The pink paint is peeling off the decorative metal garlands and globes of the old Club Bali at 14th and T streets NW. Inside the former jazz club where Louis Armstrong, Billie Holiday and Charlie Ventura played in the 1940s, there is now a fire-charred ceiling, a floor that sags to the basement and two missing walls.

As workmen clear the debris from the 77-year-old building, Bob Alexander happily clambers over the the broken brick and torn plywood as he explores the space that will be the new home of Arena Stage's Living Stage Theatre Company.

Alexander founded the theater 18 years ago as Arena's community outreach program to bring the stage to the "forgotten people" -- the very young, the elderly, the handicapped and the incarcerated. It is participatory theater, an art form where there is no stage, no admission charge and the members of the audience become the actors.

The company has moved several times since outgrowing its space at Arena Stage. The building at 1901 14th St. NW, with its rich history, makes it the perfect choice for a permanent home for his theater, says Alexander.

"The thrust of Living Stage is to work with folks, with working-class people who have been denied access to society," said Alexander, 55. "I can't imagine a better place than 14th Street to be with the people."

Alexander said he was particularly pleased that his new theater building was once a jazz club. "I grew up with jazz at the Savoy Ballroom, and Billie Holiday and Count Basie are still sources of inspiration for me. The spirit of the 'Lady Day' is in the fabric of that building. The continuity of the land and of spirits are important to artists."

The building at 1901 14th Street NW is the exception in the neighborhood. Bulldozers and wrecking balls are clearing away many of the small commercial buildings that once were the heart of "Black Broadway," as the 14th Street and U Street corridors were known earlier in the century. Once a vibrant neighborhood of theaters, large movie houses, classy night clubs, fine clothing stores and elegant row houses, the neighborhood started a show decline in the early 1950s, as did other inner-city neighborhoods.

The riots of 1968, which started at 14th and U, site of the new municipal building scheduled to open in the spring, destroyed many of the stores and apartment houses along the old Black Broadway.

Buildings that survived are now being erased from the landscape by speculators and developers who see an opportunity to build a whole new neighborhood around the municipal building and the planned Metro subway stop at 12th and U streets NW.

The Arena Stage building, which is the only one left on its block between T and Wallach streets, mirrors the changing neighborhood. Built in 1907 by Mrs. C.R. Godey as a rather grand billiards hall and bowling alley, it became a Chevrolet showroom when cars first appeared in large numbers on the streets of Washington. According to local historians, 14th Street was known for several decades as "automobile row" because of the number of competing car showrooms on that street.

In 1937, according to city permits, the building was used as an exhibition hall for the "National Memorial to the Progress of the Negro Race in America."

In 1940, it became a restaurant, and shortly thereafter Bennie Caldwell opened his Club Bali, which showcased national jazz musicians until Caldwell was convicted of jury tampering in 1954 and the club closed.

The Bali is fondly remembered as "a class club" by real estate agent Talley Holmes, who was born and raised in the row house directly behind the club. "All the entertainers went there, Holiday and all the big entertainers," he said.

Holmes was also around to see the Bali close and a series of restaurants and bars occupy the building. By the late 1960s, the area around 14th and T streets was known as the illegal heroin marketplace for the city and the whole neighborhood went into decline, said Holmes.

"There was a decade of drugs here," said Holmes. "It was like the Wild West with all the shootings and killings."

The building finally closed for good when Jack Wiseman, the owner of Jack Wiseman's Lounge, was killed in 1975 in his office at the rear of the building.

Detective Thomas J. Kilcullen handled the case. "That is still an open case so I can only say it was drug-related," said Kilcullen. "That place was a little neighborhood bar with a juke box and a bar. Nothing big. But that neighborhood was definitely a heroin area."

Few businesses survived the riots, the neighborhood decline and the influx of drugs. The several liquor stores and carry-outs in the immediate area are mostly owned by newcomers, who said they were pleased that Arena Stage was coming to 14th Street.

Up the street at 14th and Wallach, Bill White opened Bill's Deli five years ago. He says the amount of business done by his tiny carryout, which features homemade chili, is keyed to the changing neighborhood.

"Back when we first opened we did a big business with the junkies," he said. "They weren't good for the neighborhood, but they were customers to us. Now they are gone and we are trying to survive on just the neighborhood. You have to take what the neighborhood gives you, so we keep our prices low."

White looks forward to the opening of the municipal building and the Arena Stage building.

"Maybe I can expand," he said. "I'd like to open a sit-down restaurant and maybe a bar. Those government workers will need to unwind after a day at the desk."

In the meantime, White sweeps the sidewalk in front of his building and looks forward to the arrival of the Arena Stage actors.

"I sure hope those actors will be hungry," he said.