Developing real estate in the City of South Pasadena is a little bit like the lovemaking of porcupines: Both are activities to be approached very, very carefully.

This city of 25,000 people has allowed no project of significant scale to be built in its downtown area for more than 30 years. The city's redevelopment agency has repeatedly solicited developers for projects, only to see three developers in succession ridden out of town by an anti-growth populace. The latest proposal, which may be the first in a long while to survive the city's build-nothing politics, calls for a project built at only half the density allowed under the city's own zoning.

A quick glance at the geography of South Pasadena may help us understand the local fear of development. The city is a kind of island of small-town America edged between the towers of downtown Los Angeles on the south and fast-growing multi-family development in Pasadena to the immediate north. The Craftsman houses and century-old storefronts of South Pasadena could make the heartstrings of a New Urbanist go zing. The city is also an affluent place with excellent schools and limited urban ambitions. Preserving the small-town atmosphere from the predations of corporate America, on one hand, and Caltrans, which wants to extend the 710 freeway through the center of town, are the main concerns here.

Still, South Pasadena's tiny downtown could use some help. Local shoppers must often go to the big city for basic needs, and local teenagers have little beyond an aging movie theater and an ice-cream parlor to entertain them. In 2004, the city officials bit a bullet and issued a request for qualifications (RFQ) to develop a project on three discontiguous, city-owned parcels, plus an undetermined number of additional vacant properties if their owners would agree to sell. The redevelopment agency has stated publicly it will not use its eminent domain powers. As it turned out, two private landowners agreed to sell their parcels for the project, making a total of five parcels available.

Although the city has attracted some big developers in the past, the winner of the RFQ process was a small developer, Torrance-based Decoma. The developer had recently built a small loft building in the city and had a good working relationship with staff, according to Decoma principal Marinel Robinson.

Eager to head off controversy, the city conducted two sets of public meetings starting in 2005. One set of meetings centered on the development proposal and what local residents want, and do not want, to see in downtown South Pasadena. Another set of hearings focused on architecture. While a number of people gave voice to familiar concerns about traffic and density, the hearings produced a number of suggestions that were integrated into the final program. Among the accepted suggestions were a six-lane bowling alley, a concession to high-school students who asked for a local hangout. The developer also set aside 12 out of 60 new residential units for seniors. The developer also agreed to build a new town square, to be owned by the city. To minimize the number of families and the impact on local schools, Decoma instructed its architect, Kaplan McLaughlin Diaz (KMD), to redesign the units as lofts and one-bedroom units more suitable for singles than households with children.

Existing downtown tenants will not be forced out of the city: The plan allows 18 existing merchants to become tenants in the new buildings, while creating space for another 15 stores or restaurants. As a further concession to a community that calls itself "the city of trees," Decoma agreed to line the project with 50 to 60 new street trees.

Developer Robinson seems keenly aware of local preferences for keeping density low. Although zoning allows her to build up to 45 feet in height, the average building in the proposal is 35 feet high, according to architect Jim McKenzie, the director of the Los Angeles office of KMD. Much of KMD's planning work was done by architect Denise Orr, who has since left the firm but remains active in the project. "The project went through four or five iterations, and each of those had four or five versions," she recounted. After completing much of the basic design of one scheme, the architects got a telephone call from the developer telling them to scale down the project even further to make it politically acceptable.

Robinson said the public meeting process was punishing. Alarmed by the wave of insensitive, big-box construction around them, "people just don't believe developers can work with communities any more," she said. On the other hand, "if the project is built responsibly, 50 to 100 years from now, it will not be an eyesore."

Public subsidies were notably small in the financing for the $50 million, 145,000-square-foot South Pas Towne Square. The city contributed only $1.8 million toward its own redevelopment effort, primarily for public parking. Providing $8.8 million in equity was Genesis Real Estate Fund II, a unit of Roy Disney's Shamrock Capital Advisors, a fund that looks for "risk adjusted" investments with the potential of helping the local economy. The rest of the financing came through conventional lenders, according to Decoma. The project has started the environmental review process, and Decoma hopes to break ground during early 2008.

South Pas Towne Square is a case study in how to build small downtowns without throwing oneself to the mercy of giant retail chains. In this case, an unconventional and patient developer was able to cut a deal with the city, in part because high lease rates in an affluent city are enough to make the project "pencil out." Less affluent or more tax-hungry towns, however, might be quicker to cave in to big retailers — and quicker to lose some of the character they most value in their own communities.

Developers who lie down with these slow-growth cities, however, may find themselves getting up in the morning with a few porcupine quills in their skin.