Just off Camden's bustling Main Street sits the massive Knox Mill, its white smokestack as much an icon of the town as the picture-perfect harbor just a few blocks away. The woolen mill was once the charming town's industrial heart, whistling employees to work in the morning and back onto the village streets at the end of day.

Later, in the 1990s, the handsomely refurbished mill became the centerpiece of MBNA's operations in the midcoast. Hundreds of cubicle-dwelling employees in headsets answered the credit card company's phones, transferring a balance here and adjusting an interest rate there, courtesy of then-CEO Charles Cawley's decision to plunk down a few call centers near Foxhill, his sprawling Camden summer home. But just as residents were once stunned when the looms ran silent at the Knox Mill in the late 1980s when demand for its products dropped, Camden reacted with shock when Cawley retired and MBNA closed its local offices two-and-a-half years ago.

Vast portions of the two hundred thousand-square-foot mill soon sat empty and unused, and people started thinking out loud about what they'd like to see the complex become. They dreamed a little. Some saw a university, turning the little village beloved by well-heeled retirees into a college campus buzzing with intellectual activity. Others envisioned another thriving call center, or a home for biomedical research. There was talk of a conference center and a digital film production facility, of more tourists and even some movie stars.

There was just one problem: the property was not theirs. MBNA put the mill on the market, and a Baltimore real estate developer snapped it up. And now, like so much other former industrial Maine real estate — the Jordan's Meats plant in Portland, the Saco Island cotton mills, the Cowan and Libby mills in Lewiston — much of the Knox Mill is in the process of being transformed into luxury condominiums. Where MBNA's tangled webs of high-speed data lines hung from the ceilings, swanky Viking appliances will go in. Where felt was once manufactured for the paper-making process, high-end bathroom fixtures will be installed.

In town, there is some disappointment about the mill's fate. Richard Anderson, founder of the weekly Village Soup Times and villagesoup.com and the chief proponent of the university concept, feels that Camden lost a unique opportunity to transform itself into a college town, complete with spin-off businesses and the bustling under-forty crowd that is the holy grail of many a New England planner. The mill's conversion to condominiums changes the experience of living in Camden "dramatically," Anderson says, sitting in his book-lined home office on Dillingham Point, a shady outcropping into Camden Harbor about a mile from the village green. "If you don't have young professionals with children, you become even more so a retirement community. You lose diversity of age, of income levels; you become a more homogenous, less interesting place." (While Anderson's chief concern is the loss of hundreds of jobs at the mill, it's worth noting that he himself has developed two houses on the site of the former YMCA on Chestnut Street.)

Perhaps because of the energy he invested in envisioning the Camden of his dreams, Anderson is more melancholy than most about the town's future. Others — many others — are more sanguine, even optimistic. The consensus seems to be that while the Knox Mill is an important piece of Camden's economy (it represents roughly 75 percent of the commercial space available for companies with more than forty employees), it is not the only asset this Penobscot Bay town of 5,200 has going for it. "In the American Heritage Dictionary, the eighth edition, when you look up 'harbor' the definition includes a picture of Camden," says Claire Adams, the recently installed executive director of the Camden-Rockport-Lincolnville Chamber of Commerce. "We're also a vibrant, sophisticated community, and we've got cultural resources that would astound a small city," she says, reeling off a list that includes everything from the Pop!Tech conference to Bay Chamber Concerts and world-class artists like jeweler Etienne Perret.

In addition, Camden is almost unique among Maine's best-known harbor towns in that it doesn't shutter itself when the tourists leave and the cold weather comes. Sure, the pace slows down a bit, but all but a few restaurants stay open, as do most of the shops. The school system — a key institution for those who stay when the snow flies — is known as one of the best in the state. Residents have worked hard to make Camden a year-round community with events like the annual toboggan races and the Camden Conference, a discussion of global issues held every February and attended by townspeople, academics, and experts from around the world. That's why the idea of the mill transitioning from a vital economic center to yet another upscale residential complex — especially one likely to cater to seasonal residents — is so worrisome to residents who remember a more diverse Camden.

Leonard Lookner, co-owner of the Waterfront restaurant, which has been an institution on Bay View Street for nearly thirty years, puts it more bluntly: "The word is gentrification," he says. "Camden is much more gentrified now than it was thirty years ago."

Lookner fondly recalls his early days in town, when, he says, "You lived in Camden because it was a good harbor and there was camaraderie, and not because it was some kind of status thing."

But more recent transplants — those without memories of wandering downtown to buy a handsaw at Curtis Hardware or a pair of jeans at Haskell & Corthell — love the town just as fervently for what it is today. "From my office window, I can look up Bay View Street and almost see my house. I can see the ocean. And in the summer I can look out and see my kids and the babysitter at the Camden Cone," says Annie Edwards, a Boston attorney who is now the human resources director at Camden National Bank. "I love the seasonality of the town. I love that it's nice and quiet in winter, that we can walk into the Waterfront and know 90 percent of the people there."

That's the kind of thinking that convinced Walter Skayhan the Knox Mill's future is in condominiums. Skayhan, a Baltimore native who wears large tortoise-shell glasses and a polo shirt with the collar turned up, learned about the site in the course of conducting a few Maryland real estate deals with MBNA. Other than a few sailing trips up the coast, he hadn't spent much time in Maine before a round of visits to check out the mill. "On my second trip here, I was standing by the waterfalls," he recalls, referring to the millrace that runs through the middle of the property. "It was a lovely evening, and I said to myself, 'why wouldn't I want to live here?' There are people in Arizona who are building waterfalls in their backyard so they can listen to water at night; meanwhile, you couldn't duplicate this if you had $100 million."

The thirty units at what Skayhan is calling the Residences at Knox Mill won't quite run $100 million, but they aren't cheap, either, starting at $324,000 for a small one-bedroom unit and going all the way up to about $800,000 for a "family-sized" unit of more than 2,000 square feet. And along with their rooftop gardens and hardwood floors, buyers will have access to what amounts to a concierge service, run by Jesse Henry of the Inn at Ocean's Edge in Lincolnville, that will do everything from bringing residents' cars up from the underground parking lot to stocking the fridge with groceries prior to a snowbird's return.

Skayhan and Henry are also planning an 11,000-square-foot marketplace on the mill's first floor. This will allow Skayhan to comply with long-standing zoning ordinances that mandate retail space on the ground floor through much of town. But the marketplace — which will operate year-round and which is slated to include a coffee shop, a wine bar, a florist, Maine specialty foods, and other gourmet goods — also furthers Skayhan's vision of Camden as an "upscale" community. "The tone of this whole complex," he says, "is going to set a direction for the future of Camden."

Needless to say, statements like that raise heart rates in some quarters. A contingent of citizens, who've dubbed themselves the Camden Area Futures Group, has recently begun work on shoring up the town's commercial enterprises — first order of business: protecting the working waterfront — due to concerns about both the increasingly residential nature of the community and the seasonality of local businesses.

Roger Moody, who spent his youth in Camden, then returned to serve as town manager from 1991 to 2002, chairs the group. He's reluctant to offer an opinion on Skayhan's plans, preferring, instead, a more philosophical approach to the question of whether Camden is becoming a bedroom community. "The bottom line is that people have to work for their own sustainability, and most people want to work in an interesting environment and a community that feeds their psyches," he says. "How is that created these days if a village center is declining, in the sense that it is becoming more residential than commercial? Is there a new model coming?"

Camden, of course, isn't the only town in Maine grappling with this question. And the issue seems to be beyond the power of any single community to solve on its own. But Maine's ranking as demographically the oldest state in the nation — and its virtually nonexistent economic growth in recent years — has prompted Governor Baldacci and many others to brainstorm ways to keep young people from fleeing the state. And most agree that the secret is providing well-paying jobs beyond those of waiting tables and repairing the homes of wealthy retirees.

Part of the problem Camden faces in attracting new businesses, and the jobs that go along with them, is simple geography. The town is just 18.5 square miles, and the natural resources that make it so alluring — Camden Hills State Park and Mount Battie on the north end of town, Megunticook Lake to the west, and the harbor and Penobscot Bay to the east — also mean there's precious little land available for development. "The kind of things that are traditionally used to encourage business simply aren't in Camden," says Leonard Lookner. "The roads are crowded. Only Route 1 goes north-south, and there's no alternative to that because of the lake and the state park and the harbor. It's nonsensical to think of Camden as an industrial base."

Lani Temple, who moved from Bronxville, New York, to buy Megunticook Market four years ago, agrees. "If you move here, you either bring a job with you, you create a job, or you don't need a job," she says. Still, she notes, Camden has not yet become an exclusive community that's home only to the affluent. While her market does sell gourmet and specialty items, Temple takes pride in the fact that you can also walk in and pick up a box of Cheerios. She sees such basic grocery items as a link to the market's past, when it served the working people of the section of town known as Millville.

And besides, it's not as though Camden must rise and fall solely on its own power. While the quality of life in town surely will change as businesses come and go, condominiums are bought and sold, and newcomers become old-timers, Camden will remain nestled between the more diverse economies of Belfast and Rockland. Even Richard Anderson holds out hope that his university concept — in which local backers would persuade the University of Maine to open a branch campus — will see the light of day in one of those cities. Perhaps research and development efforts will follow, and along with them growing, thriving companies. And if that's the case, then surely some of the people who work for those companies would want to live in Camden, helping, as Anderson puts it, to "alleviate the negative effects of an otherwise seasonal community."

If nothing else, the transition of the Knox Mill from corporate call center to luxury condominiums prompted Camden residents to ponder their priorities, to think about what it is they value about the place they call home, and to imagine what it might become in the future. "It was sad when the mill closed and all those jobs were lost, but it was good when MBNA came in and supplied more jobs. Now they're gone again, and it seems that's just going to be another progression," says Victoria Bryant, a Camden native who's involved with the Futures Group. "I've always thought Camden is very lucky," she continues. "There always seemed to be someone or some organization that came in that could boost it to another level, and that's what I think the condos are going to do."

Perhaps they will. But even if Skayhan's plan founders and the Knox Mill becomes a blank slate yet again, Camden will persevere. Its residents will dream, and they will get to work.