After a string of more bad years than residents care to count, 1987 was the year that things finally seemed to happen in Knox Hill.

City projects got off the drawing boards and into bricks and mortar. Private developers, a species previously thought endangered in Southeast, reopened once-vacant apartment buildings. One of the major banks in the city put up money to renovate a garden apartment complex that had been empty for seven years.

For too long, the area overlooking Suitland Parkway in Southeast was a neighborhood without hope. Old stoves and refrigerators were dumped on the streets. Drug dealers congregated without fear. Weeds and brush choked the centerpiece of the area, 23 vacant acres that once held a public housing project. Most of the buildings were boarded up and abandoned.

The very desolation of Knox Hill in particular and far Southeast in general has proved to be a strong point, however, as developers and lenders are beginning to discover opportunities in the area's stock of vacant apartments.

"If you look at the backlog of 13,000 names for city public housing, it's clear there's a need for low- and moderate-income housing," said Bill Baker, who with his partner Dennis Garbis rehabilitated three 12-unit buildings in the 2800 block of Hartford Street.

This year, Baker and Garbis have leased the three buildings to the city Department of Housing and Community Development, and a new city-owned, 122-unit apartment building for senior citizens opened in November. The 7th District police station is going up on Irving Street and Alabama Avenue.

But the real catalyst for change in the area may prove to be the 48-unit Buena Vista apartments, now being rebuilt as two-bedroom apartments with atriums, bay windows and washers and dryers. The project is being developed by the nonprofit Ministries United to Support Community Life Endeavors, or MUSCLE. The housing department and American Security Bank are providing financing for the project. MUSCLE plans to rent the apartments for $575 to $605 with options for the tenants to buy in three years as the neighborhood improves.

"This isn't a schlock renovation," said Michael Crescenzo, MUSCLE's vice president for development. "These are going to be really nice places for working people, people making between $20,000 and $30,000.

"We're trying to reward people who have done the right thing," he added. "They've worked hard all their lives. They're the backbone of society and there's no place for them to live in the city."

City officials, MUSCLE and American Security, which has invested about $3.5 million in a five-block area, believe that reopening the complex will attract small investors to the neighboring four- and six-unit apartment buildings that make up the bulk of the housing in the area. It appears that the strategy is working. Some of the small apartment buildings are sporting new paint, and others show signs of recent repairs.

"I'm seeing some improvement," said Thomas Belton, a resident-owner of a small apartment building on Jasper Street and who has lived in the area for 21 years. " . . . Within the next two or three years, the neighborhood should be marvelous."

Knox Hill has seen better times. Longtime residents such as Mary Ross, resident manager of the Rockburn Estates, which adjoins the Buena Vista Apartments, can remember the 1960s when it was a quiet middle-class community. "Springtime was just gorgeous," Ross said. "It was just so pretty with the flowering trees and the well-kept buildings."

The area declined rapidly in the late 1970s when the small apartment buildings, which had been part of a real estate trust called Good Hope Hills, were sold individually. Many of the buyers could not afford to keep up their properties and eventually abandoned them.

Knox Hill is a textbook example of how partnerships among city government, private developers and banks work, those involved in the projects say. The city government has had its projects in the Knox Hill area on the drawing board for some time as part of a renewal known first as the Alabama Avenue Renaissance Plan and later as the Alabama Avenue Development Zone. The idea is for all the city agencies to concentrate their efforts in the area to improve the neighborhood, said Will Jackson, acting administrator of the Development Administration, within the city housing department.

So far, the plan seems to be successful in Knox Hill. The Department of Public Works has shoveled the mountains of trash that had accumulated on the streets during the bad years. Concrete barriers have been erected to keep the illegal dumpers from coming back. The police station is scheduled to be completed next year. The city is planning to build a recreation center on Hartford Street in 1992. And, in January, the housing department plans to choose a developer to build 190 $75,000 town houses on the site of the old public housing project.

American Security has been concentrating its money in the area as well, according to assistant vice president Rolan Young-Farrell. "If there's one project in a neighborhood, it's strengthened by a second project, and they're both strengthened by a third project. It protects our investment, and it protects the borrower," Young-Farrell said.