When the gravel-covered used-car lots that dot Route 1 stood in the way of plans to turn the highway into an arts district, Prince George's County thought it could declare the businesses illegal and turn what it called blight into beauty.

It was wrong.

The Maryland Court of Special Appeals has ruled in favor of the car dealers and against the county council, which passed a law, effective in 2003, that banned all dealerships of less than 25,000 square feet.

The county offered no compensation to the car dealers, some of whom had operated along Route 1 for years. The dealers fought back, and Judge Deborah S. Eyler agreed with them, writing on behalf of the court that banning small dealerships is "not rationally related to a possible legitimate purpose." The judge decided the case earlier this month, and although her ruling was sent to the lawyers involved, it has not yet been formally posted.

"It is just not right to close a business down because of size," said Nicholas Nicolaou, manager of Ray's Used Autos in Beltsville. He was one of a handful of dealers who hired the law firm Shipley and Horne of Upper Marlboro to fight the law. Overturning the measure saved at least 15 jobs at his business along with investments in vehicles and the building, he said.

David Whitacre, the county's attorney, said yesterday that the county has 30 days to decide whether to appeal the decision to the Maryland Court of Appeals. "A final decision has not been made," he said. "We're weighing our options."

During the period that began when the law was introduced, the small dealers were in limbo, but only a handful closed, local business owners and county officials said.

And one longtime Prince George's dealer, John Schulkins, was determined enough that he bought Suburban Motors in Hyattsville in March after the owner, Vernon Wolverton, decided to retire. Suburban Motors is still there, as it has been for 35 years, selling cars that have seen better days.

Prince George's officials had argued that the dealers had to go to make way for the $70 million Gateway Arts District, which was intended to draw more than 100 artists to Route 1 and transform 286 acres in Hyattsville, Mount Rainier, Brentwood and North Brentwood into a neighborhood of studios and galleries.

Former Prince George's County councilman Peter A. Shapiro (D), architect of the legislation and champion of the plan to recharge the business area north of the District line, said the law did not have the impact he had envisioned.

"I am certainly disappointed," Shapiro said of the ruling. "This [law] can be a useful tool in redevelopment. . . . It is unfortunate that the courts disagree."

The arts district has begun to take shape slowly. Sidewalks have been repaired, buildings painted and facades improved. A $1.5 million renovated apartment building with 12 units for artists at subsidized rents has opened. Joe's Movement Emporium, a dance and cultural center at Mount Rainer, is expanding into an abandoned 20,000-square-foot warehouse. Bethesda developer Eakin Youngentob has plans to build 124 rowhouses and about 25,000 square feet of retail on the abandoned site of Lustine's Chevrolet in Hyattsville. Lustine's, which dated to 1926, was credited with helping to make Route 1 a main street for auto dealerships after World War II.

But change in the corridor is not coming as quickly as revitalization advocates hope.

Mike Franklin, owner of the funky Franklin's restaurant in Hyattsville and vice-chair of the Hyattsville Community Development Corporation, said he could not comment on the ruling because the corporation's leaders are torn between supporting a law that could help boost economic development while closing existing businesses.

"Nothing moves as quickly as you would hope, but things are moving in the right direction," he said of Route 1's revitalization.

For example, florist Susie Rhabb opened her Basket Gourmet Shop on Route 1 in Hyattsville in 2002 after she heard about the arts district. Yesterday she was moving her baskets, bows and flowers into a larger retail space in the corridor because business has been good and could get better, she said. She would like to see fewer auto businesses and more stores in the area, but she said she believes redevelopment will take place with or without used-car dealerships.

"We need more boutiques and anchor retailers," Rhabb said. "I think it is going to take some time, but I see the potential."

Prince George's County Council Chairman Samuel H. Dean (D-Mitchellville) said he does not see any point in pursuing the case any further. "I'm just remaining hopeful that there will not be a proliferation of used-car lots on that corridor and in the county," he said.

Schulkins of Suburban Motors said he doubts more dealers will come. And even though he said he believed enough in the Suburban Motors business to buy it, he was not entirely sure new challenges will not arise.

"There is a sense that we are waiting for redevelopment to come to Hyattsville and that worries us a little bit," he said. "I've got my fingers crossed."

Staff writer Ovetta Wiggins contributed to this report.

John Schulkins bought Suburban Motors in Hyattsville after the owner decided to retire. The dealership has been selling cars on Route 1 for 35 years.

Mike Franklin, owner of Franklin's restaurant in Hyattsville, says the revitalization effort along Route 1 is "moving in the right direction."