Well, we generally require that a starting town have at least 5 houses. They must all be located close together, share a similar theme, and be accessible to the public.
A town must either take on an RP theme of some sort, which opens them up to possible events (this is the case with Serpent Isle and Gra'Knobs), or they must take the "community route", and in some way be of service to the people of LS.
Once we approve a town, they may submit a design for a "banner". Basically, a structure to represent their town. This shouldn't take up more than a 6x6 area of dry land, so as not to block potential house placement. However, consideration for more complex structures will be given for larger towns.
As I type this, I realize our page on the
LS EM Site should be updated a bit.