Fonterra and the Perry group went head to head in the city council chambers on Tuesday as the dairy company pleaded with council to not commit to the group's Te Awa Lakes development.
The Te Awa Lakes development will take place on a piece of Perry owned Horotiu land, which borders the Waikato River and the Waikato Expressway.
The plan is to build 1000 homes on the land, with 400 of them affordable under the special housing accord.
Fonterra spoke against the development, with director of New Zealand manufacturing Alan van der Nagel saying it would compromise the site's current operation.
Fonterra's Te Rapa site sits just over a kilometre away from the proposed Te Awa Lakes development.
"This will heavily influence if Fonterra chooses to invest, or reinvest in this site," Mr van der Nagel said.
"When we constructed our site, it was far out of town, we had to build a new worker's
village when constructed 50 years ago."
He said that Fonterra's investment in the region has so far resulted in the employment of 700 workers.
"In the last three years, we have invested a further $50 million in the site, which has added another 40 jobs.
"To be clear, Fonterra does support residential development, in particular affordable housing.
"However, these should be in appropriate locations."
Mr van der Nagel said Fonterra originally were pleased with the council's housing accord where it required any new SHA would not be inconsistent with the council's strategic planning.
"This proposal is a complete counter, it runs completely opposite of every strategic document, which is also noted by city planning manager for Hamilton City Council Luke O'Dwyer," he said.
The Te Awa Lakes report says if approved, the SHA proposal will introduce a new land use that is not consistent with the strategic planning framework analysed earlier. A part of the Te Rapa North industrial node will be lost to industry and converted to residential land use.
Daniel Minhinnick, who was representing Fonterra as legal counsel from Russell McVeagh, said the proposal raises complex and significant issues.
"It directly conflicts with the key criteria council must address," he said.
"Under both the housing accord and your SHA policy, SHAs should not be approved that are inconsistent with the strategic plan and the region.
"The right decision is to decline the application."
Simon Perry, chairman of the Perrys group, came into bat in defence of the development, criticising Fonterra's submission.
"They submit that it is in their location, there are about 50 houses within a kilometre of the Fonterra factory," Mr Perry said.
"In fact Rototuna is expanding so rapidly that the Meadows development is also closer than part of our site."