(FORTUNE Small Business) – Instead of trying to recapture its industrial glory, North Adams, Mass., is reinventing it. The economic center of this 120-year-old factory town is a cluster of 28 buildings enclosing 700,000 square feet of industrial space. After Sprague Electric left the site in 1985, taking 4,000 jobs with it, unemployment hit 20%, and the town lost 60% of its population. Its mayor, John Barrett, wagered that North Adams could join the same creative economy that had filled the rest of the green-and-gold Berkshire Hills with dance, music, and theater. Since the Massachusetts Museum of Contemporary Art opened in 1999—with $35 million in public and private grants—three-quarters of downtown storefronts are occupied, and unemployment has fallen below 6%. Without an endowment, MassMoCA, like any small business in North Adams, must sustain itself on the strength of the local economy. Nine businesses, employing 200 people, rent commercial space in the museum's complex. "These buildings were the heart and soul of the North Adams economy," says Joseph Thompson, MassMoCA's founding director. Thanks to MassMoCA, they still are. —JYOTI THOTTAM