Two rundown apartment buildings in Adams Morgan would be renovated, using federal funds, for low-income tenants now living in the buildings under a proposal made recently by Mayor Walter E. Washington.

The mayor's proposal, which must be approved by the City Council, would allow the city housing department to seek $1 million to renovate the Ritz, a once-elegant 60-unit apartment building at 1731 Euclid St. NW, and the Mozart, which has 30 apartments and is nearby at 1630 Fuller St. NW. The funds would be sought from the Innovative Projects Program of the U.S. Department of Housing and Urban Development, according to David Aschheim, program analyst for the city Department of Housing and Community Development. An additional $800,000 would be sought to refinance and begin rehabilitation of a third building, the 32-unit Sorrents Apartments at 18th Street and Kalorama Road NW, and set up a loan fund so other properties eventually could be acquired.

The $1.8 million, if granted, would go to the Jubilee Housing Corp., a church-affiliated volunteer community group which owns the three buildings and which has been working for several years to turn slum housing into decent housing for the poor in Adams Morgan, an area where private rehabilitation and renovation has displaced many low-income tenants.

Jubilee bought the Ritz and the Mozart in 1973. At the time, they were decaying, rat infested dwellings. But under Jubilee's direction and with the help of volunteers and donations, "cosmetic kinds of renovation" began at the two buildings, according to Prentice Bowsher, executive director of the housing corporation. Rents were kept low so that the low-income tenants could remain.

Both apartment buildings now need extensive repairs on roof and windows as well as the heating, plumbing and electrical syste.

Tenants in the buildings formed management councils last year. When renovation is completed, both buildings will be sold to the tenants' associations, which will operate the buildings as cooperatives, Bowsher said. He hopes the works will be finished by next winter. Jubilee will help the tenants get financing for their project, he added. Tenants of the Sorrento also will be urged to form a cooperative, Bowsher said.

"We're grateful for the mayor's action and for the support Jubilee has received from the housing department," Bowsher said. "It's a vote of confidence foe low-income residents in Adams Morgan."