In the mid-1980s, when metropolitan Portland first began planning a light-rail line, the downtown merchants in suburban Gresham, Oregon, discussed the issue and reached a quick consensus: They didn't want it. The construction would be bad for business, they reasoned, and even when the work was done, the incessant noise of trains coming and going would drive customers away.

By the time the Greshamites realized that they had made a mistake-- that light rail was turning out to be a boon to districts such as theirs--it was too late. The tracks were already in place, and couldn't be moved. So now, 15 years later, Gresham is doing the next best thing. It is moving its downtown to the tracks.

Right next to the light-rail station, a half mile or so from the original heart of town, Gresham is building a 130-acre town center, with a 1-acre public square to serve as the new hub of the community. Surrounding the square will be a network of streets built on an old- fashioned grid, meant to be convenient to pedestrians rather than cars.

The grid idea strikes quite a few local residents as peculiar, because the grid will pretty much stop at the edge of the development. The streets won't really lead to anything. Critics deride them as "roads to nowhere." Max Talbot, the community development director, admits that "this is a stretch, particularly for a suburban location." But voters liked the idea sufficiently to approve more than $11 million in public money for the project.

If the Gresham grid is a little wacky, it is undeniably interesting, and it is only one of a whole array of interesting ideas being tried in the suburbs of Portland, where the light-rail lines that spread east and west from the city are generating a serious search for ways to bring suburban development and public transportation together.

A few miles northwest of Gresham, near the Portland International Airport, ground has been broken on an ambitious project with an entirely different rationale. The Bechtel and Trammell Crow corporations are building a mixed-use project of 3 million square feet on 120 acres--retail, office, hotel and entertainment--not to take advantage of a transit line but to get one started. The whole idea was that the plans for Cascade Station would be a magnet for development money to extend the system all the way to the airport. And it has worked. A 5.5-mile airport spur, financed by a public-private partnership, is under construction and scheduled to open in the fall of next year.

It is not too much to say that developers in Portland are coming down with a case of light-rail fever. Historically reluctant, like developers everywhere, to invest large sums of money in projects tied to transit systems, they have recently changed their minds with a vengeance. "There's been an evolution in the comfort level of the development community about doing development around transit stations," says G.B. Arrington, a longtime official of the Portland system. "We now use light rail as a tool to direct growth."

Arrington estimates that more than $2.3 billion has now been invested in projects in the immediate proximity of Portland's light-rail lines, and that there are 10,000 retail units in walking distance of light- rail stations. Admittedly, not every project is working out. Take a ride to Beaverton, where trains began running last fall, and you will see a huge semi-circular structure.

At first it appears that someone thought about building a replica of a Roman amphitheater and gave up in the middle. Actually, that's half right. Known as the Round, it was designed as a mixed-use town center project to be ready for the first commuters in 1999, but it lost its financing. So the Round sits depressingly unfinished, materials strewn on the ground, waiting for a new entrepreneur to come along and rescue it. Beaverton's situation seems to be the exception, however. The Greshams and Cascades are more the rule.

A few miles west of Gresham, a few stops from the end of the Westside line, sits Orenco, perhaps the most interesting of all the experiments that Portland's light-rail system has generated.

If you take the train to Orenco, pause on the platform and look north several hundred yards, you see a very unusual sight. First you notice a broad field of tall grass, with a paved walkway running through it. Then, at the end of the walkway, you notice a familiar collection of white letters on a green background. It's a Starbucks coffee shop. It sits in what looks like a Victorian Main Street shopping block, with big bay windows in the storefronts and round turrets on top of the buildings. Surrounding this business district are modest-size English cottages and Craftsman bungalows, geared to the same period look as the shopping street. Behind the houses stands a village green.

This is Orenco Station, a developer's high-stakes gamble on 200 acres of empty farmland, 15 miles from downtown Portland. It will be 1,800 residential units, 27,000 square feet of retail and 30,000 square feet of office space constructed around an old-fashioned main street, by far the densest, most urbanized project anyone has built in the Portland suburbs so far.

And it may be the best test yet of the theory that traditional urban design, public transit and suburban life can coexist together in harmony. It is possible--perhaps not easy, but possible--to live in Orenco without a car. Downtown Portland is 30 minutes away on the train. Hillsboro, a magnet for high-tech employment in what locals call "Silicon Forest," is on the same Westside line. Intel has a big facility not far from Orenco's borders.

The developers of Orenco are convinced they have created a path- breaking new form of urbanity in the suburbs that will spread like wildfire in the next few years. "It is so far beyond what anyone else has done," one of them, Rudy Kadlub, has exulted. "But it is going to be the future of the country."

Clearly, it will be copied. Seattle is scheduled to open a 23-mile light-rail line next year, and planners there are already looking into the possibility of Orenco-style villages spaced at intervals along the corridor. In Minnesota, the Twin Cities metropolitan council has hired California architect Peter Calthorpe, the spiritual father of the "transit village" idea, to work with the suburbs in the path of the transportation projects being built there.

So it is no small matter whether Orenco succeeds or fails. At the moment, it is far too early to tell. Sales of its initial homes have gone extremely well. But the biggest problem for previous New Urbanist projects of this sort hasn't been poor residential sales, it has been an inability to attract the commercial infrastructure of everyday life: grocery stores, pharmacies, bakeries, barber shops and bookstores. It takes a whole streetful of merchants to make a village; without them, it is hard to see how Orenco or any development like it could change the face of suburban America in the way its promoters promise. "It's relatively easy to do residential. It's relatively easy to tweak office projects. It's very, very difficult to do retail," G.B. Arrington concedes.

Orenco jumped off to a flashy start in this respect. Its town center, open less than a year, already has a florist, a dry cleaners, a wine and cheese store, an Indian restaurant, a steakhouse and an Italian cafÈ. A stockbroker, a dentist and an insurance agent have set up shop in second-floor offices above the retail units. But there is no grocery and no drug store. For that sort of shopping, residents of Orenco have to drive a mile or so down Cornell Road, a four-lane arterial that runs in front of the town center and carries 25,000 cars a day.

And that highlights what may be the one flaw in this whole ambitious experiment. Bold as they were, Orenco's designers didn't dare build the shopping street right next to the station; if they had, Orenco might have had the compact charm of a true 19th-century streetcar suburb. But then the local merchants would have had no customers other than the immediate residents. Placing the downtown one-third of a mile away, next to a multi-lane highway, creates the opportunity to attract drive-by traffic as well.

It's hard to fault the logic of this decision. But somehow that long walk across the open grass, from station to Starbucks, suggests a moral not only to the story of Orenco but New Urbanism in general: When it comes to building communities, the 20th century isn't over yet. The automobile is still king.

On the other hand, one fact is undeniable: People want to live in places like this. Orenco isn't even close to being built out, but a house there already costs 30 percent more than it did at the opening two years ago. Buyers are paying substantially more money for less space than they could have in a conventional suburban subdivision a couple of miles away.

There is a message in the Portland experience, a lesson that comes through in Orenco, Gresham and Cascade Station. It's the same lesson that Tom Downs, the longtime transportation planner and former head of Amtrak, has been preaching for years: The greatest value of a transit system to a community doesn't come from the trains--it comes from the tracks. A light-rail system may be a money-loser; it may attract only a small fraction of the commuting population of its metropolitan area; but once it is there, once the tracks are laid and the stations are open, development follows. Investors realize the infrastructure is in place to stay, and their wallets open up.

That is happening all around Portland. There is reason to believe that in the next decade, it will happen in Seattle and Minneapolis and a long list of other cities as well.