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The Rev. William P. Chilton, rector of St. Luke's Episcopal Church in Church Hill, slips on a topcoat over a brown jacket, yellow shirt, red bow tie and brown hiking boots.

"Let me show you what passes for a hill on the Eastern Shore," he says.

Gray clouds drift in the pale blue sky to the south. Through the trees, traffic buzzes by on state Route 213. Mr. Chilton, 53, walks to the edge of a knoll overlooking marshy Southeast Creek. "This is it," he says. "The hill."

Behind him, across a swale and past the brown-shingled rectory, is the church: St. Luke's, completed in 1732. It is red brick with a striking gambrel roof and high-arched wood ceiling.

Church Hill, named for a church on a hill in upper Queen Anne's County, includes two other churches (once the total was seven), a community theater, a tea company and 481 people.

Housing in the 400-acre town is a blend of big and small dwellings, some on large lots and some crammed together. They are white, yellow or blue frame, with a few red brick. South of Walnut Street, many are mobile homes. Businesses along Main Street, except for the lumber company and Chestertown Bank, are small.

"Over the years, the town has changed very little," says town administrator Marie Rameika. Ms. Rameika, 43, answers to a three-member, unpaid town commission, which operates out of an office in a two-story, blue Victorian building, across Main Street from St. Luke's and across Walnut from the Church Hill Theatre.

She is being modest about the town's lack of change. In the 1970s, predominantly white Church Hill annexed New Town, a predominantly black area, and received a $1 million federal grant for a sewer system. In the 1980s, it got an $800,000 federal grant to renovate substandard housing, and during the same period, citizens saved the town's theater, turning it into an area attraction.

Friendliness and tranquillity seem the way in Church Hill, even though the town is situated near a state correctional facility and the townspeople must look out for the occasional escapee. (A crime spree here last month has been linked to an escaped convict.) The town is full of hard-working people who head each day to jobs in larger, nearby towns; the lumber company (the town's largest employer, with 20 employees); or the tea company and other businesses.

Down Main Street from Town Hall, the Eastern Shore Tea Co. is what Ms. Rameika calls the town's "family-owned international business." It carries the name of Church Hill into such upscale retail establishments as Nordstrom, Neiman-Marcus and Bloomingdale's.

"We sell mainly to gourmet coffee and tea shops and upscale department stores," says Jan Burns, 54, who operates the business with her husband, Howard, in a converted small red barn behind their home.

"We buy the tea from tea-producing countries around the world, blend and pack it loose in 3-ounce, foil-lined bags by hand," Mrs. Burns says. "Howard does all the art on the bags. We try to make tea fun."

The Burnses moved here from New York City after discovering Church Hill on a vacation trip. They (along with John and Sue Gutting) started a campaign in the mid-1980s to save the 240-seat art deco movie theater. Built in 1929, it was facing demolition to make way for a parking lot.

"We started a door-to-door petition drive to save the building," Mrs. Burns says. "I think all but two people signed."

The town agreed to sell the theater to a nonprofit corporation for $15,000. Residents raised the money. "Things sort of evolved from there," Mrs. Burns says. The evolution became the Church Hill Theatre Inc., with spring and fall productions, three summer-stock plays and children's theater, classes, concerts and Just Desserts, a post-performance eatery.

"It's a full-time theater," says Roberta Lewin, executive producing director. "It's very important to the community."

The Rev. Janet Rochester lives about three blocks from the theater. She was born here "more than 50 years ago." In 1979, Mrs. Rochester, who had led a drive pushing for the annexation )) of New Town, became the first black and the first woman elected a town commissioner. She served nine years, then became a source of controversy when she lost re-election to a late-filing, write-in white candidate. She and the local branch of the NAACP filed suit to overturn the results, charging racism. The suit was dropped after the town agreed to a special election a year later. She lost again, but without bitterness this time.

"It's over and forgotten," Mrs. Rochester says. "The Lord had a plan for me to come out of being a commissioner. I accepted my call to the ministry."

Her ties to Church Hill, now 35 percent to 40 percent black, remain strong. Her service to the town now comes through Bethel A.M.E. Church, where she assists the pastor.

"This is a great community," she says. "I love it. No area is all black or all white. We all mix well. I think the people get along as good neighbors."

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