The steep, boggy landscape at Staney Hill has made life difficult for developers who are seeking to build up to 300 houses there.
Designers Redman Sutherland Architects are to launch another consultation phase next week now that draft proposals have been completed.
That follows a consultation in May, which informed the early stages of design and planning.
Hjaltland Housing Association, which bought the land last year, intends for the development to be built over the course of a decade. They believe around 300 homes could be built.
The association feels the site will make a contribution towards meeting the substantial demand for housing in Lerwick. Some areas are also likely to be available to individual house builders.
Iain Malcolmson of Redman Sutherland Architects led the team producing the “masterplan”. He said the proposals were now being put forward in draft format to gauge local opinion.
He said: “We have tried to take into account both the views of local residents, expressed during the process, and the brief given to us by Hjaltland Housing Association.”
Speaking of the views expressed during previous consultations Mr Malcomson said: “There was general agreement that there should be plenty of open space.”
There are some difficulties associated with the site, namely that it is “exposed to the worst of Shetland weather”.
As a result the design team feel that the housing clusters should be concentrated in the more sheltered parts of the site.
The design team has also had to contend with a site that is very steep in places, with rocky and boggy areas causing difficulty.
However, Mr Malcolmson said he was confident that the masterplan would lead to a positive and attractive development for the town.
A new road has also been planned, linking the southern end of the site at Clickimin to the new development at Wista in the north. The road will rise steeply, climbing some 70 metres and has been designed for “slow traffic speeds.”
As well as Redman Sutherland the design team includes Edinburgh-based urban and landscape designers Iglu Studio, Mott MacDonald who are providing engineering advice, and AB Associates of Scalloway who are helping with public consultation and planning.
Two public events will be held at the Staney Hill Hall on Monday for those wishing to share their views or learn more about the development.
Between 1pm and 6.30pm there will be a “drop-in” session which will be followed at 7.30pm by a workshop allowing those attending to assess the proposals in more detail and come up with recommendations.
After the consultation has taken place the design team will revise and refine the proposals. The final version will be published early in 2017 and will later be considered by Shetland Islands Council.