Around 8.45pm readers on the Rotorua Daily Post Facebook page reported hearing what sounded like gun shots.
A Bay of Plenty Police District Command Centre spokesman said police were "working towards resolving the situation".
Earlier, he said there was no danger to the public and police were talking to a number of individuals relating to the altercation.
As the incident unfolded, resident Zena Patu said she had lived in neighbouring Fordlands 25 years "so this is normal to me".
"It is a concern because I think about my nieces and nephews' safety. As soon as the cops showed up they bolted out the gates wanting to see what was going on. I do think the violence has calmed down in recent years though.
"I have thought of leaving but I can't leave these kids or mum - she's been here forever and she won't ever move."
Another resident, who did not want to be named, said she didn't know anything about the incident until she "went out to go to the shop and there were all these armed police".
"It is scary and it does happen a lot.
"It comes down to drugs, gangs and poverty."
