Growing gang tensions have culminated in gun shots being fired and a house being torched.
Around 9.30am three addresses associated with a local gang were shot at on Rotorua's Ford Rd, police say.
A woman living on the street said she and her two young daughters sat on the floor of their house after hearing four or five gunshots ring out.
"It sounded like it was right outside my gate," the woman, who did not want to be named, said.
"We heard a really loud bang - at first I thought it was fireworks and then I realised it was gun shots. Me and my two daughters, one eight months and the other nearly 2, sat on the floor until it was over.
"There were gunshots last night as well, around 9-9.30, it's ugly."
Another woman said the gun shots were fired at a house on the corner of Pullar Pl and Ford Rd.
"It all started when a guy went to this house with a gun, he was standing in the middle of the street shooting and swearing.
"He left but then a couple of cars with loads of people came back and started mouthing off. There was a bunch of arguing until the police showed up."
She said her parents, who live in the area, had been hearing gun shots sporadically for the last two weeks, including a few last night.
Just after midnight last night, police received a report of shots being fired near another gang-related property on Turner Dr.
About the same time, a house on Turner Dr was set alight and was seriously damaged. Nobody was inside at the time of the fire.
A police media spokesman Gareth Thomas said the fire is being treated as arson and a scene examination is being carried out.
In response to Rotorua Daily Post questions, it was revealed police believed all the events were connected to a development in tensions between two factions of the Black Power gang.
He said investigations were focused on the Western Heights and Fordlands areas of the city.
Mr Thomas said hostility between both parties had been simmering in the city since 2010.
He said police had run a number of investigations into the gang during that same period and more than 20 gang members have been given custodial sentences as a result of those investigations.
Police have increased their presence in both suburbs in an effort to prevent further violence and to reassure the public.
Schools in the immediate area, Westbrook, Malfroy and Sunset Primary Schools, were not put into lockdown following the incident, though Sunset did take extra precautions.
"We were made aware of the issue through a member of our parent community," principal Niels Rasmussen said.
"It [was] sufficiently far away from us to not warrant going into lock down. However we did take a few extra precautions, including shutting our gates."
Police were seen carrying guns and stopping cars at cordons on Wrigley Rd and Ford Rd.