NEW ORLEANS -- Several of the dilapidated, barracks-style buildings at the Desire public housing development in the eastern part of this city are surrounded by moats of raw sewage that seep from broken underground pipes.

The stench is nearly unbearable for residents of New Orleans' most notorious public housing complex, a 98-acre blight that looks like a bombed-out town. More than half of Desire's 1,832 units are boarded up. Hallways and courtyards fall into utter darkness at night because broken light bulbs have not been replaced, creating a haven for drug dealers and other criminals.

"It stinks so bad, like someone sat out there and just did it," said Jackie, a 27-year resident, who requested that her last name not be used. "People get sick from all that mess."

Five years after the federal government stepped in and ordered the New Orleans housing authority to install private management to help salvage it from ruin, the agency is still one of the worst public-housing operations in the nation.

It is a system that is strikingly similar to the District's in size, problems and ignominy.

The crisis in the District has become so grave that a special master appointed by D.C. Superior Court Judge Steffen W. Graae has recommended that the city's public housing department be placed in receivership. Such a move could clear the way for private management to run all or part of the agency.

Trying to head off a takeover, D.C. Mayor Sharon Pratt Kelly and federal officials have agreed to establish a five-member board to run public housing -- a move that will give federal officials veto power over the agency's actions and reduce the mayor's control of the operation. The panel will be chaired by Kelly and co-chaired by a U.S. Department of Housing and Urban Development official.

Since 1979, HUD has intervened in the management of seven public housing authorities by declaring a breach or default in their contracts with those cities.

Some public housing has been improved. Even in New Orleans, progress has been made in maintenance and renovations. But the challenges of distressed public housing have been formidable: dealing with local politics, cobbling together a management team, filling vacant positions, devising a rescue plan and trying to break entrenched ways of doing business.

"I don't see the light at the end of the tunnel for at least five or six years, and that's a light that is pretty dim," said Shelia J. Danzey, managing director of the Housing Authority of New Orleans and an employee of C.J. Public Management Inc., which runs the agency.

"It can take as long to try to rescue an authority as it took to run it into the ground, but it can be done," said Wendy C. Adler, an investigator for the House subcommittee on employment, housing and aviation.

For example, Boston's housing authority was in court-ordered receivership for 11 years. It was removed from the government's list of "troubled" housing agencies last year.

The District and New Orleans have been on the list of troubled housing authorities since the list began in 1979, with no hope of getting off anytime soon.

Each housing agency is graded by HUD in 22 categories, from maintenance to rent collections, on a scale of 100. An agency that scores below 60 points is considered troubled. Most recently, the District scored 24.17, compared with 46.63 points for New Orleans.

The two departments continue to be roiled by furious turnover in directors. In the last 15 years, the District has gone through 12 public housing directors, while New Orleans has had 10, including four private managers.

Most recently, Kelly fired her second housing director, Robert K. Jenkins Jr., who had been on the job less than a year.

Both agencies have also been plagued by years of mismanaged maintenance, such as lead paint abatement, and questionable contract practices. About 20 percent of each system's units are vacant and in need of substantial repairs; both departments have lost huge sums of money by failing to fully collect rent. Some families have been on waiting lists for units for nearly a decade; renovations have been botched and endlessly delayed.

Renovating a public housing unit in New Orleans takes about 154 days on average. Under HUD regulations, the renovations are supposed to be done in 30 days. In the District, the average time last fiscal year was 214 days, according to a preliminary report. But previous studies have put the time in excess of three years.

The District agency also has been beset by corruption so rampant that of the 400 new rent subsidy vouchers given out by the department since 1990, only 10 were awarded to eligible low-income families who had waited their turn and had not paid bribes, federal investigators revealed last week. The head of the program and four of her deputies have been charged.

The special master, James G. Stockard Jr., said in an interview that private management of individual housing complexes rather than one manager for the entire system would be a viable option for the District.

Private management has helped get some housing agencies off the "troubled" list.

The agency in Bridgeport, Conn., was returned to local control in late 1987, after nearly four years of private management. HUD is working to return the housing authority in East St. Louis, Ill., back to local control, after scratching it from the troubled list in 1992.

However, there is no guarantee of improvement.

The housing authority board in Philadelphia agreed in 1992 to turn over the agency's operations to a special master appointed by the Bush administration. But by most measures, the city's public housing system worsened during the year-long stewardship. The vacancy rate jumped from 20 percent to 25 percent during the takeover, and the agency's top three positions were never filled.

Last August, HUD announced a new partnership with the Philadelphia Housing Authority, in which the mayor and city council president are the top two members of the agency's board.

In return, the Clinton administration promised money and other resources. That arrangement served as a model in Kelly's negotiations with HUD. The setup is also similar to Milwaukee's housing authority, which is a municipal agency run by a board of commissioners headed by the mayor. However, Milwaukee's agency long has been regarded as well run.

But local politics still infuse many federal attempts to rescue public housing, a concern for critics who point to political meddling as a major agency problem.

In New Orleans, the private management company has been hampered by clashes with the seven-member board of commissioners, to which the company reports.

The 1988 agreement between HUD and the housing authority stipulates that the board, appointed by the mayor, serve as a policy-making body, while the management company runs the daily operations of the agency.

But in practical terms, the lines of division are blurred.

"A lot of it is perception. There is uncertainty over what is policy and what are day-to-day operations," said Linda D. Hull, the authority's interim executive director, who is a public employee.

When private management was installed at the authority, some top administrators, board members and agency staff were resistant.

So, the 18 months were marked by paralysis, and the management company was let go and the contract rebid. The board was replaced soon after. Mayor-elect Marc H. Morial said he plans to replace the board again, perhaps with tenants.

HUD officials said it has been easier for the management company to work with the latest board. But a draft report by HUD's regional inspector general recommends giving all management functions to private contractors to eliminate the "potential for political interference."

The District could encounter similar problems.

Already, the District agency is bogged down by a battery of personnel and contracting regulations, critics said. Unlike most public housing authorities, which operate with substantial independence from local governments, the D.C. department is a mayoral agency. That means it must first comply with HUD and then with the city.

A Kelly spokeswoman said, "The mayor is aware of the ongoing issues regarding DPAH and the concerns of the tenants. That is why she initiated discussions with HUD to provide better services and security for them."

Federal intervention in New Orleans has resulted in more modernization and improvements in some services, such as maintenance and rent collection.

More than half of District public housing residents are delinquent in their rents, costing the city about $5 million a year, according to the special master's report. The inspector general's report said the New Orleans authority failed to collect $268,753 in rents last fiscal year.

Authority officials said they have attacked the problem in the last seven months by centralizing rent collections and having tenants mail in their checks each month to the authority's headquarters.

As the District's public housing department continues to do, the authority collected rents at each of the development sites -- a system that Danzey said was inefficient and invited crime.

Danzey said the authority's maintenance operation also has been computerized, knocking down the backlog on work orders from more than 200,000 to 14,000.

Nonetheless, squalor and endless maintenance delays are still rampant in New Orleans' complexes.

Donna Short, 34, who lives in a crammed two-bedroom apartment at the B.W. Cooper complex with her six children and a grandson, said she has complained to the authority about her crumbling bathroom ceiling and flaking paint for five years.

Two weeks ago, her 10-month-old grandson swallowed a large paint chip that fell into the bathtub where he was frolicking, she said.

"He has a high fever and can't keep anything, like milk, in his stomach," Short said. She was awaiting the results of a lead test on the toddler. "Everything here is falling apart. The toilet leaks and rocks every time you flush it, and I have to put rugs under it so we don't flood."

Of the authority's 420 maintenance workers, there are only two licensed plumbers and five employees who are specialists in plastering and flooring. The agency has had a tough time attracting qualified workers because pay scales are low.

Staffing and maintenance operations are equally woeful in the District. The special master's report said that the backlog of work orders is as high as 30,000 and that the average response time is 112 days. The District's housing department still has no director of modernization.

Work-order computers are set up in only seven of the District's public housing complexes. Repair requests from residents at the city's 52 other housing sites are recorded manually or phoned in to a central office.

Frustrating delays in renovations have also been rife in both cities.

The District has more than $100 million in unused renovation funds. Meanwhile, decrepit housing sites like Valley Green and Eastgate are virtually vacant.

But in the last 2 1/2 years, the New Orleans authority has closed out 15 renovation projects that dated as far back as 19 years and nearly $40 million in renovations are underway -- but not without some controversy.

Part of the row over the planned renovation of the Desire development is that the federal government could demolish the complex and rebuild it for $24 million less than it plans to spend fixing it up. The money, however, is limited to renovations by a congressional mandate.

The authority also has drawn criticism for its contracting, even under private management.

A contract to renovate three scattered housing sites, for instance, was rebid last year as three different jobs after some board members objected that the contract was not awarded to a minority firm. In the end, the three contracts went to white-owned companies and cost $430,000 more than planned.

In the District, federal audits have shown that the public housing department constantly overspends on its contracts and that theft by workers and other scams have been widespread at agency warehouses.

Public housing tenants said that even if private management is no panacea, federal control would finally give them a chance at decent housing.

Jackie Massey, head of the Valley Green Resident Council, wrote recently to Judge Graae, "It {takeover} will get rid of the political bureaucracy that lives and breeds on the back of poor people."

Public housing departments in both the District and New Orleans have been on the federal government's "troubled" list since it began in 1979. Both housing agencies have been the subject of regulatory intervention. A court-appointed special master has recommended that the District's housing department be placed in receivership. And the U.S. Department of Housing and Urban Development ordered the New Orleans agency be run by a private management firm. A comparison of housing programs, which are similar in size and type of problems.

..................................... Washington ..... New Orleans

Latest grading out of 100 points

as reported by HUD .................. 24.17 .......... 46.63

Annual subsidy from HUD ............. $56 million .... $62 million

National ranking in size ............ 10th ........... 7th

Directors in the last 15 years ...... 12 ............. 10

Total employees ..................... 700 ............ 826

Number of units ..................... 11,796 ......... 13,521

Vacancy rate ........................ 20% ............ 19%

Potential rent income lost

annually from vacant units .......... $4.8 million ... $3.1 million

Families living in public housing ... 9,422 .......... 10,166

Waiting list for

subsidized housing ................ 11,300 families .. 7,000

SOURCES: U.S. Department of Housing and Urban Development; D.C. Department of Public and Assisted Housing, report on D.C. public housing by court appointed special master James G. Stockard Jr.; Housing Authority of New Orleans.