The Alexandria City Council unanimously approved yesterday the use of $15 million in tax-exempt bonds for the renovation of the Presidential Gardens Apartments, a first step in a sweeping revitalization plan for one of the city's poorest sections.

There is a large concentration of refugees and low-income people in the 393-unit complex at Russell Road and Mount Vernon Avenue in Arlandria, in the city's northeastern corner. Some citizen groups said they are concerned that the plan -- while improving the neighborhood -- may drive many of those residents into the streets.

"This plan will wipe out low-income housing in the city," said William P. Peak, a spokesman for the Alexandria Emergency Needs Task Force, a coalition of 48 human service agencies. "There will be severe displacement."

Peak said that many of the Presidential Gardens residents, and those living in the 1,000 Arlandria rental units that a Boston development group plans to purchase in various buildings in the area, will not be able to afford the higher-priced renovated apartments.

"We're not left with much choice," said Mayor Charles E. Beatley. "The federal government is giving us no leadership or financing. The only choice we have is to give tax-exempt financing and keep the buildings rental, or let them go condo."

Beatley said the recent sharp cut in federal funds for low- and moderate-income people -- a whopping 98 percent since 1980 -- could "force packing-crate cities to spring up" around the edges of the nation's cities.

In Alexandria, where the average rent for a one-bedroom apartment is $498 and the vacancy rate for rental apartments is just over 1 percent, the availability of affordable housing is a particularly severe problem.

After the Presidential Gardens Apartments, a 47-year-old complex purchased for about $10 million by a group of Arlington investors called the Presidential Gardens Partnership, is renovated this fall, most of the one-bedroom units that now cost $333 a month will go up to $525 a month plus utilities.

But because the partnership received tax-exempt financing yesterday, federal law will require that 20 percent of the units be set aside for low- and moderate-income residents. These one-bedroom units will rent for $453 a month, one of the partnership investors, LolaReinsch, said.

Also eyeing the Arlandria section of the city for residential development yesterday was the Boston-based Bay Group, which unveiled a comprehensive plan and architectural sketches for their proposed purchase and renovation of 1,000 rental units in the area.

The City Council will vote on the $50 million in financing needed for that plan, which tentatively includes improving eight housing complexes and building a high-rise to ease the displacement of current residents.