CAMBRIDGE — This historic Eastern Shore city offers a glorious view of the Choptank River, but its working waterfront is a forlorn place.

The once-thriving tuna canneries are long gone, and a failed port now sits at the mouth of Cambridge Creek, hosting occasional concerts and weddings.

Cambridge officials are pushing a plan to revitalize the waterfront by redeveloping that parcel. They hope an Annapolis developer's plan for a $50 million mixed-use development will attract retirees and young professionals, as well as upscale stores and restaurants, and boost the city's long-struggling economy.

"This project is our main economic-development initiative," said Natalie Chabot, the city's economic development chief. "It has the opportunity to redefine Cambridge."

The vision for the project, called Sailwinds in tribute to the community's maritime tradition, includes commercial property, a boutique hotel, retail shops and waterfront residences brought together as a visually compelling whole visible from the U.S. 50 bridge.

"I do want that eye-popping [view] when you're coming into our city on the beautiful Choptank," said Mayor Victoria Jackson-Stanley.

Cambridge, a city of about 12,500 settled in 1684, has been troubled by high unemployment and a rundown image. Its median household income of $34,412 in 2011 was less than half that of state as a whole. One-fifth of the population lives below the federal poverty line.

Its downtown went into a deep decline after race riots in the 1960s. The city's status as the seat of Dorchester County government ensures that it always has some activity by day, but until recently its central business district turned into a near-ghost town after dark.

A modest turnaround began after the opening of the state-backed Hyatt Regency resort just east of downtown in 2002. In the decade since, the city has made significant progress in redeveloping its downtown, attracting highly rated restaurants and trendy retail shops even though the Hyatt has struggled for high-ticket bookings since the recession hit.

Revitalization of the waterfront has not matched that along Race Street, but this month brought an important milestone. The Maryland Board of Public Works voted to label as surplus almost 12 acres of state-owned waterfront property adjacent to Dorchester General Hospital.

The decision to declare the land at the mouth of Cambridge Creek surplus is a big step toward closing a frustrating chapter in the city's history.

For decades, Cambridge was Maryland's second-largest port after Baltimore, shipping lumber and canned tuna around the world. As the tuna business withered in the 1970s, city and county officials tried to sustain Cambridge as an economically viable deep-water port.

After that venture failed in the face of weak demand, the Maryland Port Administration took over the site in 1979 and tried to do the same. In 1991, with little cargo crossing the Cambridge Marine Terminal's wharf, the state ended the venture — leaving a large parcel of underused land on a prime stretch of the city's working waterfront.

There were other sporadic efforts to revitalize the waterfront. In the early 1980s, the Rouse Co., fresh off the success of developing Baltimore's Harborplace, considered a similar project along the creek, an arm of the Choptank. Though James Rouse described the site as "a potential waterfront jewel," the project fizzled.

Meanwhile, the state leased the site to the city, which dubbed it Sailwinds Park and turned the old tuna warehouse there into a community meeting place called Governor's Hall.

In 2010, the O'Malley administration designated the property as a Smart Growth site, which made it eligible for stepped-up state assistance in clearing obstacles to development. In 2011, the state entered an exclusive agreement with developer Jerome J. Parks Cos. of Annapolis to negotiate a final development agreement for the Sailwinds project.

The Board of Public Works' recent decision clears the way for the state Department of Transportation to transfer ownership of the parcel to the city for redevelopment.

Jeremy Parks, executive vice president of the Parks Cos., declined to comment for this article, saying the developer still is in negotiations with the city and the state.

The firm has developed several projects in and around Annapolis, including the mixed-use Park Place, with condominiums, restaurants, retail and office space, and a Westin hotel; and Chesapeake Landing, a gated community of townhouses with an 87-slip marina.

Despite that success, some worry that the developer's plans might be too ambitious for Cambridge in terms of restaurants and hotel rooms. New restaurants would compete with those downtown, and the nearby Hyatt is struggling to keep its rooms filled. Others wonder about the market for high-end rental units and condos.

"I'm not sure how much people are going to be willing to pay for a sunset versus an ocean view," said Daraius Irani, executive director of the Regional Economic Studies Institute at Towson University. "I don't know what the market is for retirement homes on the Choptank River."

There's also the issue of how much public investment would be needed to enable the project to proceed; repairing a deteriorated wharf is expected to cost $2.5 million to $4 million.

"It's to a large degree a state responsibility to fix that," said Sen. Richard F. Colburn, an Eastern Shore Republican who backs the project and introduced a bill in the General Assembly last spring that would have contributed $2 million in state funds for it. "It's a prime piece of real estate, and it's way underutilized."

Before any development could occur, the state and the city must work out the terms of the land transfer. The developer must work out a final plan with Cambridge and Dorchester County officials and secure financing. Any government cost-sharing would have to go through a potentially arduous approval process.

Also to be resolved is the future of Governor's Hall. Some think the old building has to go; others see it as a civic asset that should stay. The city launched a study in August to determine replacement options.

Jackson-Stanley said she sees none of the problems as insurmountable.

"We believe we have a good, strong plan and that it will come to fruition," she said.

michael.dresser@baltsun.com