Phil Lewis and Ken Jeffrey, of the Jamberoo Valley Ratepayers Association, defended the development after another group of residents voiced their opposition last week.

Huntingdale Developments submitted a planning proposal in 2012 to rezone 7.8 hectares in Wyalla Road, from RU2 Rural Landscape to R2 Low Density Residential and E3 Environmental Management, in order to build 30 Torrens title lots for those older than 55 and 22 detached housing lots.

A group calling themselves The Village People opposed the development on flooding and character grounds, but Mr Lewis and Mr Jeffrey said the proposal was essential for business viability.

"The town has lost its petrol, its doctor," Mr Lewis said.

"Many businesses and clubs are going through a tough time."

Jamberoo butcher Peter McInerney agreed, saying businesses were struggling.

"There's not enough local support . . . there's a lot of escape spending," he said.

"[The development] will help. A lot of those people will shop locally."

Jamberoo Pub licensee Erica Warren was uncertain if the proposal would help the pub and questioned the need for a seniors' development, but said the village needed some kind of smaller development.

"Given the school's going to be down a teacher, we need a trigger to bring families with kids," she said.

Mr Lewis and Mr Jeffrey thought seniors moving from large blocks could lead to more families coming to the area.

"State and federal governments advocate ageing in place - that means living in the residence of your choice as long as you are able," Mr Lewis said.

"But that doesn't mean Ken and I could age in our houses at the present stage, which are on acre blocks.

"We prefer to move somewhere else and, of course, if other people did the same thing and moved into seniors' housing, other people would buy our houses, perhaps with younger children."

Mr Jeffrey said they did not want to leave behind the community spirit in Jamberoo, which was evident when Fredericks's store burned down.

The pair were concerned an alternative could not be found if the Wyalla proposal was rejected.

"There can be empty blocks around, but there's no guarantee that anyone will actually build on them," Mr Jeffrey said.

Mr Lewis said the proposal included a community hall for the residents living there.

"You couldn't have that with infill," he said.

A Huntingdale Developments spokesman said flooding issues had been addressed and most of the seniors' portion of the development was likely to be taken up by elderly people already living in the area.

He said, with NSW homes containing 1.7 people on average, the population was not likely to increase by much.

"Twenty-five of the 30 residences proposed will be taken up by people from Jamberoo," he said.

"The population growth from this development along with the 31 blocks approved [in Drualla Road] will help the community's businesses not only exist, but thrive."

Submissions closed on January 7 and a report on the re-zoning proposal will be brought back to the council.