The white marble palace on Mount Vernon Square that was the city's first public library will make a debut in the next century as Washington's first museum dedicated to neighborhood history.

Yesterday, Mayor Anthony A. Williams (D) made it official when he handed an oversize door key to Barbara Franco, executive director of the Historical Society of Washington D.C. The group has leased the building for the next 99 years in exchange for one dollar in rent.

"We don't have a true identity as a city if we don't recognize our own history," Williams said at the afternoon ceremony in the library lobby. "This museum will preserve all those oral histories [of the World War II generation] and preserve all of our papers for generations to come."

Franco, in accepting the key, told the audience of about 100 people that the 1902 building is one of the city's treasures.

"This is the right time for this project," she said. "It's the 200th anniversary of the city. We have a new millennium, new mayor and a revival of the city."

She said the museum would act as a gateway to the city's neighborhoods, offering a place for visitors to get information before setting out to explore residential Washington. The city's new convention center, under construction just north of the library, would draw visitors to the museum, Franco said.

Last year, Congress designated the library at 801 K St. NW as the site for a city museum and made $2 million available for the project, provided local officials matched the funds. Franco said she doesn't anticipate problems raising the money.

The City Museum of Washington D.C. has been added to the list of official projects recognized by Save America's Treasures, a public-private partnership between the White House Millennium Council and the National Trust for Historic Preservation, said T.C. Benson, director of the trust's part of the program. Save America's Treasures, created in 1998, is a national effort to identify and rescue enduring symbols of American tradition that define the nation, such as the Star Spangled Banner and New Mexico's adobe churches.

At the ceremony, former mayor Walter E. Washington and Austin Kiplinger, chairman of Kiplinger Washington Editors Inc., were introduced as co-chairmen of the Committee for a City Museum. They will lead fund-raising efforts, Washington said.

The graceful, 97-year-old beaux-arts building was financed by philanthropist Andrew Carnegie, who made his fortune with steel mills but is best known for funding more than 1,600 public libraries in the United States around 1900. Though he never allowed the buildings to be named for him, many of them--including the one in the District--are referred to as Carnegie libraries.

The main library moved to a new building a few blocks away about 20 years ago and since then, the University of the District of Columbia has used the building for classes.

The City Museum is scheduled to open in 2003.

CAPTION: Supporters gather at the old Carnegie library in Northwest Washington. It has been chosen as the site for Washington's first city museum. Organizers hope to raise $2 million to match funds from Congress.

CAPTION: Officials hope to open the City Museum of Washington D.C. by 2003 and expect the new convention center to draw visitors to the museum.