A few years ago, Joe Fennell was in an Alexandria drug store looking for a water cooler when he noticed a newspaper article about an unusual housing offer. That article changed his life.

About the same time, Ron Kaminski was in the Alexandria apartment recuperating from an illness when a story in the morning paper caught his eye. That article changed his life, too.

Both stories were about Alexandria's "Born-Again" housing program. For Fennell, a D.C. fireman, and Kaminski, a Fairfax County librarian, the program was a chance to join the privileged ranks of Alexandria homeowners.

For the city, the program brought a 1980 Virginia Municipal League award for innovative services to citizens.

"It's a dream," say Kaminski. "Its the only way I would have been able to buy a house. I always wanted to buy a home in Alexandria and never thought it would happen."

In addition to Alexandria, the Municipal League honored two other Northern Virginia cities -- Fairfax City and Vienna -- for environmental projects.

In Alexandria, the city, through its Housing Authority, buys, rehabilitates and sells at a discount houses that were once vacant and boarded up eyesores.

Fennell and Kaminski were among the first nine Alexandrians in the program. The city has since sold eight other houses that should be ready for occupancy soon.

Using a combination of its own capital improvement funds and federal Community Development Block Grant money, the city began the program in 1976, selling homes to low - and moderate-income families. The families are eligible for loans, at 7 percent interest, through a pilot financing arrangement with the Virginia Housing Development Authority.

Joe Fennell's two-story frame townhouse at 1023 Queen St. is one of the most dramatic examples of a Born-Again house.

Before he moved to the house two years ago, it had been the ghost of the Carolina Bar-be-cue carry-out. Posters covered boarded up windows and the inside was a haven for rats and vagrants.

After making a $3,500 down payment, assuming a $30,000 mortage and a second trust of $20,000 from the city, Fennell moved into the freshly painted and renovated three-bedroom house near Rte. 1 on the edge of Old Town. Like other Born-Again houses, it had wall-to-wall carpeting, a gas stove and furnace, refrigerator, garbage disposal and hot-water heater.

"Being right next to Rte. 1, it's dirty and noisy," says Fennell, 30, who earns about $17,000 a year. "It takes getting used to, but I'm very confident of the long-term outlook."

While the city has been good about making necessary repairs, Fennell had made some of his own additions -- for peace of mind. For instance, he and other neighbors say, burglaries and rowdyism have been a problem in the area. So recently, Fennell installed floodlights and put bars on his lower windows and doors.

"I don't think I'd want to live here if I were married. But for appreciation, this area is dynamite," says Fennell.

When fennell originally bought his home, it was assessed at $53,000. As of January, it was assessed at $70,000.

Curtis Lee Wilkerson, who lives next door to Fennell at 1019 Queen St., is pleased with the program's effect on the entire neighborhood, noting that other residents have been spurred to fix up their own homes.

Wilkerson, who is black, says his only complaint is that many blacks in the city cannot afford the down payments on the homes. One solution, he says, would be to rent some of the homes instead of selling them.

Both Fennell's and Wilkerson's homes are in predominately black areas of Alexandria. City officials say three of the original nine homes were sold to black residents.

Although Ron Kaminski, 28, generally is pleased with the Born-Again home he bought at 708 N. Patrick St., he says noise from Rte. 1 and burglaries have been a source of irritation.

Kaminski, who earns about $15,000 a year as a librarian, bought his two-bedroom home last November for $52,000. He also has added bars to the windows, but thinks it is a small price to pay for his home.

"The neighbors are very friendly and very nice here. Most of them have lived here probably all their lives and they've protective about their property and they watch out for mine when I'm not here," he said.

Before Debbie Forehand, a nurse at Sibley Hospital moved into her three-bedroom, $75,000 house at 304 E. Custis, it had been vacant for nearly 20 years. The cellar was flooded and pigeons were living inside the large and airy house.

I'm just delighted with the home," said the 30-year-old Forehand, who is single. "This is the nicest thing I've ever experienced."

City officials are pleased with the program and say it has served two purposes: adding moderately priced homes to the housing market and acting as a catalyst for owners of the buildings to fix them up.

Under the program, city staff members evaluate homes, generally vacant, to see if they are fit for "human habitation." If the staff says they are not, the recommendation must be reviewed by both the planning department and the City Council. Owners of "unfit" houses are given 60 days to get a building permit and 60 days to repair the houses before the city exercises its right of "eminent domain" and seizes the houses.

Of the 126 homes designated as unfit, city officials point out, 61 already have been rehabilitated by their owners.

"Without this program," says Vola Lawson, assistant city manager for housing, "the owner could let the house stand there for 10 to 15 years until he thinks the market has caught up with it. So the program has a tremendous rehabilitative effect."

The 17 houses in the first stage of the Born-again project are in the Potomac West and Potomac East areas, but city officials said they eventually expect to have homes through out the city.

To qualify for the program, residents can earn no more than $12,000 to $22,000 a year, depending on the size of their family. Residents of the neighborhood are given first priority on houses, followed by residents from other parts of the city and non-residents who work in the city. Names are picked by lottery. The city plans to hold lotteries for other homes as soon as they are rehabilitated, and hopes eventually have about 100 homes.

The Virginia Housing Development Authority provides loans to buyers, with a maximum sales price of $45,000. The difference between that ceiling and the appraised value is picked up by the city as a second trust.So far, home prices have ranged from $47,500 to 79,000.

The city has spent $510,000 on the project and has received $846,490 in CDBG money.