The Ferodo site is just outside the town of Caernarfon
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Plans to redevelop a former factory site near Caernarfon have gone on display in the Gwynedd town.
The former Ferodo site is owned by Bluefield Caernarfon Ltd, and is already on a shortlist of four possible locations for a new prison in Wales.
Bluefield said it was looking at three other development options - residential, holiday and retirement.
The Ministry of Justice is expected to announce its preferred location for a prison in the new year.
"The first option would be to regenerate with a leisure development including a holiday park, and possibly a hotel for visitors," said Gwion ap Rhisiart, from Bluefiled Caernarfon.
"The second option would be residential, including around 250 homes.
"Thirdly the site could be developed for retirement, including housing for retired people," he added.
Caernarfon town councillor Hywel Roberts said there was a need for a prison in north Wales, but he was cautious about Ferodo being the right location.
"This is a special site on the banks of the Menai Strait," he said.
"I'm not sure this sort of development would be right for this location, which is very beautiful," he added.
Sian Gwenllian, the Gwynedd county councillor covering the Ferodo area, welcomed the opportunity to see what the developers wanted to achieve, but she had doubts about some aspects.
"Perhaps the option to build 250 homes would not be compatible with the unitary development plan, for instance," she said.
"It would be very difficult to grant permission for that," she added.
When Prisons Minister David Hanson made the announcement in August about the four possible sites at Cwmbran, Merthyr, Wrexham and Caernarfon, political reaction from Gwynedd was positive.
The plans can be seen at 23 Pool Street, Caernarfon until Saturday.
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