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In the glow of the blazing electric lights of the 7-Eleven and the strip of modern stores lining Sheridan Boulevard, a beaten sign sways above West 25th Avenue marking the entrance to some place completely different.

Residents describe their enclave as an oasis. Once visitors turn west off Sheridan beneath the sign that spells Edgewater, they can`t help but notice they`re not in Denver anymore.

Yet this square-mile city is stuck in the middle of the metropolis, surrounded by Denver, Lakewood and Wheat Ridge.

Two- and three-bedroom clapboard homes line the quiet, shady streets. Women walk down the wide sidewalks unafraid at night. Children play in their grandparents` yards. Neighbors know one another and wave at each passing car. They meet at the town hall or over pizza and beer at the Edgewater Inn, where the waitresses know the customers by name. The police officers actually walk a beat, stopping to talk to residents about the weather.

Edgewater is like a movie set, and its residents play the part of small-town citizens with relish.

For 90 years, Edgewater has staved off the crowding metropolis and suburban sprawl. But lately city leaders have been struggling for ways to retain Edgewater`s highly touted services without mortgaging its folksy charm. Running a small town in the midst of a metropolitan area takes a toll.

Small-town politics, usually quiet since Edgewater`s inception, have flared in the past two years and ground government to a halt. Residents now hope new council members elected this month will put the problems behind them and guide Edgewater through a period of change.

The bickering had become so intense that a pair of next-door neighbors received restraining orders against each other, the City Council spent nearly $25,000 fighting a recall effort, and the mayor`s daughter called residents crude names at a council meeting.

The rest of the town followed the political cat fights like their favorite soap opera, sometimes standing on the street and leaning in open windows at the packed council chambers to hear every word.

”An awful lot is going on for a town of 4,600 people,” said John Moreno, who has been involved in the political turmoil. ”But remember, you`re talking about a town of 4,600 Edgewaterites.”

Edgewaterites, residents explain, have a fast and long-lasting relationship with their town.

Explained Moreno: ”There`s a saying that if you`ve lived here five years, you`re a transient. If you`ve lived here 10 years, you`re a visitor. If you`ve lived here 20 years, they might consider you a neighbor. If you`ve lived here 40 years, you become an Edgewaterite.”

And, yes, the city is teeming with 40-year residents, many of them children of Edgewater natives.

The long lineage helps pass along the city`s colorful history.

Old-timers enjoy telling the story of Roger the Elephant, a circus animal who carried children on his back at a nearby amusement park in the 1890s. Roger was spooked one afternoon and stepped on a 6-year-old boy`s head, killing him. The elephant was killed after the accident and buried in the swamp that years later was paved over for a supermarket that became the mainstay of Edgewater`s tax base.

Soon after that incident, Edgewater developed into Denver`s red-light district. Turn-of-the-century businessmen flocked to nightlife that couldn`t be found in the city.

Denver had outlawed alcohol, but across its border the west edge of Sloan`s Lake offered a row of gambling halls, saloons and brothels. In fact, Edgewater saloon keepers fought for the town`s 1901 incorporation so they could fend off Jefferson County officials who sought to close the bars.

But shortly after Edgewater became a town, city officials passed a long list of ordinances outlawing the bordellos and the bawdy saloons. Edgewater settled down to become a quiet, homey community that beckoned young families. In the early 1950s, the town nearly doubled in population, as homes were hurriedly built for soldiers returning from World War II.

Several of the city`s steadfast traditions were born during the postwar boom. The Edgewater volunteer fire department became an institution, not only responding to local emergencies, but also delivering gifts to the town`s children on Christmas Eve. Edgewater Days, a celebration including booths, dances and a parade, was introduced. A town center was built at the intersection of West 25th Avenue and Gray Street and grew to include a police station, fire station, town hall and a library.

”It has always been a really neighborly little city,” said Ben DiPietro, who has run the Edgewater Inn for nearly 38 years.

But as Edgewater grew older, so did its citizens. As testimony to the town`s charm, few of the people who moved to Edgewater in the 1950s had left by the 1980s. School enrollment dipped, forcing closures and mergers in the area.

By 1980, then-Mayor Bonnie Allison realized other problems were creeping in.

The cost of running Edgewater was greater than the town could afford. The budget climbed to $1 million, a pittance for its large neighbors, but a fortune to a town that still relies on a King Soopers grocery store for the bulk of its sales tax revenue – until a larger shopping complex helps pay off $11 million in bonds and then begins contributing to the city`s coffers.

Allison and the City Council created the Edgewater Redevelopment Authority, a newfangled form of government that frightened residents but helped turn undeveloped swampland into a strip mall.

The fast-food restaurants and video stores that now line Sheridan Boulevard are in stark contrast with the rest of Edgewater`s old-town charm, but the city`s future depends on it, Allison said.

”We had to do it. We needed the revenue,” Allison said. ”If Edgewater was stuck out in the plains, there would be a low standard of living, and we could get away with paying our police officers and our administrators less. But it`s not. It`s in the middle of a metropolitan area, and groceries cost as much here as they do in Denver.”

Still, the redevelopment authority bred distrust among residents, who are used to dealing actively with their Town Council, a familiar form of government. That distrust boiled over in 1988, when the authority changed the redevelopment borders to encompass the eastern half of the city.

The sector was designated as ”blighted” to allow the authority to offer low-interest loans to remodel homes, start businesses and fight off deterioration. But the label insulted and panicked homeowners who were concerned that their property values would plummet.

The Redevelopment Authority hasn`t solved the town`s money woes, either. It still has $11 million in bonds to repay, and until it does, the city doesn`t receive a dime in the tax revenue generated by the Edgewater Marketplace.