CHELSEA, Mass.--Three years ago this city hidden among the oil tanks and container yards of Boston's inner harbor seemed to be stumbling through darkness as it tried to pull itself out of receivership.

But last weekend, as this year's holiday shopping season began to crank up and city workers finished hanging Christmas lights and colored candles along downtown streets, there was an uncharacteristic air of optimism among local business owners.

Take Sergio Jaramillo, the owner of the Liberty Loan Co., one of the larger combination jewelry store/pawn shops in the city, which is a half hour from Cambridge.

Jaramillo, who bought the 55-year-old business in 1984, said that over the past two months he has recorded his best sales figures ever.

"There's just a better sense this year," Jaramillo said as he finished cleaning a gold ring last weekend. "Customers are spending more per purchase."

The cheerful entrepreneur said his recent success is less a result of savvy business practices than of the city's warming business climate.

"There's a strong resurgence in the City of Chelsea...and I think the economy is the major factor," he said.

Jaramillo explained that whether it's crime rates or fiscal and political stability, life in Chelsea is slowly improving.

Up the street, the manager of Diane's Fashion, Mayra Aranya, expressed the same sort of optimism as she sewed lace onto a child's dress last Saturday.

"I think we're going to have a good season," she said. "We started with a good day yesterday."

But unlike Jaramillo, Aranya held on to a crusty skepticism rooted in experience.

"Chelsea still has lot of problems," she said. "The police don't do much, they just sit in one spot all day."

Aranya explained that while her store has been busy lately, she could attract more customers if the crime rate were lower.

But other store owners maintained that Boston's monied professional community tends to exaggerate the city's problems, whether with crime or welfare.

"The image of the community is very negative," said Rick Gordon, a member of the city's chamber of commerce and the owner of 57-year-old Allan Perfumers. "A lot of people are apprehensive about coming into the community, because of the perceived crime problem--and that's perceived with a capital 'P.'"