The old building at 720 11th St. NW had seen better days. Dust covered the floor-length bay windows where children's books were once displayed. The roof leaked, the floors creaked, but what caught artist Vernard Gray's eyes when he first saw it two years ago was the rent: It was cheap.

Downtown Washington was desolate then. The city had picked up many buildings sold or abandoned after the riots and was leasing them to nonprofit groups rentfree or for nominal cost on a month-to-month basis. Grayish gloom hung over rows of harsh street lights then. Empty Victorian-style storefronts cast eerie shadows on lonely bus stops at night.

That made no difference to gray, who, along with more than a hundred other artists, photographers, actors, and sculptors flocked to the ruins of downtown in search of a loft, a studio -- "the loft cause," they called it.

Gray, director of the Miya Gallery, had run out of space at his 14th and U Street NW room, so he moved into the former downtown bookstore. Thomasena Allen found a home for her New Theater for Ethnic Art in an abandoned electric razor repair shop. Janet Schmuckal of the Museum of Temporary Art moved to a space vacated at 12th and G streets when Glenn's Record and Stereo store left.

Now in the basement of the new Miya Gallery, in space where a man remembered only as Mr. Haynes repaired shoes before the 1968 riots, Cuchi Wilson does "hair suclpturing," an eight-hour bead and braid routine. D.C. (District Creative) Space, a jazz club and restaurant opened at 7th and D streets NW in quarters that had been occupied by High Boy's fast food shop.

Inconspicuously tucked away in nooks and crannies, curiously perched atop surgical supply stores, hidden in the basements of the repair shops and in warehouse lofts, there are artists who have quietly eased in their easels, canvas and sleeping cots.

But this little Bohemia is now threatened by private developers and the federally funded Pennsylvania Avenue Development Corporation who have grand plans in old downtown for shiny buildings towering to a new limit of 130 feet -- hotels, a convention center, shops and apartments -- but, as yet, no place for the artists.

"The wolf is at our door," said Allen, of the New Theater. "The artists and factors are hustling to stay alive."

Eviction notices have been sent to many of the downtown artists. Moving day for most is March 1. Traditionally, artists pack and run under such pressure, but not this time.

"The artists downtown are ready to move into stage two,c said Schmuckal of the Museum of Temporary Art. "We have a history of site development in this city that is part of our responsibility as members of the community. In order for us to survive, we can't have individual buildings to ourselves. Property values are skyrocketing beyond our means. We have formed a coalition to go after common space."

Schmuckal, Gray and others have their eyes on the now vacant Lansburgh department store building at Ninth and F streets NW. They want the Pennsylvania Avenue Development Corporation to renovate it and rent studios -- cheaply -- to them. They also have suggested that PADC and private developers could create "Gallery Row" on Seventh Street between D and e.

"We could have all the big boys in there," Gray said with excitement.

"Exhibits, museums, framing shops, whatever. See, whites don't come up 11th Street (his present location), and that makes it hard to do business. But down there they can't miss us."

The fate of downtown's creative cluster has been a matter of much discussion, with several workshops and panel discussions among artists, often at odds, who are desperately trying to band together.

"If you don't have no money, you better have your act together," Gray told one such gathering.

Seated around a large, hardwood table Friday night at D.C. Space, the art community's watering hole, painter Andrew Lufkin and friends sipped grimly from their cups of tea.

"It's too many factions. We'll nverr get together. We never have," Lufkin said. "It is a lost cause."

"It's not nearly as bad as it used to be," said his sister, Marsha Lufkin. "It used to be whites against the blacks, men against the women. Now it's basically those who have money and those like us."

Vernard Gray surveyed his Miya Gallery, which specializes in art exhibits of a Third World persuasion. Film canisters were stacked high on shevels around him. Picutures of Black people covered the walls. Potted plants covered cracks along the bay window behind him.

"It was too good to be true," he said. "The fact is that we (the artists) showed an interest in downtown when everyone else was backing off. Now just when the big money is starting to roll in, they want us out."

Two door down, at Thomasena Allen's theater, rehearsal was about to begin for the play, "Jump Back Honey!" Standing in an auditorium that had been completely renovated by the Eastern High School basketball team, director William Hudley faced his leotard-clad high schoolers, grim faced.

The students did not knwo the fate that faced the community theather. Hudley did.

"For you younger ones who have put a lot into this, I just want to let you know that this is a tough business. It's not fair," he said. "Things happen that have nothing to do with your talent, your potential. But you just have to keep on trying." Reherarsal began as usual.

Downstairs, Allen wrung her hands. "This is the only black theater in this area, and now we are about to be weeded out like the rest of them have been. I knew this was a temporary space when we moved in two years ago, but God it hurts to think of leaving when the children have responded to us like they have."

Squatting neatly before a mass of canvas in his studio in the DeDroit Building, Steven Ludlum, 28, pondered his career as a Washington artist.

"Working here is as good as anyplace else, I guess. Other than New York. I mean, this city sure doesn't go out of it's fway to help the artists."

Ludlum pays $50 to $100 a month rent for his studio, which is typical for a 400 square-foot area in the downtown art community.

"I really enjoy this spot, but artists are accustomed to searching for a place to paint. If we get moved out of here, I know of some vacant buildings on Capitol Hill where I might be able to fit in."

The midnight oil was burning on the 10th floor of the Lincoln Building. A disk jockey from radio station KYS was crooning a tune. A cage of eight snow doves fluttered fabout. Jym Slavin sucked on a pipeful of tobacco, stepped back from the canvas, and mused, "I've screwed fthis thing up bad, man." Then he turned the canvas upside down. "Well, well, well," he said.

A year-and-a-half ago, Slavin, 26, flew in from San Francisco where he had sampled the West Coast art scene. A native Washingtonian, he got homesick. In search of a place to paint, he received word of space vacated by the son of Judge John Sirica, who had moved on to bigger and better things.

"Downtown is really convenient," he said. "Everybody at least passes through. You got a lot of people with similar interests and life styles living down here. It helps the mood, you know."

Donning a gas mask, Slavin picked up a spray can and fired away at a row of canvases, moving from one to another.

"Washington doesn't really give a damn about their local artists," he huffed. "This a national city, right. The big galleries, the big names. The big money don't have room for us."

Rita Abraham, a spokesperson for the Pennsylvania Avenue Development Corporation, desagreed.

"We like what we see happening down there," she said. "We're happy to have a natural, self-starting community.

"There's no way we can subsidize the artists. That's not what we are set up to do," she said. "But we are very keyed in to what's going on down there."

Abraham said the PADC has decided to allow artists to use on a rotating basis space in the PADC display window at the Willard Hotel.

"Amdittedly it's not a big thing," Abraham said. "But it is within the paramenters of what we are all about."

Schmuckal of the Museum of Temporary Art, said, "Downtown has our roots. We don't feel that you can revitailze downtown just by tearing it all down. There is no need to reinvent the wheel. People should have cultural interest in mind in the development of downtown."