By Alison Rice. Three years ago, Bluffton, S.C., would have been a tough sell for a national builder. Located across the May River from Hilton Head Island, the tiny town had no municipal manager, no planning staff--and no need of them within its 1 square mile of land.

Today, Bluffton still has just 1,275 residents, according to the U.S. Census. But it now registers about 50 square miles, geographically one of South Carolina's largest localities, thanks to multiple annexations since 1998. The town's population should jump soon, too. Arlington, Texas-based D.R. Horton recently began construction on the 187-acre Farm at Buckwalter, the first community to be built on the annexed land.

"It's the most exciting game board in the United States," says Bruce Behrens, who became Bluffton's first town manager in 1999. Within the annexed land, the town hopes to create a wider diversity of housing and price points for Bluffton residents. But none of this could have happened without an unusual set of agreements granting developers planned-unit zoning in exchange for covering the town's initial costs.

"We had to have the money or it just wouldn't fly," Behrens says. "They basically said, 'We'll carry the town if you give us development parameters that are more flexible than the county's.'"

Developers as partners

Located in fast-growing Beaufort County, the town was being strangled, according to Bluffton's mayor Hank Johnston.

The town had few options for loosening the noose. "With so few citizens, it had no political power or persuasion," says Peter Lamb, a Bluffton resident and Beaufort County council member. "The county treated it as a stepchild."

Town leaders saw annexation as the answer. "It not only increased the geography, but also [potentially] added enough voters to be a political force. It spoke to the continued viability of the town, on an economic and political basis," Lamb explains.

The annexed properties, the largest of which are the Palmetto Bluff/Schultz, Buckwalter, and Jones tracts, increased Bluffton's land mass by more than 31,000 acres.

But adding thousands of acres slated for development introduced new challenges for Bluffton and would-be developers. Chief among them was The Branigar Organization, a Bluffton land development subsidiary of International Paper Co. (International Paper, based in Stamford, Conn., owned the bulk of the annexed acres after it bought local pine tree forester Union Camp in 1998.)

For Bluffton, protecting the nearby May River qualified as a top concern. Waterfront lots sell at a premium in coastal South Carolina, but town officials worried about the impact of private docks, septic tanks, and stormwater runoff on the river and its oyster beds.

They also were concerned about waterfront setbacks. "We all came to the conclusion that the county [regulations] were insufficient for ensuring the protection of a waterway that wasn't impaired," Johnston says.

The developer agreed. "We found that we and the town of Bluffton were on the same page as far as quality and environmental protection," says Jack Alderman, Branigar's senior vice president.

As a result, the development agreements contain multiple environmental conditions. Water and sewer would be extended to all homes, safeguarding the river and the town's aquifer. Stormwater would be treated internally. On waterfront properties, private docks would be prohibited in favor of limited public access points. Finally, waterfront setbacks for development would be increased from 50 to 100 feet for residential, 125 to 150 feet for commercial, and 150 feet for development near headwaters.

Just as critical was the town staff--or lack thereof. Bluffton had neither the planners to manage such development nor the budget to hire them.

But the developers did. In exchange for planned-unit development rights allowing up to 6,885 homes on the 5,600-acre Buckwalter tract, Branigar agreed to pay administrative fees of $200,000 in the first year and $150,000 annually for the next five years. The developers on the Palmetto Bluff/Schultz tracts are paying similar amounts. The money has allowed the town to hire a town manager, two planners, more police, and support staff.

It's a significant investment but a sensible one, according to Alderman. "It was important to us and our purchasers to have vested development rights. We were willing to live with the restrictions and the administrative fees to ensure the town would be willing to handle our projects," he says.

"It gives the town a comfort level about their control over their own destiny, and it gives us a comfort level that when folks are ready to move forward with development, the town would be ready to go."

First, affordable product

A mix of local and national builders, including Centex and Toll Brothers, have also purchased portions of the Buckwalter property, which may eventually include more than a half-dozen new home communities. The first builder to move forward on the Buckwalter land is D.R. Horton, with 556 affordable single-family homes and townhouses.

Priced from the mid-$90s to the $180s, Horton's Farm at Buckwalter introduces affordable product to an area where the average home sells for $394,000. "It's way out of whack because of the retirement homes here," explains Richard Schwartz, vice president of D.R. Horton's coastal Carolina division in Bluffton.

Still, getting approval for the Farm took some finesse. As desperately as the town wanted to add lower priced housing, it had concerns about its appearance and integration into the community.

It's a discussion Schwartz is used to having. "When people think 'affordable,' they think 'project,'" he shrugs. "It's not an affordable project, it's less expensive housing. That was half our battle."

To put the town at ease, the builder provided photos and examples of past developments. They agreed to alternate single-story and two-story homes and to offer expensive features the town desired, such as tin roofs, as options. They stressed the Farm's amenities: a pool, clubhouse, exercise trail, and landscaping. They allowed the mayor to walk every home under construction.

In return, Bluffton boosted the total density of Horton's portion by 100 units and waived per-unit fees of $200 to $1,000 for homes priced below the affordable benchmark of $124,000, keeping the builder's lot costs, for the lower priced homes, under $20,000.

"We just had to convince them how to do business with people in that price point," Schwartz says.

Alison Rice is senior contributing editor.

BIG BUILDER Magazine, April 2002