Red Panda Property has withdrawn its rezoning application for a $300 million development for up to 390 homes due to a disagreement that saw the developer label the council "a circus".

The central issue is a disagreement between the two over the development's stormwater disbursement, which the developer claims is not an issue to be considered for a rezoning application.

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RPP director Andrew McCullagh said the disagreement was "more personal" than stormwater.

"It's not really about the stormwater, it goes much more personal than that, and one might see the irony when you have council doing their own property development on designated flood-prone land across the road," he said.

"The requests are outside the legislated process and the Tasmanian Planning Commission has advised the same and [the requests] are part of the development application process."

Mr McCullagh said the group had provided extensive information to ease the council's concerns over the stormwater and road alignments, including legal advice and a conceptual model for the stormwater.

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The recent events mean the developer's hope of turning soil this year appear gone but the council says it is open to working further with the company.

According to advice received by the developer, the stormwater issue is a concern to be explored during a development application and not the rezoning process.

Red Panda Property was seeking to rezone the area from rural resource to general residential and business.

However, the council refuted the claim information had been forthcoming from RPP and said the withdrawal was the developer's choice.

"That information has not been forthcoming and now the developer has opted to withdraw the application rather than work with council to resolve these substantial issues," Northern Midlands Council mayor Mary Knowles OAM said.

"The applicant was advised that proposals for private lot-based detentions of the stormwater, or full discharge to the Drummond Street open drain would not be acceptable."

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The council wanted assurances that future development would see the stormwater washed into South Esk River and to Sheepwash Creek.

The council raised concerns over the development's stormwater late last year.

It was thought the application withdrawal would be a stumbling block for TasWater, which was going to contribute to a pump station on the development.

"The developer was going to build a pump station to support their development, and TasWater had planned to contribute financially to further upgrade it to cater for future growth in the network," a spokesperson said.

"However, our long term asset plans are not dependent upon this development."

The development, to be known as Villages@Q, was slated for a 50-hectare site at 35 Drummond Street, which had been identified by the council as an area of residential growth.

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There had been hopes that the development would turn soil in the second half of this year but that appears to be overdue to the recent development.

"While the Northern Midlands Council continues to be run like a circus, we will sit back and reassess our options which include a likely multi-million dollar damages claim against council going to the Supreme Court shortly," he said.

"Times and expectations have changed and you simply can't have councils flouting their duties and ignoring legislated processes."

Council confirmed that they remain open to working with RPP if their requests for further information were obliged.

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