Syringes no longer litter the parking lot behind 36 Clay St. in Annapolis. The drug dealers who inhabited the nearby corner of Clay and West Washington streets have moved on, and the phone booth once used to stash rocks of crack cocaine has been carted away from the front of the building.

The old two-story brick structure is now home to a small coffeehouse called By the Bay Cafe -- a funky new spot that not only serves exotic coffees and teas, but also hosts art shows and live music.

But to hear owner Jennifer Funn tell it, the cafe, which opened in August, also has something else to offer: proof that independent shops and eateries can thrive in overlooked areas of the city just as well as they can on Main Street.

In fact, in Funn's eyes, the cafe is more than a business venture. It is, she says, a cultural link between the more prosperous downtown historic district, known for its trendy shops and sushi bars, and the generally lower-income Clay Street district, famous for its litter-strewn streets and crime.

In short, the cafe, said Funn, is an operation that other businesses can emulate and local residents can enjoy and take pride in.

"These residents are really the pulse of the city," Funn said. "They're the ones who prepare the crab cakes in the fine dining establishments of downtown Annapolis. They're the ones who greet the tourists in the hotels. Yet, they are the ones who tend to be ignored."

Indeed, Funn, 44, an Annapolis resident and former executive assistant to the officer of health and human services in Prince George's County, said she chose Clay Street to open her first business because it reminded her of the Jamaica, N.Y., neighborhood in Queens where she was raised.

In addition to opening the cafe, Funn has also refurbished four efficiency apartments on the building's second floor. She rents out three of the apartments under the city's affordable housing program. Funn, along with cafe co-owners Patrice M. Young and Pamela G. Dunn-Hale, eventually wants to expand the cafe to include a full-service restaurant.

Young, a District parole and probation officer, and Dunn-Hale, a lawyer in New Jersey, invested money in the cafe in exchange for silent partnerships.

Funn said the women did not receive financial backing from the City of Annapolis, Anne Arundel County or the State of Maryland.

But they have received lots of support from customers who are increasingly making the the cafe a part of their routine. They regularly stop for a cup of coffee, a muffin and conversation.

On any given morning, a mix of people sit at the long counter in the cafe, a smallish space adorned with a retro black-and-white checkerboard floor and wrought iron tables. The decor includes colorful paintings, hand-stitched quilts and photos of Annapolis and Chesapeake Bay scenes by famed local photographer M. E. Warren.

"On one end of the counter, there will be someone from the statehouse, and on the other, a kid from the neighborhood," Funn said. "They may not have ever been in the same room together, but they sit together here."

That coming together of differences is what Funn said she hoped to bring about in her cafe. And already some city employees and residents said they can point to changes in attitudes in the way blacks and whites and low-income and middle-class people view each other.

"It's not just that she wants [the cafe] to become a gateway; it has become a gateway," said Theresa Wellman, the city's chief of community development. "I think there are people going to that neighborhood who wouldn't have gone before. There's a business now that attracts them."

Carl Snowden, special assistant to County Executive Janet S. Owens (D), agrees.

"I don't think people understand how important it is that she has built a business in this district," said Snowden, a former Annapolis Alderman. "The most important thing (the cafe) will do is get people to think that if a new business can relocate in the community, others will come."

The cafe's welcome reception is encouraging to Funn, who opened the cafe at the strong suggestions of her two longtime friends and now business partners. When Funn's father was found to have a rare form of cancer two years ago, Young and Dunn-Hale drove to Annapolis every week to give their friend moral support. To boost her spirits, they encouraged her to follow her dream and open a cafe, which is something she had talked about doing since the three struck up their friendship more than two decades ago.

Funn first wrote a business plan, in part, to map just how she would carry out the financing and development of her idea for a cafe. She also immersed herself in writing the plan as a way to get her mind off her father's suffering.

"I was driving to New York almost every weekend," said Funn, in New York City. "I just needed something to get my mind off of his illness so I started writing this business plan."

Within a year, the plan was finished. Funn shared her ideas with Snowden and Vincent Leggett, founder of the Blacks of the Chesapeake Foundation.

Knowing that Funn was serious about using her business to help grow a neighborhood, Snowden and Leggett suggested that she look for a place to open on Clay Street where, though the location could be troublesome, it was close to the bustling historic district and could present her with an affordable opportunity to revitalize a struggling community.

But when the single mother of two teenagers saw the area, she was slightly put off. Funn's first thought was that the community had been ignored for a long time. Her second was whether her cafe idea could work in a place that has been rejected by the economic world. Her will to succeed won over.

Now, Funn sees her business as one of many steps that the Clay Street neighborhood is taking toward revitalization.

Last year, the city started putting in place an Annapolis Community Legacy Plan -- a program based loosely on a neighborhood revitalization plan developed by members of the Clay Street Neighborhood Improvement Association.

The Legacy Plan, funded by a state grant, dedicates $330,000 to Clay Street neighborhood improvements, $200,000 of which will be used by Habitat for Humanity to purchase land and build homes. Another $100,000 will go to the city for improvements to the facades of existing homes.

Funn, who has been a member of the Clay Street Neighborhood Improvement Association for almost two years, remembers the negative comments she received when she told people she was opening a cafe on Clay Street.

"They would say things like, 'You're going to put nice things on the walls in that area? People are going to steal them,' " she recalled. "Of course, that hasn't happened." Instead, children on Clay Street have come to Funn with ideas about holding poetry slams or competitions in the cafe. Neighborhood youngsters also attend Saturday workshops at the cafe where they brainstorm about safe alternatives to drug abuse and violence. Funn in turn asks them to write business plans and encourages them to save money to implement their ideas.

"She's letting people know that she'll be doing stuff to get things going in that neighborhood," said Snowden, who is excited about the future of Clay Street. "Government should be going to her and asking her, 'What do we need to help you get the job done?' "

Funn is modest about where By the Bay Cafe will take her and Clay Street.

She points to one well-known city that was once viewed as one of the nation's most troubled areas.

"Harlem was once considered one of the poorest areas in New York, but now it's one of the [best]," she said. "I believe the same thing can happen on Clay Street."

Jennifer Funn, who co-owns and operates the new cafe, takes pride in helping to revitalize a struggling neighborhood.

Lou LaRicci, left, Ed Garett breakfast at the cafe, which has been warmly welcomed by residents from inside -- and outside -- the Clay Street neighborhood.LaFrance Garlington, left, and Michelle Wanichko enjoy coffee and conversation at the new By the Bay Cafe on Clay Street. Owner-operator Jennifer Funn is delighting in the mix of clientele, from statehouse workers to neighborhood kids.