NEARBY residents to a proposed 233-lot subdivision on Wangaratta's Clarkes Lane are largely worried about the density of the proposed estate and the impact traffic will have on connecting roads.

The planning permit and a recycled water facility at Targoora Park has been referred to an independent planning panel to suggest recommendations for the project's future following the submission of unresolved objections.

An amendment to the Wangaratta Planning Scheme seeks to rezone the land from Low Density Residential Zone (LDRZ) to General Residential Zone 1 (GRZ1) to accommodate the smaller lot sizes.

Lot sizes range from 300sqm to 700sqm, plus three super lots with the largest of these at 2349sqm, however the 233-lot density has reduced from an initial 248-lot proposal.

An Integrated Water Management (IWM) facility, which accompanies the proposed application, also requires the rezoning of land to Public Use Zone at Targoora Park on Wangaratta-Whitfield Road.

The Clarkes Lane site is currently vacant and used for agricultural purposes and Targoora Park is on council owned land.

Proponents reported key reasons for the new housing lots are to address the existing housing shortage and delays due to sewer capacity constraints in Wangaratta, with the integrated water management (IWM) facility to service 350 lots.

It would convert wastewater from the sewer system into Class A recycled water that could be used to irrigate nearby recreational spaces or fed back into the sewer system.

The IWM facility has been given in-principle approval by both the Environment Protection Authority (EPA) and North East Water.

Objections to the project ranged from topics including removal of public space from Targoora Park, native vegetation impacts, development not consistent with surrounding areas, traffic and environmental impacts.

At the Rural City of Wangaratta council's December's meeting this month, Pin Oak Drive resident Lauren Bowie raised concerns about the number of lots proposed for the subdivision and the impact that could have on the roads in the area which are already in a poor condition.

"The size of the lots are not in keeping with what's already developed in the area," Ms Bowie said.

"The fact that it backs onto Cathedral College and there are school children in the area, we are concerned with traffic."

Ms Bowie expressed concerns about the current state of the Laceby-Targoora Road and the potential 500-plus cars travelling up and down Clarkes Lane as well as school buses.

"Potholes are being filled, it is quite narrow, there are trucks and school buses that use that section of road which is literally only single lane, so my concern is obviously the infrastructure and the pressure on Clarkes Lane and Laceby-Targoora Road," she said.

Council director of sustainability and culture, Stephen Swart, said all of the issues will be considered by the panel and will make a recommendation to council before councillors make a decision about the proposal.

He said conditions in a planning application could include upgrades to infrastructure including roads.

Lots typically in the current LDRZ zone range between 2000-4000sqm.

Yarrunga Ward councillor Allison Winters thanked several Pin Oak Drive residents for advocating for their community.

"Many residents have raised concerns with me over the number of blocks, blocks sizes and the impacts on the environment, and social impacts," Cr Winters said.

"I'm conscious we have had a serious housing shortage and the proposed 233 lots are desperately needed by people in our community.

"The wastewater also provides much needed irrigation to sporting fields which are vital assets for our community."

Cr Winters said it will be vital for a panel to be installed to make sure everyone has their voices heard.