Updated at 12:18 p.m.

Calling it a referendum on density throughout the city, the City Council approved a controversial development Friday in the University of Minnesota's Dinkytown neighborhood over the objections of vocal activists.

The Council took the rare step of overturning a committee vote against rezoning for the project, siding with density advocates over some neighbors who said it would destroy the small business character of Dinkytown. They approved rezoning on a 9-4 vote.

The project, proposed by Opus Development Company, features 140 apartments and ground-level retail. It would be built at 5th Street SE between 13th and 14th Avenues, on a plot of land that is now about 70 percent surface parking lots.

Neighborhood activists organized a "Save Dinkytown" effort to oppose the project, appearing at many city political conventions this spring. On Friday, many of them crowded into the Council chambers holding signs reading "No re-zoning" and "Dinkytown not Megatown."

Supporters of the project held signs like: "Don’t let scare tactics stop quality redevelopment of blighted parking lot. Approve this project!!”

Several council members indicated in comments that they viewed the project as a bellwhether for density throughout the city.

"If we’re not able to say yes to this project…how and when are we going to be able to say yes to density?" said council member Elizabeth Glidden.

Supporting the rezoning were council members Glidden, John Quincy, Betsy Hodges, Don Samuels, Kevin Reich, Gary Schiff, Robert Lilligren, Sandy Colvin Roy, and Barb Johnson. Opponents were Meg Tuthill, Lisa Goodman, Cam Gordon and Diane Hofstede.

City staffers said in an exhaustive staff report that the project is in line with the city’s comprehensive plans, particularly building dense housing near activity centers. The project also received approval from the Marcy Holmes neighborhood.

Hofstede, who represents the area, countered that it is incompatible with the current small area plan for the neighborhood.

“This is a really critical issue not just for Dinkytown but for each and every neighborhood in the city of Minneapolis because it goes to the core of who we are as a city,” Hofstede said.

Following the meeting, she could be overheard telling a business owner outside the council chambers that she will proposing a development moratorium for the area. She declined to comment on it when approached by a reporter.

Opus representatives said Friday that they hope to begin construction in August, with possible completion in August 2014.