NORCO — To many residents, it's just a 3-inch-high rodent that runs on its hind legs.

But this tiny creature, Stephens' kangaroo rat, has been declared an endangered species, making development on its barren grassland habitat subject to fines and even prison terms. Its recent discovery in this rural town has been to the frustration of developers--and to the amusement of many residents.

"To me, a rat is a rat," Norco City Councilman Bill Vaughan said. "It's more of a joke than anything else. . . . It seems strange the rats are taking a precedent over people and projects."

The discovery of Stephens' K-rats, as they are called, came as somewhat of a surprise. Three years ago, at the time of its listing as a federal endangered species, its habitat was believed to be confined to areas just east of Corona and Norco. Property owners elsewhere thought that they could go ahead with ambitious projects without interference.

But in September, K-rats were found to inhabit a large part of the Norco Hills, a 235-acre residential and commercial project proposed by the Windward Development Co. of Newport Beach. For the company, the discovery could mean months of headaches.

"For us, it's just another one of those things," said Bill Tackabery, an engineering consultant with the company. "It's just frustrating how slow this goes. It just goes on and on and on."

Biologists working on an environmental impact report at the site discovered that the rat inhabited about 80% of the project. In fact, the habitat was found to be so extensive that some residents began to doubt whether the K-rat actually is more abundant and not endangered at all.

"If they can catch 80 in one night, I don't think there's much of a rarity," said Vaughan, who lives near the project.

For now, Tackabery said Windward Development will have time to spare, because the decline in the housing market would have delayed the project anyway.

The discovery did have an immediate impact on the Corona Hills, a project to the south of the Norco Hills project in Corona. The Norco Hills discovery led biologists to believe that the K-rat also inhabits the Corona Hills site. Its developer, Buie Corp., temporarily halted grading on part of a 700-acre project in November until the extent of the habitat could be identified.

"We had just a couple of acres that were ungraded," said Jack Schwellenbach, vice president of Buie Corp. "We felt we were clear. It was never indicated that it was in our area."