After nearly 10 years of planning, the City of Alexandria this week begins work on the massive project to redevelop the city's four-building torpedo complex along King Street and the city's waterfront.

That first step will be tearing up Cameron and Union streets and the alley behind Fayette Street to install underground utility lines, expected to begin today or tomorrow. It is the prelude to what is expected to be at least three years of dust, demolition and disturbance as developers and the city remake parts of the historic district.

In October, the city is to begin knocking down parts of Building No. 3, at the foot of Cameron Street along Union Street, according to city planners.

"This has been years coming down the pike, and now it's here," said Dayton Cook, director of transportation and environmental services for the city.

The city's ambitious plans to turn the decaying, four-building torpedo complex into a commercial, retail and residential project still await some final touches, although general plans for the complex already have been approved.

Those plans include:

Building No. 1: Located between Lee, Cameron, Union and Fayette streets, the building would be razed and up to 99 condominiums and 2 1/2 levels of parking built on the site.

Buildings No. 2 and No. 10: These buildings are connected in one structure stretching from King Street between Union and the waterfront to the foot of Cameron. Torpedo Factory artists would remain in a remodeled building No. 2., and No. 10, which faces King Street, would be leased for commercial purposes.

Building No. 3: The central part of the building, which is along the river north of No. 2 and No. 10, would be partially torn down and subsequently remodeled to house 100,000 square feet of office space.

The city still is negotiating with developers over the location of 509 parking spaces throughout the proposed complex, as well as how many town houses will be built.

Currently, officials say the only firm plans are to raze the central part of Building No. 3 and all of Building No. 1, a massive donut-shaped structure.

"We hope that all the plans are final by mid-June," said the city's chief planner George Collyer. "It's been a Chinese fire drill in planning."

Already, local merchants seem resigned to the coming months of closed streets, truck traffic, noise and dust.

"Viewing it as a merchant with a store in the heart of all this mess, I am concerned about the effect on customers," said Joel Blanchette, owner of American Artisan at 201 King St. "If it gets too bad, I might not be around when the calm returns."

William Rowan, owner of Gilpin House bookstore at 208 King, was more relaxed. "It should auger well for the future," he said. "I just hope they plan disruption when we have down times."

And Marge Alderson, director of the Torpedo Factory Artists Association, expects most residents and merchants to endure the necessary dislocations.

"It's not going to be pleasant for residents, artists, merchants or tourists," she said. "We'll all be inconvenienced, but it has to be done."

With the Christmas shopping season in mind, city officials have scheduled demolition of the huge Building No. 1 for January 1982. Under an agreement with the development consortium -- Alexandria Waterfront Restoration Co. -- the city is responsible for razing the four-story building, which now serves as a parking lot.

Some observers say that the demolition phase will be the most difficult part of the project, particularly considering the construction of the torpedo buildings.

Built during World War I, and expanded in World War II as a plant to build torpedos, the buildings were constructed to withstand the force of an exploding torpedo. The walls of Building No. 1, for instance, are constructed of about two feet of concrete reinforced with steel rods, and the floors were built to support a dead load capacity of 500 pounds per square inch, according to one planner.

"They'll have to take it down a section at a time and cut the walls up with torches," said planner Van Slaymaker. To cushion the falling rubble, the demolition firm might have to fill the building's floor with earth, he added.

The city has budgeted $800,000 for the job, and bids are scheduled to go out in August for a September award, Cook said.

After the demolition, the Alexandria Waterfront Restoration Co., led by local developer Charles Hooff III, will take over reconstruction of buildings No. 1 and No. 3.

Hooff's group, which includes local and out-of-state development firms, has a contract to buy the two buildings for $1.5 million. "The developer owns the buildings and the city owns everything around them," said Slaymaker.

In bidding two years ago, Hooff and another developer, Redstone, had joined together to win the contract to develop the torpedo complex. Several months after the contract was awarded, however, the partnership had fallen through, and Redstone filed suit in Alexandria Circuit Court charging Hooff's firm with "misrepresentation."

Although the developers declined comment on the suit, city officials said it was settled out of court for a "sizable" sum, with the result that Redstone was no longer part of the torpedo project.

Under plans presented to the City Council two years ago, Redstone was to have provided the major financing for the joint project. However, city officials say they have no doubts that Hooff can meet the financial obligations of the project.

"The city is secure that Hooff can do it," said Slaymaker. "We very carefully checked out their financial stability."