NORTH KINGSTOWN — A developer who planned to build nearly 300 houses on a gravel site has instead agreed to sell the development rights to the town.

Under the deal, Dry Bridge Development won’t pursue plans to build 290 three-bedroom houses — some of them affordable units – on 286 acres east of Buena Vista Circle – at the Exeter town line near Route 2.

Instead, the town will pay $5 million for the development rights to the property. The town may also buy some of the land later for a new town well and possibly for recreation use, said Planning Director Jon Reiner.

The town plans to borrow the money through a future bond issue. The Town Council approved the deal, which includes a March 30 closing date, last week.

“We’re not trying to stop affordable housing,” said Reiner. “The town is one hundred percent dedicated to more affordable housing.”

In fact, officials plan to meet or exceed a state formula that requires 10 percent of a town’s housing stock to be affordable, he said. “But this type of growth is bad growth. It leads to further sprawl.”

Because the subdivision site is distant from other developed areas, the new neighborhood would have cost the town more than $2 million a year for new teachers, road maintenance, police and fire protection and other services, Reiner said.

The site is also within the town’s groundwater overlay zone. New homes could have the potential to pollute the groundwater supply, Reiner said.

The town first looked at the property four years ago. But officials didn’t actively pursue it until about a year ago, Reiner said.

Dry Bridge Development submitted the plan for Goose Nest Commons more than two years ago. When the Zoning Board said the application was incomplete, the developer appealed to the state Housing Appeals Board, which sided with the developer.

The development company is owned by Dry Bridge Sand & Stone in Peace Dale. The site, zoned for light industry and rural homes, is being mined for gravel. That operation will continue under the new deal, Reiner said.

“It’s a win-win for the town,” said Town Councilman Edward J. Cooney. The town will avoid the cost of providing services to a new subdivision and “preserve the rural character of that part of town,” he said.