LOS ANGELES -- The Christmas episode of "Cagney & Lacey" unfolded against the splendor of a Fifth Avenue department store, decorated for the holiday with blinking fairy lights and animated reindeer, and flanked by wide-eyed children watching from a snow-covered sidewalk.

But it was all an illusion -- part of the magic that film crews perform regularly in downtown Los Angeles, using the beautiful old buildings in one of the few parts of this city that can simulate the "big city" look of Manhattan.

In this case, the store masquerading as Macy's was really the old, empty Rowan Building at the corner of Fifth and South Spring streets in downtown Los Angeles. And because it was really filmed in August, police stood sweltering in 100-degree heat, on guard to keep away the area's ever-present drunks and derelicts.

The area along South Spring Street, between Fourth and Eighth streets, has become a favorite location of filmmakers, with its elegant but neglected office buildings, erected years ago by rich men intent on establishing it as the "Wall Street of the West."

But the filming, while it brings money to an area badly in need, is so frequent that it also provokes controversy among those doing business downtown over whether the benefits are worth the traffic and parking problems filming creates.

On many days along South Spring Street, film trucks choke the scarce parking lots, and cameramen and stars -- surrounded by gawkers -- disrupt traffic so badly it can take 20 minutes to drive two blocks.

Workers find their offices blocked and customers shopping for watches or radios give up trying to reach the little shops lining the street and go elsewhere to buy. Out-of-town visitors are confused when signs for "7th Street" are temporarily covered by others reading "Fifth Avenue" or even signs in Chinese.

Downtown Los Angeles is "the only part of Los Angeles that can be made to resemble Manhattan in architecture, atmosphere, ethnicity -- even decrepitude, the dirt, if you like," said "Cagney & Lacey" producer Barney Rosenzweig.

But Alexander Vari, who buys and remodels old downtown buildings, fumes when he is blocked from entering one of his buildings so he won't ruin a scene. "Somewhere in downtown L.A. this situation hits me almost every day. I object to police blocking my way into my own buildings and telling me, 'You can't walk across here.' "

Most people who work downtown, though, seem ready to put up with the inconvenience to keep an industry that creates thousands of jobs and brings the area millions of dollars.

"I'd rather see them filming here, even if it does cause problems, than have them move to New York," said Domenic Saraceno, manager of a shoe store at Broadway Avenue and Seventh Street. "It hits the little shops around here, but film companies pay them compensation."

It's not just money and jobs, though: It's the pride in a fascinating industry that people consider Los Angeles' very own and the aura of glamor it adds to gritty downtown locales.

"Film crews are some of the finest people we ever see on this street," said the owner of a South Spring Street radio repair shop who didn't want to give his name. "Look around you -- bums, drunks, druggies. Los Angeles east of Broadway is dead, but film people are polite and they pay. If you lose business, they give you $200, $300 a day, and they don't bother anyone."

There are 20 to 30 "shoots" a day on the streets of Los Angeles, and the city issues more than 5,000 film permits a year for commercials, television shows and feature films, said Edward Avila, commissioner of the Los Angeles Board of Public Works, which controls the city's Movie Permit Office. "A permit costs $115, so the city earns $500,000 a year just in permits, and it goes up every year," he said.

"Sure, there's inconvenience. There's no other city in the world that has as many shoots. We shoot 10, 20 times as many films as anywhere else. This means we're likely to have 10 or 20 times as many problems.

"Some complaints are pretty vehement, but we get only three or four a year from downtown."

The president of the Spring Street Association of businesses, Leonard Glickman, agrees that filming interferes with traffic, but said the industry's contribution to downtown's economy far outweighs the inconvenience.

"Filming is a multibillion-dollar business California could lose to other states because of their willingness to accommodate movie people," said Glickman. "We have to do the same. No one likes being stuck in traffic. We moan and groan. But most people want the movie industry to stay in California."

While downtown Los Angeles has its attractions for filmmakers, it also has its problems.

"Police are one of our best insurances," said Steve Dawson, location manager for "Cagney & Lacey," which has shot more than 100 episodes in downtown Los Angeles.

"There are huge security problems downtown. I've seen robberies, knifings, murders, found dead bodies while we've been filming. It's rough. We hire an awful lot of police."

Dawson said filmmakers try to disrupt life as little as possible, keeping equipment in parking lots to avoid blocking traffic. But normal movement has to be controlled sometimes. "If you're filming a winter scene, you can't have a guy walking through it in shorts and a T-shirt," he explained.

And downtown businesses are paid for their troubles, he said.

"If we interrupt someone's business, we pay," said Dawson. "We do it by intuition and negotiation. A high figure would be $7,000 for a top restaurant downtown. A small shopkeeper up to $500 or $1,000."

Dawson's crew often uses a largely empty bank building at the corner of Seventh and South Spring streets to build sets and provide backdrop.

"We made the seventh floor the Kennedy International Airport customs area," he said. "It's been a district attorney's office. You look out the windows and see tall buildings and right away you think, 'It's New York.' We created a police shooting range there. We used the old board room as an embassy." Another downtown building has been a hospital, a morgue, city hall.

Film crews are good business, said Edward Velasquez, manager of Irwin's Theatre Grill.

"Sometimes a crew takes over the restaurant and pays us thousands of dollars," he said. "Occasionally, customers complain because they can't park or get a table. But most of them love the filming. They sit and gawk at people like Madonna, Tyne Daly, Sharon Gless, Stacy Keach, Anthony Geary, Leslie Charleson. They've all been here. Part of 'Beverly Hills Cop' was filmed here."

Velasquez sat at the high bar stool and slapped the bar counter. "This," he said, "is the 'New York' bar you've seen in 'Mike Hammer.'

"I have no beef at all about film people. Last week an East Coast crew was shooting here because the weather was bad in New York."

Velasquez nodded and smiled. "That's what I love to hear!"