Flowery Branch City Council gave its first OK Thursday night to allow the developer of the city's largest neighborhood to build smaller homes than planned, including ranches, in a section near the front of the community.

"I've been asked to vote no because these homes are going to bring riffraff, a different socioeconomic group to our development. I disagree with that," Councilman Damon Gibbs said.

"There was a time in my life when my wife and I were starting out that we lived in houses very similar to the size of these that are going to be built."

Some residents of the 1,000-acre Sterling on the Lake have protested the move by Newland Communities to reduce the homes' minimum size from 1,400-1,500 square feet to 1,300 square feet and allow for single-story homes.

One resident, Linda Nevins, told the council she worried about sales.

"I would hate for the front of our neighborhood to be empty houses, and then they'll have to lower the prices to sell them," she said.

Patrick Clark, Newland vice president and general manager, told the council in a meeting last month that Newland didn't "want to lose the buyers right now that we're seeing ... in good numbers that are asking for a single-story home in (a $150,000 to $180,000) price range."

Several residents protested the move at that meeting, prompting council members to push for a delay so that the two sides could discuss the issue further.

Clark said Thursday night that a meeting took place last week with about 75 people.

"We addressed every question and while some of the answers may or may not have been as some folks would have liked them to be, we did answer them ... with the transparency that we typically do," he said.

Ed Asbridge, a Sterling resident, said he believed the biggest reason his house value has dropped is because of the economic downturn.

"But, overall there are (neighborhood sections) that are going to be hurt by building smaller houses," he said. "I don't think that (front section) necessarily will be, but it could affect the whole community."

Gibbs, a Sterling resident, said the trend of smaller homes has occurred where he lives as well.

"The economy is driving the market," he said. "There's not a lot we can do about that."

Gibbs said he bought a home in Sterling because of the diversity of residents there, from young families to retirees.

"And while I'm not crazy about the fact that there are houses in my section that are smaller than ours, I trust that they are going to bring good people and we're going to have great neighbors, and our new reality is going to be OK."

In other business, Craig Lutz, who represents South Hall on the Hall County Board of Commissioners, criticized the council in its hiring last month of Jeremy Perry as the city's first finance director.

"Frankly, I think you did the right thing the wrong way," said Lutz, who served on the council before his 2010 election to the commission.

He especially objected to how the matter was handled in a closed meeting, which is allowed by state law for certain matters, including personnel.

"All (the law) talks about is things like hiring, appointing, doing people's personnel write-ups and evaluations," Lutz said. "It doesn't say you can go in there and create positions. It doesn't say you can go in there and make budget decisions, and frankly that's where I think the city went out of bounds."

City minutes show that on Feb. 20, the council went into the closed meeting and then emerged to create the position of finance director.

After Thursday night's meeting, City Attorney Ron Bennett responded to Lutz's charge, saying he believed the council followed the law and "properly discussed personnel issues, which would include the appointment or hiring" of an employee for the new post.