CAMBRIDGE -- For Steve Vondenbosch and Greg Vande Visser, taking a gamble on the scruffy downtown was a no-brainer.
First, there are the plans for a 50-acre arts and entertainment district there. Then there's the push to add the old commercial center to the state's Main Street Maryland program. And a new tourism plan is in the works to market Dorchester County.
The long-delayed $150 million Hyatt Regency Chesapeake Bay Resort looms along the banks of the Choptank River, with what appears to be a firm opening date of Aug. 29.
People around here are thinking that Cambridge might evolve into what some call "a funky version of St. Michaels."
So Vande Visser and Vondenbosch figured that if ever the time were ripe for buying what one real estate agent calls the jewel of Cambridge's downtown -- the 91-year-old Phillips building that once was headquarters for the city's seafood and canning industry -- this was it.
The business partners, both 34, bought in this spring. Others are jockeying to stake their claims amid the redevelopment.
City officials and real estate agents say once-vacant properties are drawing interest from out-of-towners, and prices are inching upward in anticipation of a resurgence fueled by the Hyatt project.
"I've had people from Colorado and all over looking for property. I have an attorney who's looking for a waterfront lot and commercial property," says Wayne Johnson, who sold his Cambridge truck dealership and got into real estate six years ago. "There's one building downtown where the owner's raised his price, even though we only had one offer. A lot depends on the Hyatt."
Speculation also has boosted values along U.S. 50, says City Commissioner Lee Weldon, where the price for a four-acre parcel the city had been eyeing as the site for a new police, fire and ambulance operations center has jumped from $350,000 to $1 million in a few months.
For Vande Visser and Vondenbosch, it took one quick tour through the three-story, 20,000- square-foot Race Street anchor and they were sold. They had outgrown leased office space in nearby Easton for their 2-year- old graphics design firm.
The Phillips building, with huge windows, ornate molding and 16-foot tin ceilings, now houses a new second-floor office for their company. Their next step is renovating studio space.
Their business plan is banking on growing momentum in the city of 11,000. The key is the proposed arts and entertainment district that city officials say is crucial to luring tourists across U.S. 50 from the 400- room waterfront Hyatt.
If the district turns out as they picture it, downtown will be full of galleries and studios, with artists living in the buildings where they work.
"Everybody tells us we got the premier building downtown," Vande Visser says. "We knew right away this would be attractive studio space.
In recent weeks, they've washed nearly 100 years of grime from exterior bricks and stained-glass windows. They haven't figured out what to do with three 5,000-pound safes, left from the days when Phillips, the city's largest employer, paid in cash.
"By the time the Hyatt opens, we'll have an 8,000-square-foot gallery open on the first floor," says Vande Visser.
Up the street, Joy Staniforth bought a small storefront a year ago and opened a gallery featuring textile, metal and other fine art and crafts -- most produced by area artists. Lately, she's spent nearly as much time meeting with a group of business and arts leaders working to gain state recognition as an arts and entertainment district as she has in her shop.
"What we have in mind is that Cambridge can be something of a funky version of St. Michaels," Staniforth says. "We have visual arts, performing arts, music, real cultural diversity."
Staniforth and Vande Visser, along with other investors and artists appointed by Mayor Cleveland L. Rippons, are hustling to finish an application due to the state's economic development office by Oct. 1. If approved, Cambridge would become Maryland's seventh arts and entertainment district -- a designation that would bring tax incentives for property owners and income tax breaks for artists.
Organizers say a major boost would come from the state tourism office's marketing muscle, which would include exposure on Web sites, brochures and materials displayed in visitors centers statewide.
The city has revived plans for a downtown business district to be included in the Maryland Main Street program -- an effort that dissolved two years ago amid squabbles over boundaries and other details.
As one of 10 Main Street programs in the state -- including others on the Eastern Shore in Salisbury, Denton and Easton -- Cambridge would be eligible for technical assistance, marketing and planning advice from state agencies.
Meanwhile, city and state officials have put on the back burner plans to redevelop another prime area of the city, the 31-acre Sailwinds Park that fronts the Choptank River near a flashy new visitor's center topped with a 110-foot sail.
City officials say they are pleased with new management at the cavernous Governor's Hall there, where attendance at concerts and other events has grown. In the long run, Cambridge and state officials must decide how best to develop the park. Options discussed in recent years include a retail and entertainment project, another hotel and conference center, and a ship-building operation.
Rippons says a new economic development committee -- a first for a city government that was frequently criticized by business leaders for its lack of focus -- has been effective in eliminating duplication in like-minded programs.
Besides the city's efforts, Dorchester County officials are near the end of a six-year effort to create a tourism management plan that would, among other benefits, make a half-dozen "target investment zones," including Cambridge, eligible for matching state grants designed to spur private investment.
The stakes are high, says Weldon, considering Cambridge's high unemployment (about 8 percent) and low home ownership (about 60 percent of dwelling units are rentals).
"We finally seem to have been able to break loose from the inertia of the barbershop conversations that the Hyatt or this or that plan will never fly," says Weldon. "The reality is that we have a waterfront that any city on the Shore would die for, roads and access that St. Michaels would love.
"Now we have a resort that anyplace on the East Coast would want. The potential is tremendous."