UPDATE / DRUG TUNNEL TOWN : Some Finding Gold in Passage Under Border : Entrepreneurs are cashing in on souvenirs. Other residents feel the publicity is giving the Arizona city a poor image.

Life has not been the same in this normally quiet border town of 14,000 since law enforcement officials discovered a drug smugglers’ tunnel from Mexico that ended here.

The May 17 discovery of the 250-foot-long tunnel, which began under a posh home in Agua Prieta in Mexico and ended in the warehouse of a cement business in Arizona, put Douglas on the international map.

But the surge of publicity, which has turned the town into a mini tourist mecca, has inspired mixed feelings among residents.

“People must think we have gunslingers riding through town and dopers shooting at one another on the street,” says Pat Kehl of Douglas Against Drugs, a civic group.

Insurance agent Rafael Escarcega worries that the tunnel is the only thing people know about his town. “Name something good you’ve heard about Douglas,” Escarcega said. “You can’t. All people say is: ‘Oh, yeah, tunnel-ville, I’ve heard of that place.’ ”

Greg LaFreniere, editor of the Daily Dispatch, said some responsibility for that bad image belongs to the U.S. Customs Service.

“Customs has taken the tunnel discovery as their own little gold mine,” LaFreniere said. “They’re parading every possible dignitary through the tunnel--senators, representatives, they’ve had media days for chiefs of police, justices of the peace, mayors, you name it--telling them what a wonderful job they’re doing. I guess the resentment from us locals is because it’s become their political ball.”

But Tom McDermott, U.S. Customs chief in Arizona, said he is not showing off, just responding to requests from reporters, politicians and police.

“The public needs to know the level of sophistication of the drug smugglers,” he said. “The tunnel has opened a whole new chapter in the drug war.”

It’s a new chapter for Douglas, too, a town that has survived much over the years, including the collapse of the Mexican peso in 1982, crimping vital cross-border business, and, five years later, the closing of the Phelps-Dodge copper smelter, a longtime economic mainstay.

And a good many residents don’t seem to mind the notoriety.

“A lot of people in town think it’s great we got the recognition, even if it was negative,” said George Sayers, Douglas’ mayor from 1988 to 1990. “Some small towns you never even hear of.”

When news of the tunnel bust spread through town, some rushed home from work to get their cameras to take pictures. Tunnel jokes quickly circulated, such as the one about changing the number of the Chamber of Commerce to 1-800-TUNNEL. Or changing the name of the local cable channel to Tunnel-vision.

Far from hurting business, as some feared, tunnel-mania has created an unexpected boost.

Tourists have flocked to town to see the tunnel and entrepreneurs have responded with a spate of products. At Color Transfers Unlimited, a small shop near downtown, owner Jose Teran is having trouble meeting demand for his tunnel T-shirts ($10), caps ($5.50), mugs ($6.50) and postcards ($1).

Teran said he is nearing 4,000 T-shirts sold. One of the most popular shows six little men wearing miners’ caps and carrying pickaxes on their way into the tunnel to work. The caption says, “Hi, ho, oh, oh.” The “oh, oh” is for an FBI helicopter hovering overhead.

“I was three months behind in all my bills and business was real bad,” Teran said. “This has turned it around for me . . . . I know this is bad publicity for Douglas, but it was an opportunity I couldn’t pass up.”

That’s the attitude of a lot of residents--they might as well capitalize on tunnel-mania or some outsider will beat them to it. Even respected civic groups take part. The Breakfast Lions Club sold tunnel T-shirts to help pay for the town’s Fourth of July fireworks display.

“I don’t think the publicity is bad, at least they’re catching people,” said Robin Brekhus, owner of the Cadsden Hotel, a historic downtown landmark where customers can buy tunnel T-shirts.

“The more publicity the better it is for the hotel. We had a bunch of DEA (Drug Enforcement Administration) agents stay here, and that was great for us.”