission be refused.
She said that the adverse effects cannot be mitigated.
The plans for the complex were published by the council last September. The town of Wanaka is home to over 10,000 people and is surrounded by sites that were used to film the Lord of the Rings trilogy.
The plans show a private residential building built into a hillside and a larger luxury lodge with enough space for 24 people. There is a back-of-house building, a meditation Pod, and several water features.
The so-called owner's cabin has a spa, pool, theater lounge, office and three bedrooms, while the guest cabin has its own spa and pool, as well as a library, and 10 guest bedrooms.
The objective was to design an organic architecture that blends into the landscape and respects the indigenous nature.
Gathercole said that the proposal is of a scale well in excess of what could be reasonably anticipated within the rural zone.
Three environmental groups opposed the plans.
The lodge would be visible from the trails in the area, according to the secretary of the Upper Clutha Environmental Society.
The buildings proposed spread across the landscape for 330 meters and will be very visible from the Te Araroa track and Lake Wanaka.
A representative for Thiel, who co-foundedPayPal, did not respond to a CNBC request for comment.
In 2015, the estate was bought by a company called Second Star, which was owned by Thiel, an early investor in Facebook and a friend of Musk.
The New Zealand government granted citizenship to Thiel. Local citizens accused him of quietly buying citizenship.
New Zealand is a popular destination for high net-worth individuals due to its isolation away from the largest population centers of the world. Larry Page was granted residency at the start of last year.
Home to around 5 million people, the country has become synonymous with those who try to prepare for catastrophic events that may pose a threat to humanity. There is a website dedicated to people who want to prepare their families for survival in New Zealand.
There were reports that said that Thiel was planning to build abunker on his estate, which is currently used as a farm. Some of the buildings seem to be built into the hillsides, but it's not clear if they are intended to serve as a Bunker.