The City Council agreed last week to allow the city's housing department to solicit redevelopment plans for the Buzzard Point area one mile south of the Capitol - property the city neither owns nor has any idea how it will acquire.

The only thing city officials know is that they want this close-in neighborhood, now a rundown industrial area of mostly junkyards, transformed into a new urban community of mostly apartments, small shops and townhouses.

"It's not doing anything productive for the city," said J. Kirkwood White, director of the city's zoning office. "Having outdoor storage (junkyards) that close to the U.S. Capitol is a misuse of land," he added.

In the recent past the city would simply have declared the entire 40 acres - stretching from South Capitol Street east to the Navy Yard and from M Street south to the Anacostia River - an urban renewal area, bought the land and sold it to the developer who presented the best revitalization plan.

Now there is no money for new urban renewal projects. The federal government turned off the flow of funds three years ago when it switched to the revenue sharing program for housing - community development block grants.

The District, like other cities across the country, is now grappling with the complex question of how to clean up a blighted area without urban renewal money.

The answer so far from District officials is they are not sure.

"The project comes at a time when the city is seeking new procedures for urban development and new methods to fund it with a view toward minimizing the delays and the expenditures of large amounts of public money that are associated with the urban renewal process," White said.

"We're attempting to come up with a feasible plan" for redevelopment "without urban revewal," said Albert Miller, deputy director of the city housing department.

Currently the land, in the hands of about 50 owners, is a melange of rundown houses that are home to about 80 families, gas stations, auto repair shops and a paper baling company. A storage yard for Metro buses, the Government Services Inc. warehouses, a garage for the city's trash trucks and the Maloney Concrete plant are also located in the neighborhood.

City officials went potential developers to submit detailed plans for land acquisition and new housing. Officials are unsure exactly where to obtain money to buy land in the area if that becomes necessary.

The only company that has indicated any interest in redeveloping the [WORD ILLEGIBLE] area is the Dravo Corp. of Pittsburgh, a conglomerate that specializes in heavy construction work. The corporation owns the Potomac Sand and Gravel Co., which is located in the area.

A person knowledgeable about development trends in the city said he would send the Buzzard Point materials to some of his clients, but he added that redevelopment of the area for housing might be hampered by the presence of the heavy industry in the community such as the concrete plant and the nearby generating station of the Potomac Electric Power Company.

White admits that developers are not hurrying to invest in Buzzard Point.

"It is not a hot investment area but a back burner investment area that needs government stimulus to come alive," he said.

White believes that the subway stop at South Capitol and M and the area's waterfront location should make it attractive for homes priced for sale to middle-income families who cannot afford the luxury housing that is planned for West End and the Georgetown Waterfront.

The West End, the area generally northwest of Washington Circle is similar to Buzzard Point since both are old industrial areas. But private developers have long been interested in building in the West End because it is between Georgetown and downtown.

Last year White's office prepared a major rezoning plan for the entire 167-acre Buzzard Point area.

Although that rezoning plan has never been formally adopted by the city's zoning commission, developers for the scaled-down area are being told to use the plan as a guide in preparing their designs for the area.

Lacking urban renewal, "it's not going to be easy - but we have to look at things differently," Miller said.