Daniel Cleveland strokes the woolen white beard that frames his delicate and dark features as he recalls how his Alexandria neighborhood once was--its rats and alley cats, its crime, its elderly who lived poor and scared in brittle old houses.

"Oh, it was bad then," he says.

Cleveland still lives in that neighborhood. But today home is in a modern 100-unit apartment building that rises six stories above the neatly landscaped grounds of Olde Towne West, a 319-unit apartment development that is the heart of a 14-block section of Alexandria's historic black district known for many generations by a variety of nicknames, including "The Bottoms," "Vinegar Hill," and for the last 40 or so years as "The Dip."

"It's a place that all people in the city of Alexandria are proud of," says City Council member Lionel R. Hope, who was president of The Dip's civic association during its transformation in the 1970s. "People can be proud of The Dip because its residents weren't dislocated. Justice was done and people were treated fairly. It's one of the projects I feel is a success all the way around."

Two centuries ago, The Dip was a marshy settlement of freed blacks. By the late 1960s, it was a neighborhood of rotting shanties. Nicknamed for its gently sloping contours, The Dip was recast as part of a $14-million urban renewal project now in its final phase.

The change meant that some very poor residents and some who sold their homes for redevelopment and spent the money elsewhere are gone or are renters today. But residents and politicians alike say the rebirth of The Dip worked well. In an area roughly bounded by Duke, Columbus, Gibbon and S. Fayette streets, The Dip is a mix of apartments and town houses that offer federally assisted rents and mortgages and properties such as the soon-to-be-completed Burgess Square, where a refurbished, century-old town house will cost from $95,000 to $200,000.

The neighborhood, 85 percent black, has the look of a suburban apartment complex ringed by town houses of an earlier urban age. Nearly every block of two-story apartments has its own small parking lot, anchored by a garbage dumpster. The Dip's narrow strips of grass and concrete are neat, despite the neighborhood children's tendency to play there instead of in The Dip's well designed playgrounds.

Tina Brewer, 17, enjoys cruising through the parking lots near her home on a friend's $600 moped. "It's wonderful around here," she says. "I think this is the ideal place."

When the 15-year urban renewal project began in 1968, the idea was to build more than 300 units with about a 3-to-1 ratio of private to rental units. But the Alexandria Redevelopment and Housing Administration rejected the plan after studies showed that most of The Dip's 690 residents could not afford to buy the new town house units, says Lola Lawson, assistant city manager for housing. So in 1972, the ratio was essentially reversed. About 320 units were set for renters and 131 units set for sale to buyers. Forty-six sale units carried federally assisted mortgages.

Alexandria Mayor Charles E. Beatley Jr., who was also mayor at the time, says he remembers neighborhood fears that The Dip urban renewal project would, like so many other revitalization plans, end up an urban removal project, with black residents displaced by upper middle-class whites.

"That didn't happen," says Beatley.

"The whole area has changed so much," says Shelly Taylor, a real estate saleswoman with Anne B. Rector Associates, which is housed in a mansion-office on the edge of The Dip. "It's one of the few places where rehabilitation can be done." The area around the publicly subsidized project is today attracting young professionals, she says.

Real estate sales people and housing officials say The Dip project has increased surrounding property values by removing a blighted area located so close to the city's high-value Old Town real estate.

The Dip remains mostly black after more than 200 years. The majority of The Dip's black residents, Lawson says, live in rent-assisted apartments where tenants pay between 25 to 30 percent of their incomes for rent and utilities. About 10 percent of the rent-assisted tenants are white; most of the residents living in The Dip's private market town houses are white.

That racial mix was unheard of when Mary R. Herr, a silver-haired senior citizen, came to Alexandria 45 years ago as the bride of a young mortician. Though her husband worked in a funeral parlor in The Dip, the couple never considered living there because it was a place whites rarely ventured, she recalls. Herr now lives in the same building as Daniel Cleveland.

"I think it's nice," she says.

For Virginia Turner and her family, The Dip offered a way out of public housing. Turner lived in a tiny apartment in the Adkins public housing project for more than a decade. Four years ago, the widowed domestic worker moved into a new three-bedroom town house on Gibbon Street. A $20,000 federal block grant reduced the cost of the house to $31,600, and with her income and that of her son, the family purchased its first house.

"This is really nice," Turner says. "Without this project I would have never been able to get a house. It's a family affair, but I could never do it by myself."