A nonprofit group has purchased a rundown shopping center near Minnesota Avenue and Benning Road NE for $3.2 million as part of a plan to revive portions of the city east of the Anacostia River, D.C. officials announced yesterday.

The Marshall Heights Community Development Organization, a community-based group financed by the city's housing department, acquired the shopping center from Burman Properties and plans extensive remodeling of the nine-acre center. The renovation will cost about $600,000. The center, which will be renamed the East River Park Shopping Center, currently has 15 businesses, including a department store, furniture store, drugstore, auto supply firm, record shop and delicatessen.

The purchase was financed with loans from the D.C. government, the D.C. National Bank, the D.C. Bankers Association and Local Initiatives Support Corporation (LISC), a national philanthropic group.

Kwasi Holman, acting director of the D.C. Office of Business and Economic Development, said the unusual funding arrangement "marks an important first step toward the overall revitalization of this critical intersection east of the river."

Lloyd Smith, executive director of the Marshall Heights group, which will become a limited partner in the venture and share in part of the income, predicted that the center would become "a model for similar community development projects all over the country."

He added, "We are especially pleased that funding was not based on grants but was a straight business deal."

District officials said that, once completed, the center will provide $80,000 a year in real estate taxes. Moreover, they said, the project will recapture tax dollars that are being lost to suburban shopping centers.

Commercial development in Marshall Heights and other east-of-the-river neighborhoods has long been an issue with community groups in the area. Mayor Marion Barry's administration has been criticized in recent years for focusing its development efforts on downtown Washington, rather than on neighborhood shopping areas, many of which have fallen into decline.