Amid the festive din of the fifth annual Georgia Avenue Day yesterday, city officials announced a $3 million plan to renovate the Colony Theater, a project that they said will be the most important on the avenue in at least 10 years.

The announcement was made at the conclusion of the Georgia Avenue Day parade, the highlight of an all-day festival held to boost civic pride and revitalize business on one of the city's longest streets and one suffering from disinvestment and deterioration.

"Because of the theater's size and visibility, its renovation will provide the anchor for our revitalization effort in the entire corridor," said D.C. Council member Charlene Drew Jarvis (D-Ward 4). "We've been talking about revitalization for years, and it's been a long time coming. But this is it."

The Colony Theater, in the 4900 block of Georgia Avenue NW, was formerly a neighborhood movie house and later the home of the D.C. Black Repertory Theater until it was abandoned in the 1970s. It has remained abandoned since that time.

The renovation project, which city officials said will be the largest of its kind on Georgia Avenue since the Howard Inn was restored in the late 1970s, likely will take one of two shapes.

Andree Gandy, executive director of Peoples Involvement Corp., which is working with Key Largo Development on the plan, said the property will be restored as a theater or as a mixed-use development containing offices, stores and apartments. A feasibility study is being completed to determine which option would be best for the avenue, Gandy said.

"This is the clearest signal yet that Georgia Avenue is on the move," said Kwasi Holman, executive director of the District's Office of Business and Economic Development. "It certainly will accelerate the pace of much-needed revitalization in this area, and that means neighborhood pride. That's especially important here."

Much of Georgia Avenue, which stretches from Seventh Street NW to Eastern Avenue, was left battered and burning in the wake of rioting in 1968. Businesses fled and hopes for revival diminished in the following years. The avenue has tried to recover ever since.

"So much was dampened by the riots," Jarvis said. "People forgot how much {of} a commercial market existed along this street. We believe a major renovation like this one will definitely serve as the catalyst to further economic development."

The theater's renovation probably will begin next summer and is expected to take between nine months and a year to complete, Holman said. He said the project was shaped in the past six months, and became official when the Office of Business and Economic Development issued a loan commitment to the Peoples Involvement Corp., a nonprofit community development corporation, to purchase the Colony Theater property.

"We're committed to making this a showcase development," Gandy said. "And the point we want to get across is: If it can be done here, it should be duplicated on other parts of the avenue."

The renovation announcement came after the parade, which began at 10:30 a.m. with recording artist Jeffrey Osborne serving as grand marshal on the seven-mile, two-hour route down the avenue.