January’s end was a busy time for Holyoke Mayor Michael Sullivan, who, despite a widespread economic slowdown, found himself presiding over two significant groundbreaking ceremonies in the Paper City.

The first was the long-awaited start to work at the old fire station on Maple Street, just a few blocks from City Hall. This is a $5.5 million project that includes a major bus terminal and adult-education center, and is expected to bring foot traffic and more vibrancy to the city’s downtown. A few days later, Sullivan and other dignitaries had ceremonial shovels in hand as they took part in festivities that marked the first example of the city’s expedited building permitting efforts; Horizon Solutions, an energy company, saw its plans to construct a 12,000-square-foot regional headquarters at Holyoke Crossroads in the Ingleside area move from the drawing board to reality in a mere 69 days.

These two projects show some of Holyoke’s vast potential and also some of the forward motion in a city that still has some public-relations issues, as well as some extreme demographic challenges (nearly a quarter of its 40,000 residents live at or below the poverty line), but is becoming an increasingly popular place in which to live and work.

Indeed, Holyoke is among many old mill towns in this region and well beyond to convert former manufacturing complexes, some of them hundreds of thousands of square feet in size, into homes for small businesses and artists. Adding to an abundance of such real estate is one of the lowest electric rates in the Northeast, widely available ‘whitewire’ high-speed Internet, and a quality of life that mirrors surrounding communities with far higher costs of living.

This mix of selling points has a number of business owners buying, but challenges remain, said Sullivan, who will be leaving City Hall after five terms in office next January. During his decade in the corner office, he’s seen progress with many stated goals — from attracting new jobs to revitalizing downtown to putting old mills to new uses — but also some of the political infighting that has hindered additional development.

For this latest installment of its Community Profile series, BusinessWest talked with Sullivan and others about what lies in the future for the city with a glorious past.

Paris, New York, and Holyoke

Most people associate the city with the mall at Ingleside, but also the largest Puerto Rican community outside of Puerto Rico, the Saint Patrick’s Day parade, the Nick’s Nest hot dog stand, and a legacy summed up in the community’s nickname: the Paper City.

Holyoke’s status as one of the first planned industrial cities translates to a dense neighborhood of brick mill buildings and a canal system that powered nearly all of its urban manufacturing. In addition to paper, the city earned fame from the silk mills of the Skinner family, socially progressive benefactors for many generations.

The three-level canal system and the 60-foot drop in the Connecticut River that fueled hydropower once brought the city prosperity. A new crop of thinkers sees this as the key to unlocking the economic problems faced for much of the past four decades. With progressive planning and outside resources, Holyoke hopes to again be the fair city that grand dame Belle Skinner once likened to Paris and New York.

The key to achieving a full resurgence is taking full advantage of the community’s major assets, said Sullivan, who mentioned the mills, those low electricity rates, the expedited permitting process, and some tracts of permitted land on which to develop. But with those assets come some liabilities as well, he said, including the mills themselves (they are old, and their multi-story character makes them unsuitable for most modern manufacturers), but also those demographic challenges. Many residents lack the basic skills needed for many jobs, as evidenced by the fact that, while Holyoke is a major employer, 65% of those working within the city live outside its borders.

And then there is the political divisiveness, which Sullivan summed up as a lack of clear consensus on a game plan for the future.

“It’s important to have a realistic outlook and an understanding of how things really work here,” he said. “Recently we had a conversation about the impact of the large home-improvement store [Lowe’s] planned for Whiting Farms Road. The hue and cry is that it will take away from the smaller, independently owned retailers. But really, if it’s not built in Holyoke, it will be built in a neighboring community. So, should we let the project go to one of the other towns, where we won’t receive the benefit from jobs or taxes?”

A frustrated Sullivan cited another example, one involving a downtown parcel.

“There were city councilors who came out against a project on the corner of Cabot and Main streets, where the investment was going to be somewhere in the neighborhood of $3 million,” he said, noting that a developer wanted to put in a convenience store and other retail outlets at the vacant and overgrown site, and opposition came from some city councilors who envisioned a nonprofit, open-air-style marketplace.

“Only 38% of the property in Holyoke pays property taxes,” said the mayor. “We have a large concentration of nonprofits, offering services to the poor, primarily, but they don’t pay into the tax structure. All of the other taxpayers need to cover the burden of that inequity.”

While building the tax base, city officials must also try to attract jobs that provide opportunities for a broad mix of constituencies, including those with limited job skills, Sullivan continued.

“I’ve heard naysayers complain that another development like the big-box retailer isn’t what the community needs, or that a place like the Holyoke Mall doesn’t have the kinds of jobs that Holyoke needs,” he explained. “But let’s look at it this way — there are something like 280 retail managerial positions employed at Ingleside. The average salary for those positions is $72,000 a year. Coming from a community with a median income of $24,000, I’d say that’s something to aspire to. Realistically, if we did have biotechnology or nanotechnology headquartered here, would our population that is unemployed, or underemployed, have the skill sets for those concerns?”

Holyoke native Eric Suher bought the old Mountain Park property in 2006, and has mentioned plans to create an open air-style concert venue, akin to the Comcast Center (the old Great Woods) or Tanglewood. But there’s been controversy concerning the development of that dilapidated site.

Sullivan said he’s seen the plans for Suher’s vision, and thinks it’s a home run. “I try to be sensitive and sympathetic to the questions about the environmental impact up there,” said the mayor. “I’m very conscious and responsible to environmental issues with all that we do. But that was an asphalt-covered amusement park. There was no grass. We aren’t talking about virgin wilderness.”

Where There’s a Mill, There’s a Way

While Sullivan admires much of the sentiment toward the renovation of his downtown’s storied architecture, with buildings by some of the 19th century’s foremost architects, he understands the liability such structures might have in the 21st century. New economic activity would be a boon to the poverty-stricken areas of Holyoke in the old mill district, but the reality is that many enterprises require a different style of building for their needs.

Sullivan applauds the development of the vacant mill buildings, but he admits that such buildings have a limited appeal. At one time they suited urban manufacturing and industry, but today’s companies often require a modern structure with one level and immediate access to the highways — in other words, away from downtown. “To a functioning business looking to expand their company,” he said, “well, it’s an additional $500,000 cost to tear those buildings down to make something more suitable for them.”

Locally, mill conversion successes may have happened sooner for Northampton, Easthampton, and Chicopee, but Holyoke is enjoying some success of its own. The 8.5-acre Open Square complex and the artist-owned Canal Gallery nearby have helped bring an influx of artists, entrepreneurs, and investors from the region and beyond, drawn to the city’s abundant vacancies. This spring, the city starts work on a long-awaited canal walk, integrating much of the city’s newly rezoned ‘arts and industry’ corridor around the lower wards, with the first phase set to be completed on this multi-million-dollar project this summer.

John Aubin, owner and developer of Open Square, said he sees the canal walk as a crucible for further development downtown. “People respond when they see government making concrete investment,” he said. Aubin mentioned that he has plans for a $30 million redevelopment of the main area at Open Square, incorporating an underground garage, but that he is waiting until “the market is ready for it.”

An important facet to building that market, said Aubin, is further residential development downtown. He mentioned a proposed residential tax abatement for gateway cities in their urban cores, sponsored by State Sen. Ben Downing (D-Pittsfield). “That will be a great incentive for owner-occupied buildings downtown,” said Aubin, “and would spur growth in the other buildings as well.”

One of this past year’s BusinessWest 40 Under Forty, Internet entrepreneur Brendan Ciecko is bullish on downtown Holyoke and its prospects for the future. He lives there, locates his business there, and has purchased and renovated buildings along High Street, the city’s main drag.

Ciecko is among a group of passionate young talents who see the future of Holyoke tied to mill buildings used as internet-based data centers for higher education, hospitals, and the wikis and ‘Googles’ of the world. And Ciecko should know. He has been in contact with the president of MIT and CEOs from major computer and technology firms, and the word is that Holyoke is a prime candidate for such industry.

“Basically, what we have now are all these buildings that make Holyoke a perfect location for data centers,” Ciecko said. “Their biggest expenses, over 50%, are electricity and cooling. The fact is that these data centers could be located in New England, in a colder climate, also using water from these canals to keep the structures cool. Additionally, these are now sustainable models, using the hydroelectric electricity. It’s green tech, but also clean tech.”

Whatever the future holds for this tarnished gem of a city, one thing is certain: the raw materials are there, both in real estate and in progressive thought. Time will tell if ‘mill power’ is again the future for Holyoke.