Cynthia Brown, a D.C. police officer, was searching for cars to immobilize with the infamous Denver boot a year ago when she came upon a ghost town of slum houses covered with signs saying the city was about to fix them up and sell them.

Brown, who then rented in Maryland but wanted to buy a house, later inquired about the program. She was told the homes were part of the massive Bates Street rehabilitation project, the showpiece of D.C. Mayor Marion Barry's first major housing program. When finished, the community would have a mixture of refurbished homes and apartments. Sidewalks, streets and curbs in the area were to be improved as well.

With the assistance of government funds that will subsidize the interest rate on her home and decrease it to 4 percent, Brown and her two children moved into one of the Bates Street homes two weeks ago.

And last weekend, the community and city officials celebrated the completion of the first homes in the project with day-long festivities. It was billed as the grand opening of the reemerging Bates Street neighborhood.

The Bates Street project, located in Shaw on Bates, P, Q, First and Third streets NW, probably would win the prize for the most talked-about urban renewal area in the city. For more than a decade, city and federal officials promised residents that the slum would be fixed up.

Finally, developers for the project were selected in 1978, during the last year of former mayor Walter Washington's administration.

But D.C. Housing Director Robert L. Moore said that when he took over last year, the program was bogged down. He said that he and Barry take credit for turning a bricks-and-mortar plan into a living-room-and-kitchen reality.

Under the program, 189 units in 163 buildings are being rehabilitated for sale or rent to lower-income families, or to families who qualify for homes being sold at market-rate prices. The first phase, including 89 homes, should be finished by the end of this month, with the rest ready for occupancy by the end of the year, according to Gloria Barajas of the housing department.

Forty-four of the homes in the first phase are being sold for $44,000 each to moderate-income persons under a federal program that provides interest rate subsidies.The families also will get payment loans from the D.C. Development Corp.

Brown, who is divorced and estimates that she earns about $19,000 a year working in the special operations division of the D.C. police department, said her mortgage payment should be about the same as the $280 a month in rent she used to pay for her Suitland apartment.

"I just hope more housing of this type becomes available," Brown said. "If this hadn't come up, I'd have had to wait for a lot of raises (before buying a house)."

Actually, she added, she didn't think she'd ever be able to afford to buy a home.

The area promises to have a diverse racial as well as economic mixture. In an interview in March, one of the developers of the project said all the interest-rate subsidized homes have been sold to blacks. But 60 percent of the market-rate homes, which average about $75,000 in price, have been sold to whites, he said. Some Hispanics also are buying in the project, he added.

Some of the residents who have signed contracts to buy homes have been displaced from Bates Street or other urban renewal areas in the past. Some also are public housing residents.

Brown, who has yet to complete official settlement on her house, is one of three new residents on the block. More families are expected to move in soon.

Charles Lewis, a social science analyst for the federal Department of Health and Welfare, moved from Columbia, Md., to his Bates Street house several months ago. He paid $72,000 for his market-rate house.

Joyce and Kurt Wubbena, both interior designers, paid $75,000 for their home and moved in recently. They've already planted tomato plants in the yard.

Kurt Wubbena said he and his wife rented in the Adams-Morgan area across from the National Zoo before they bought their Bates Street house with Veterans Administration-backed financing. He and his wife both work for the same architectural firm in Falls Church, but didn't want to buy a house in the suburbs.

Wubbena said he considers his house "an excellent investment," wedged between Capitaol Hill and Logan Circle.

Bates Street Associates, a minority firm, is developing the homes with private financing. The project requires a $6 million public and a $15 million private investment, a city official said. Local financial institutions have committed about $10 million in mortgage money, to be used along with $3.1 million in loan funds from the city.

Sixty-four of the homes in the first section will have solar hot water heaters. Most of the houses have three or four bedrooms, and some have fireplaces.