A Virginia company's plan to redevelop the Anne Arundel Medical Center in downtown Annapolis into high-end homes and condominiums is being hailed by city officials as a boon to tax rolls and neighborhood property values.

The medical center announced its selection of a $25 million redevelopment proposal by Madison Homes Inc. last week for its five-acre campus between Shaw and Cathedral streets and Franklin and Charles streets. Madison Homes's plan calls for tearing down four of the five structures on the property, including a parking garage and tower, while retaining the original 1902 hospital building at the corner of Franklin and Cathedral streets for residences and community space.

The company has proposed building a 139-unit complex of condominiums, town houses and single-family homes in the Murray Hill neighborhood, retaining the architectural flavor of the area and developing a public park along the waterfront.

Officials at McLean-based Madison Homes said that they plan to hammer out concerns such as parking and density with community leaders and that they expect it will take about nine months to win city zoning and planning approval of their Villages at Annapolis project.

"It's a little too intense," said Minor Carter, president of the Ward 1 Resident Association, voicing some neighbors' fear that 139 units would bring too much traffic to the historic district.

Russell Rosenberger, president of Madison Homes, assured community leaders that the company will continue to meet with them and work out nuances of the plan. For the past two years, medical center officials have bounced around proposals for the site and organized a committee of business, community and political leaders to help decide its fate.

Hospital officials said even if the plans change, they are confident Madison Homes, which developed a successful project in Old Town Alexandria, is well equipped to help see downtown through its most important land-use transition in decades.

"We're comfortable and confident that we've made the right selection," said Chip Doordan, president of Anne Arundel Health System Inc.

City officials said the tract of land that the private, nonprofit hospital is vacating on Franklin Street is particularly significant because it may be the largest parcel developed downtown for years to come.

Under Madison Homes's plans, the historic hospital building would be redeveloped into condominiums and one floor may be converted to retail space or a community meeting area, Rosenberger said.

Mayor Dean Johnson said he expects the housing will "knit back together" a residential area and create a sense of community. And while many downtown business leaders have long lamented the departure of the hospital and its hundreds of employees from the neighborhood, city economic development director Susan Zeller said Annapolis would benefit from property tax revenues and the spending by the development's residents.

"The hospital has been a self-contained unit for a long time," Zeller said. She noted that that more employees eat in the hospital cafeteria than in downtown restaurants, and because most hospital employees work odd shifts they usually don't shop on their breaks.

The new residents, however, are likely to have both time and money on their hands, said Bob Burden, president of the Annapolis and Anne Arundel Chamber of Commerce.

Homes in the Village at Annapolis are expected to range from $250,000 to $500,000, and are aimed at attracting empty nesters--couples in their forties and fifties who have more or less finished spending big bucks on their children.

City officials estimate that Annapolis would see at least $336,000 annually in property tax revenue from the new housing project. Currently the city collects no direct taxes from the hospital because it is a not-for-profit facility.

"It's more than what we're getting now," said Jon Arason, city planning director.

Meanwhile, company officials appear to have made up their minds about one of the most contentious issues in downtown Annapolis.

When crews begin demolishing the hospital tower sometime in 2001, Madison Homes also plans to destroy the medical center's 367-space parking garage--a plan that has upset several downtown business leaders.

"Under any circumstances, the existing four-story parking garage is coming down," Rosenberger said. "Ninety-eight, 99 percent of the people definitely want to get rid of that garage. It's an eyesore."

Jim Nolan, a lawyer and longtime Annapolis resident whose offices are on Main Street, called the move shortsighted.

"The fact that [the garage] would come down is going to exacerbate the difficult parking situation that we already have downtown," he said. "If you don't have reasonable parking, you're going to have problems with the businesses."

But Carter, speaking for Ward 1 residents who dislike the garage, said he thinks the facility actually attracts traffic.

Destroying it may encourage transportation alternatives such as shuttle buses, he said.

There is, however, plenty of time for debate.

The hospital does not vacate the property until mid-2001, when it will move to Parole. Once the medical center is gone, Madison Homes officials estimate construction would take about two years.

CAPTION: A Virginia firm has a $25 million plan to redevelop the five-acre Anne Arundel Medical Center campus in downtown Annapolis.

CAPTION: Artist's rendering of plan for redeveloping the hospital site.