More than 3,000 Alexandrians could be priced out of their homes because developers plan to upgrade 1,000 apartments in the low-income area just south of Arlington, city officials said yesterday.

City Manager Vola Lawson released a statement last night saying she had learned that the Potowmack Development Group had signed a contract to purchase 1,057 apartments known as the Layton Estates and intented to renovate them.

Officials had feared that a major renovation of the rundown apartments could force thousands of the city's poorest residents to leave their homes, and possibly the city. In rejecting another developer's similar renovation plans in December, Mayor James P. Moran Jr. said it could have been "the largest displacement in the city's history."

That earlier proposal needed city approval because the developer requested tax-exempt financing, but the Potowmack Development Group apparently will purchase the properties, valued at $30 million, with conventional loans.

John Freeman and Conrad Cafritz, two of the developers involved in the project, could not be reached for comment last night.

"It's going to be an exodus of people," said Magda Gotts, the Alexandria United Tenant Organization coordinator. Crying as she heard the news of the sale, she said, "There is no place for these people to go. I'm speechless."

The City Council had allocated $16,000 to Gotts' organization last month to study the feasibility of the tenants organizing and acquiring the apartments.

Beverly Steele, the city housing director, said she did not know details of Freeman and Cafritz's plan for the apartments scattered near Mount Vernon Avenue and Four Mile Run. "There is a real concern" of displacement, she said. "We are hoping that a mix is preserved, with some housing for the low- and moderate-income."

Freeman, one of the developers who last year renovated the Abingdon, another rundown apartment complex, raised the rent almost $300 in some of the units after installing weight rooms, wet bars and a tennis court.

Officials said that more than 90 percent of the Abingdon tenants had to move elsewhere, unable to afford the higher rents.

"It's similar to the Abingdon," said Mark Looney, chief of the city's landlord/tenant office. "How many will leave? It'll depend on what the developers do."

Many tenants in the Layton Estates pay between $325 and $400 a month, compared to the average price for a one-bedroom in the city that officials say is now $530.

In the past decade, federal officials have pumped millions of dollars into a flood project around Four Mile Run and city officials have encouraged businesses to settle along the spruced-up Mount Vernon Avenue corridor. Soaring land values have come with the improvements, and officials in real estate say the once-washed-out area is prime property for young professionals who want to live minutes from the District.