A clutch of starry-eyed grade-school dancers circled Lise Houlton one recent Sunday afternoon as she was about to enter her dance company's sixth-floor studio in downtown Minneapolis.

The bouncy youngsters, clad in tank tops and pink tights, jockeyed for position as Houlton held up, for their inspection, a precious piece of clothing.

The object of the girls' fascination was a faded but still regal tutu with visible patches where it had been mended over the years. It is still used by the Sugar Plum Fairy in Minnesota Dance Theatre's production of "Loyce Houlton's Nutcracker Fantasy," which opened Friday in Minneapolis.

As their director read aloud the names of performers who had worn the outfit over the years -- the names were written on the inside of the garment -- the girls oohed and aahed. For a moment, hearing about the history of this living relic, some of them became lost in sugar plum dreams.

The moment encapsulated the past and the future for MDT, whose "Nutcracker Fantasy" is a cherished holiday tradition for many families in the Twin Cities. The show, a massive undertaking, also feeds the aspirations of would-be dancers who imagine themselves going on the trip that young Marie takes to the land of snow and the kingdom of the Sugar Plum Fairy.

"That twinkle in their eyes and willingness to work harder -- that's ultimately what matters," Houlton said later, explaining that the show's 98-member cast includes 81 students drawn from six levels of the MDT's dance school. "We, as dancers, take classes to learn technique all our lives. What you can't teach, and what you look for in young dancers, is that desire and hunger. Sometimes, that passion is all you've got to go on, and it has to power you a long way."

Like mother, like daughter

This is the 48th year for "Nutcracker Fantasy," created by Lise's mother, who died in 1995. One of the longest-running productions in state history, it has been produced every season, even in years, such as the late 1980s, when financial difficulties disrupted other activities of the company.

"Loycey would move mountains to make it happen," Lise said. "And even when the company was disbanded" -- for a short time in the late 1980s -- "she continued to do it."

Lise Houlton, 58, said she keeps coming back to the show, despite recent challenges, not only to honor the legacy of her mother, who founded MDT. Lise herself began dancing in "Nutcracker Fantasy" in its inaugural year in 1964 -- she was 10 -- and has performed most of the female parts. Lise's daughters Kaitlyn, 25, and Raina Gilliland, 22, both danced in the show. Raina played the Sugar Plum Fairy last year and she and her older sister, who is now a pre-med student at Columbia University, are slated to be in this year's "Nutcracker Fantasy," even though injuries have made the participation of both questionable.

"I know what this show did for me as a child and what it did for many of my colleagues as children," said Houlton, who speaks in commanding, hushed tones. "It gave us not only a sense that we could be dancers, but also showed us the magic of a storytelling production."

Houlton had a successful eight-year career at American Ballet Theater in New York and also spent a spell at the Stuttgart Ballet. She returned to the Twin Cities in 1995 as her mother was dying, and took over the company in 1996.

Injuries are so prevalent among dancers that Houlton must triple-cast principal roles. As a director, Houlton works with seasoned veterans and a corps of children. She's also contending with the need to cut costs, and new rules of working at the Cowles Center, a union theater.

This "Nutcracker" breaks even on a budget of $250,000, or about a quarter of MDT's $1 million annual expenses. While MDT has had a live orchestra play the famed Tchaikovsky score in past years, budget cutbacks and a smaller orchestra pit at the Cowles led them to opt for recorded music this year.

In the costume shop

During weekend rehearsals, the company's offices and studios on the sixth floor of the former Hennepin Center for the Arts buzz with activity. Children are doing pliés and arabesques in one room. In another, dancers line up at the barre. And in a back room, a dedicated cadre of needle-and-thread-bearing volunteers pull costumes from storage and repair them painstakingly by hand. A costume for a Chinese peasant was on a table, as was a ball dress.

"These costumes are made with real high-quality silk and satin, with strong canvas construction," said Kristen Taraszewski, whose 14-year-old daughter is dancing her third MDT "Nutcracker." The former NASA flight engineer was on supervisory duty in the makeshift costume room. "That's why they've held up so long."

While the show covers its costs and even makes a little money in some years, "Nutcracker Fantasy" offers more than box office ka-ching.

It's a valentine to dance that feeds the dreams of aspiring performers, Houlton said.

The show also has an ambassadorial role.

"Families and donors and everyone can see what we do and how well we do it, so they give a little more," said business manager Tafera Kassa.

"It creates a whole series of positive outcomes, from marketing to the box office to our relationship with our audience. It really is a dream show."

Rohan Preston • 612-673-4390