A proposed $130 million retirement village near Richmond, Nelson could be under way next year as part of a planned 50ha residential development worth about $350m.

Arvida Group is behind the retirement village project, working in conjunction with Richmond West Development Company Ltd on a combined residential development proposal called The Meadows, which is earmarked for a site off McShane Rd.

The Meadows proposal, which is tipped to provide more than 800 homes including those in the retirement village, received the backing of Tasman District Council on Thursday when councillors agreed to recommend to the Minister of Building and Construction that it be established as a Special Housing Area (SHA). Another seven proposed developments across the district also received council backing to become SHAs.

Arvida Group chief executive Bill McDonald said Richmond, along with the wider Nelson-Tasman region, was undergoing tremendous growth and "becoming a destination for retirees".

McDonald stressed the planning of the retirement village was in its early stages and the team was still "working out how things fit on the site" but it could have about 160 villas and 50 care suites. There would also be community facilities and commercial centres that would be open to the wider public.

The retirement village would not be gated. It would be part of the wider development, helping form a "multi-generational community".

If the SHA was established and resource consents granted, it was hoped construction of the retirement village could be under way by the end of 2018, McDonald said.

Arvida Group also owns the nearby Oakwoods Retirement Village and would be able to "lever off our management team there and our [good] reputation".

Richmond West Development Company director Andrew Spittal said his team was aiming to develop about 550 to 650 sections on an area adjacent to the proposed retirement village, with an average section price of about $220,000.

"Some will be smaller, some bigger," Spittal said of the sections. "That's about $100,000 cheaper than what's around at the moment."

A lack of supply meant section prices had jumped by about 64 per cent over the past 15 months.

"I don't think people understand how short supply is," Spittal said. "They see a lot of development but it's all pre-sold and people are waiting."

The Meadows site straddles Borck Creek, which would become a feature of the development along with shared pathways connecting the homes with the retirement village.

"I imagine grandchildren walking down the shared pathways to see grandparents," Spittal said.

As long as the proposed SHA was established and resource consents were granted, the first sections could hit the market in late November 2018.

The other directors of Richmond West Development Company are Gary Donaldson, Graham Vercoe and Simon Collett.

"We're all local boys," Spittal said.

The directors had been "absolutely" heartened by the support of the councillors and council staff. In something of an unusual move, there had also been liaison with developers of sites nearby on design matters including road layout.

"So they complement each other," Spittal said. "We're working together so we do it well. It's what good neighbours should do."

The team behind The Meadows was part of a group of developers who approached TDC and offered to co-fund water supply infrastructure that would enable the early development of up to 400 dwellings near Richmond.

Councillors agreed to the infrastructure co-funding suggestion before they considered the SHA proposals. The work, estimated to cost $1.2m in total, involves the provision of additional storage at the Richmond Water Treatment Plant equivalent to the existing balance tank, the installation of a back-up generator for the treatment plant, and associated pipe, electronic and telemetry works.

Any cost overruns would be borne by the developers, who would also manage procurement and construction for much of the work, which they intend to have completed in early 2018.

Councillors agreed to provide additional funding of $600,000 in 2017-18 for the infrastructure project.

Deputy mayor Tim King said working with developers provided a cost-effective way for the council to enable faster land development and provide extra infrastructure for the benefit of wider Richmond.

"As well as servicing new development, the upgrade to the Richmond Water Treatment Plant will give greater supply security to all Richmond water users in the event of a pipe failure and allow the plant to keep operating in the event of power failure," King said.