"First, they noticed the clown," Francine Harris said.

But after helium balloons were bought and the gawking at the purple-faced jester was done, Harris' three young sons next spied the pony rides at yesterday's H Street festival in Northeast Washington.

Harris, 36, had not expressly come to the festival along the H Street corridor between Third and 14th Streets NE to sample food or hear gospel music or enjoy a day in the sun as hundreds of other area residents had.

"I came to the store to buy a watch for my oldest son," she said, but "I liked what I saw."

What she and her younger sons, 4-year-old twins Cortez and Curtis and Ryan, 2, saw was a celebration of the rebirth of a commercial strip from which businesses nearly disappeared after the 1968 riots.

A morning parade kicked off the H Street Festival, and until 7 p.m. yesterday more than 500 people wandered over the festival's 13 blocks, listening to performers on three music stages and dining at curbside stands.

But perhaps most important, those who came also shopped in the stores, many of which have bright, new facades installed with the help of low-interest city loans.

Unbridled drug trafficking and vagrancy in the area and the chilling, much-publicized slaying of a neighborhood woman, Catherine Fuller, at the hands of a group of local youths three years ago, spurred the creation of the H Street Community Development Corp.

The nonprofit development group, with Mayor Marion Barry and D.C. Council members Nadine P. Winter (D-Ward 6) and John A. Wilson (D-Ward 2), whose districts share the corridor, has interested developers in the area.

The H Street Connection, a sparkling-clean shopping plaza at Ninth and H Streets NE, construction of a home for the city human services department and of luxury town houses and other high-profile projects have led the way, and now more small businesses are opening on the street.

Winter, who helped the committee organize the third annual festival, said she is pleased about the area's renaissance, which started with a meeting around her kitchen table "because four years ago people kept saying it couldn't be done."

She said the festival helps the overall effort because "a lack of knowledge of {the services} on H Street preclude people from shopping there. There's a natural food store, French's {a fast-food style, southern cooking restaurant}. We want to publicize it."

Taking note of exteriors that need to be cleaned and sidewalks that will be replaced soon, Winter said the process is not over. After talking to several merchants, she began making plans to help them organize a training program for youth in the area.

"It's just a different kind of neighborhood now that things are moving," she said. "I just love it."

Verline Perry, 65, looked out on the festival-goers from amidst the used housewares, lamps, furniture -- and a plastic Godzilla replica -- in front of her store, Creative Recycling.

"It has been wonderful today," said Perry, who has lived around the corner on I Street NE since 1952. Despite the past success of the area for businesses, she said, "it was never like this."