Customers stroll casually into Arlington's Westover Bakery, a community gathering place for 30 years, and ask about the chocolate cake, the muffins and the petition.

"People are worried about what's going to happen to property values and the crime rate, what will happen to the neighborhood," said bakery owner and Westover Business Association President Mike Haene Jr. to a customer with a bag of cookies in one hand and a pen for signing the petition in the other.

Haene is one of many who have been instrumental in collecting the 700 names that petition circulators have gathered in an effort to stop a $7.5 million plan by a private developer to buy and renovate the nearby 152-unit, town house-style Westover Apartments off Washington Boulevard.

The plan has become a powder keg in the once-placid northwestern Arlington neighborhood, stunning county officials, residents and merchants with the intensity of the debate. It has pitted homeowners against each other and against tenants and has led to name-calling at neighborhood meetings and accusations of racism and sellouts.

The Arlington Housing Corp., a private, nonprofit group, has a contract to buy the 46-year-old, red brick complex from the Jewish Federation of Cleveland.

The community furor is over the AHC's proposal to buy and renovate the complex so it can remain a rental property and to increase the number of subsidies to low-income tenants so they can afford to stay there when rents go up. The Alexandria Redevelopment and Housing Authority, which has agreed to undertake the project for Arlington, would provide the funds through the sale of tax-exempt bonds, a financing process that is being closely watched by other local jurisdictions and by a House subcommittee.

If AHC does not succeed with its plans, said Lou Ann Frederick, executive director of AHC, there are at least two other private developers waiting to buy out the contract and convert the complex to condominiums, a move that many say would lead to widespread displacement of many of the current low- to-middle-income tenants.

At a public hearing before the Alexandria Redevelopment and Housing Authority last week, homeowners from the Westover area dominated the meeting, packing the hearing room and complaining that the AHC plan would "lower property values in the area."

"Everyone here is kidding themselves by saying this project will be maintained if it is made into low- and moderate-income housing," said Jim Norris, a homeowner in a nearby neighborhood.

At one point a tenant said that she probably would be eligible for certain subsidies, adding, "I must be the scum you are talking about."

The plan for Westover has prompted some opponents to distribute fliers in the neighborhood accusing the County Board of "circumventing" voters' wishes and allowing a "public housing project" and "a dangerous element" into the community.

"There are a lot of people of good will and intentions who have a lot of misinformation about this . . . and have been given disinformation," said County Board Chairman John G. Milliken. He sent letters to the community last week on behalf of the five-member board in an attempt to calm residents.

Opponents' fliers referred to the voters' overwhelming rejection two years ago of a proposal to create an Arlington Redevelopment and Housing Authority, making it clear they did not want an independent agency buying, building or running public housing projects.

After that vote, county officials decided the best way to preserve the rapidly disappearing stock of affordable rental housing for low- and moderate-income persons was to turn to the private sector.

The County Board signed an agreement last year with the Alexandria authority allowing that agency to give low-interest loans to private developers and nonprofit housing groups in Arlington by selling tax-exempt bonds. The agreement, county officials emphasize, does not allow public housing projects and requires County Board approval of all applications to Alexandria.

"People told us they didn't want any of those things, and we don't have any of those things," said County Board member Ellen M. Bozman, echoing the others on the board. "All this is is strictly a method of financing for private owners."

County Board member Michael E. Brunner, a member of the Westover Civic Association and an opponent of the proposed Arlington authority, agreed. He said he believes AHC's Westover plan is a "chance to improve the neighborhood and improve the housing stock."

The board has given preliminary approval to AHC's application for a loan of up to $6.5 million from the Alexandria agency and will review the plan again at its April 13 meeting, when final approval is expected.

This is AHC's first venture, but the third for a private developer in the county under the new Alexandria agreement. Rent increases will be phased in over a two-year period. Now $370 for a one-bedroom and $465 for a two-bedroom, they will go up to $506 and $625, respectively.

To help tenants meet the increases, AHC will have to arrange for Section 8 low-income subsidy grants, which run for 15 years.

Rumors that the complex will be 100 percent subsidized or that the community is targeted for a massive infusion of subsidies are patently false, Frederick and county officials said. "There are not enough subsidies to go around, so there are usually less low-income people after this type of project," said County Board member Albert C. Eisenberg.

But both the subsidies and the use of the Alexandria authority as a financing mechanism has split the community.

"People feel like, 'By God, we told you we didn't want this and you gave it to us anyway,' " said Sara Collins Huggins, who moved to Arlington with her husband Frederick last September. "People feel this was an end run around what we don't want to see in Arlington."

"This is the same way to do what an authority would do," said Barnett Norris, who lives in another civic area, but has become an opposition leader. Norris said she has not heard anyone express opposition to AHC's plan for racial reasons. "We have plenty of various nationalities and races in Westover," she said.

But others say they have heard people express concern that the program will lead to more minorities. "It's definitely a big concern," said a merchant who requested anonymity.

The concern of some homeowners that the neighborhood will encounter a "dangerous element" that will lead to crime does not always sit well with some of the tenants who see AHC's plan as benefiting them and neighbors who might be forced out by a condominium conversion.

"All this derogatory talk is unfair," said Loy Wall Witt, a resident of Westover for 43 years and copresident of the tenants association. "These things being said about a 'dangerous element' and turning this place into slums are hurting people's feelings because they've been here a long time and they think they've done a pretty good job of keeping up the area."

Lois Barnes, the complex's manager and a nearby homeowner, recalled recent meetings in the neighborhoods where tenants were booed by a few homeowners she said appeared eager for a condominium converter to come in and raise property values.

"The tenants felt people were saying they were trash," Barnes said. "They're not trash. Some of them have lived here for 30 or 40 years . . . and some are subsidized now."

Both the opponents and proponents agree that there could have been better communication. The Westover Civic Association will meet at 7:30 tonight at Swanson Intermediate School.