Sure, Chapel Hill has better bookstores and cafes, and Raleigh has done a better job of attracting business, but Durham (population: 136,000) stands out because it tackles real-city problems in a forward-thinking way. When Durham's inner-city schools were deteriorating as middle-class people moved their kids to suburban schools, the city merged with the county school system to prevent educational inequality. When downtown became more deserted than a Smokenders' meeting at R.J. Reynolds, officials built a new baseball stadium for the city's minor league team, the Bulls (of Bull Durham fame). Now the old-timey stadium, modeled after Baltimore's Camden Yards, regularly brings 10,000 people downtown for games.

This blue-collar tobacco town, home to Duke University, has attracted a bumper crop of new southern writers, including Lee Smith, Reynolds Price, Allan Gurganus, Claude Edgerton, and Laurel Goldman. It's also a center for alternative journalism with the accomplished weekly The Independent, the Africa News Service, and the hot documentary magazine DoubleTake. And Durham has more than its share of MacArthur 'genius grant' recipients and local visionaries like Martin Eakes, president of the Self-Help Credit Union, and Bob Hall, founder of the Institute for Southern Studies.

Although Jesse Helms still wins at the polls in North Carolina, Durham boasts a surprising number of progressive organizations working on a range of issues from criminal justice to health care reform. The city's excellent arts council offers scholarships for low-income students and TROSA, a city-funded drug rehabilitation program runs several businesses where its residents must work to stay enrolled. The Self-Help Credit Union is a national model (along with South Shore Bank in Chicago) of a community development bank that specializes in working with low-income people. In a truly innovative move, the Self-Help Credit Union recently bought $20 million worth of the riskiest loans from Wachovia, a big regional bank, (and has a high success rate at managing them). In return, Wachovia agreed to make $20 million in additional loans to low-income people.