The tiny town of Vineyard is thriving.

Well, maybe "thriving" is too big a word for Vineyard; let's just say Utah County's richest little town is doing quite well, thank you.The Utah County Commission created the town in May 1989 amid a chorus of naysayers who predicted the town was doomed to fail. Mayor Rulon Gammon and Town Council members are proving the naysayers wrong.

But Gammon admits that building a government from the ground up is not easy.

"Let's face it," Gammon said. "We're a bunch of farmers who have a difficult time learning how a municipality works."

The biggest bug Gammon had to work out was mail delivery. As part of incorporation, Vineyard had to switch from a rural route to a formal street-address system. But mail to Vineyard residents often ended up getting delivered to Provo residents. The Town Council solved the problem by renaming streets and switching mail service to Orem, although mail service is "still not up to par," Gammon said.

Town Council members are guided in their town-shaping efforts by the philosophy that "our objective is to maintain the community as it presently is, in so far as that is possible," Gammon said.

What Gammon and council members Morris Clegg, Stan Morris, Robert Holdaway and Grace Holdaway are striving to preserve is Vineyard's close-knit neighborliness, its rural flavor and its mix of residential, agricultural, commercial and industrial zones.

With that goal in mind, the council earlier this month placed a moratorium on building and temporarily dissolved its Planning Commission while the council develops a master plan to govern development in Vineyard.

"We have an understanding among the residents of the community that (preserving integrity) could place hardships on residents," Gammon said.

The master plan will take three to six months to complete. "As farmers we have a little more time to work on it this winter than we've had this summer," he said.

If one zone is emphasized above the rest it may be the agricultural zone. About half the residents of Vineyard are involved in agriculture; there are four dairies in the town.

"One thing we are trying to do is maintain a true agricultural zone," Gammon said. "Thirty years ago 25 percent to 30 percent of the United States was involved in agriculture. Now it's 2 percent."

Vineyard, tucked behind Geneva Steel on Orem's west side, comprises 2,805 acres; 52 percent of the land, 1,460 acres, is owned by Geneva. The town is bounded by Geneva Road on the east and Utah Lake on the west and lengthwise by Orem's 800 South and 1600 North.

According to the 1990 census, Vineyard has 156 residents - a total of about 38 families. And nearly everyone is related, Gammon said.

"It's hard to tell your cousin no," Gammon said. Still, "if you're going to build a community you all have to give and take. We're learning to do that."

Since its inception more than a year ago, Vineyard has existed financially on sales-tax revenue - $39,588 through the second quarter of 1990, according to the State Tax Commission - and building permits issued to Geneva Steel.

Dennis Wanless, chief financial officer for Geneva, said that since January the company has paid Vineyard approximately $105,000 for building permits and licenses.

Vineyard also will have received about $5,500 in class B and class C road funds in 1990 from the state to help maintain its 6.8 miles of streets, according to Kim Morris, Utah Department of Transportation spokesman.

In February, Vineyard will receive its first allocation of property-tax revenue from the county - about $129,000. Most of that comes from Geneva, the county's largest property-tax payer. Vineyard also has other noteworthy business enterprises in its boundaries: La Roche Industries, Western Pipe Coaters, Liquid Air Corp. and a branch of the Family First Credit Union.

Vineyard's 1990 property-tax revenue is about $40,000 more than projected by county officials back in 1989 when the town incorporated. While revenue is higher, operating expenses are nowhere near the $80,000 per year predicted by the same county officials. About the only expense the town has is contracting with Orem for public-safety services.

Vineyard's financial standing is in such fine shape that it has cut business-license fees in half for 1991.

"We seem to have sufficient funds to run the town," said Arthur Pheysey, a resident. "The people down here seem to work quite well for the common good. I think that is important."

Despite the fact that the bulk of Vineyard's revenue comes from Geneva Steel, fears that the steel company would rule the tiny town have proven groundless. The town and the mill co-exist almost like strangers sitting next to each other on a bus.

"The truth is we don't think much about Vineyard, and they don't think much about us," said Robert Grow, Geneva vice president.

It's likely, however, that Orem thinks about them both occasionally. Orem lost out on a potential substantial source of tax revenue - perhaps as much as $1 million a year in the future, depending on what is taxed and how fees increased - when Vineyard incorporated and annexed Geneva.

So what is Vineyard doing with its growing funds? Some money is being spent renovating a building on the corner of Holdaway and Gammon roads for use as a town hall. For the past year, the Town Council has held its monthly meetings in Grace Holdaway's basement. The now defunct Planning Commission rotated its meetings among homes.

The town is also planning a park with a baseball diamond, volleyball court, toddler sand pile and barbecue pavilion next to the new town hall. Later, the park may be expanded to include a soccer field.

Some money is earmarked for future needs. Roads will continue to need improvement in Vineyard. And diminishing water levels in the wells supplying Vineyard homes may force the town to seek water from other sources.

But for now, Vineyard is set.