Ten years ago a visitor to Alexandria's waterfront would have found its value as a bustling Potomac River riverport only a memory. Trucks filled with gravel rumbled in and out of a concrete plant, junked cars and other trash littered the shoreline, and the stench of a rendering plant filled the air along with dust from a fertilizer factory.

"We never went down there at all," said Marchant Shuman, owner of Shuman's Bakery in Old Town. "It was sleepy; warehouses were closed up," said Old Town activist Andrea Dimond. "It was like the enchanted village waiting for something to happen."

Today, after decades of delay and controversy, it's happening.

In a multimillion-dollar version of what some residents liken to the ugly-duckling-turned-swan story, Alexandria's waterfront is undergoing a renaissance from a smelly, unsightly, has-been seaport to what some say is one of the Washington area's most beautiful and valuable pieces of waterfront real estate. City officials say coming developments, like those planned for the Georgetown waterfront, will make dramatic use of the Potomac shoreline. But a number of Old Town residents are furious about the projects for just that reason, fearing their city will become a mix of the worst of Georgetown and Crystal City.

Alexandria officials, leery of losing all the boom in commercial development to Arlington's Rosslyn to the north and to Fairfax's Tysons Corner to the west, are delighted.

"I really have to stop and pinch myself sometimes," said Mayor Charles E. Beatley earlier this month as plans for a $90 million office and commercial complex were announced for the city's northern waterfront. The new project, called the TransPotomac Canal Center and financed in part by Dutch investors, is to be completed in l986 and will be the first of the new construction directly at the river's edge.

Meanwhile, the transformation that Beatley has made a hallmark of his administration is well under way, winning the approval of many residents. "Now that we have all the waterfront festivals, parks, restaurants, the whole thing is much more alive than it was years ago," says baker Shuman.

The Norton rendering plant, the Bogle chemical plant, the Andrews pile-driving operation, the Virginia Concrete plant, the Texaco oil tanks and the trash along the water's edge are gone -- as are most of the railroad tracks and the overhead electrical and telephone lines.

In their place will be renovated warehouses and new buildings, limited to a height of 70 feet, which house upscale restaurants, boutiques, offices and residences.

The restored Torpedo Factory, acquired by the city from the federal government in l970, with its Art Center, offices, shops, new piers and residential quarters, has become the city's biggest tourist attraction, drawing 60,000 people a month. There are two new waterfront parks, complete with waterside promenades that are part of plans for a walkway and bike trail along the 1 1/2-mile waterfront.

Another office and retail complex, envisioned for completion in the early 1990s, is planned for the old Ford auto factory on the southern waterfront. The land is being sold for $14 million by the federal government to an Alaskan nonprofit corporation that plans to develop the site.

In addition to millions of dollars from tourist-related sales and real estate taxes, the waterfront development has provided the city of 106,100 with thousands of job opportunities, helped stimulate a local bus system, and given a boon to the history buffs and archaeological afficionados who make up an influential constituency at Alexandria's City Hall.

The planning for Alexandria's waterfront dates to the 1960s, when, in other cities such as Boston and Baltimore, urban waterfronts were discovered as more of an asset than an eyesore. A concerted effort to clean up the polluted Potomac spurred Alexandria's planning.

But city officials say the turning point came in October 1981 when the federal government and Alexandria reached an agreement to settle a 1973 suit over who owns the land along the Potomac.

The settlement resolved a dispute over riverside land that dated to 1846, when Alexandria was retroceded to Virginia in one of the compromises that predated the Civil War. Part of Alexandria and what is now Arlington County had been part of the "10-mile square" that made up the orginial District of Columbia.

The federal government claimed all the land east of the Potomac's 1791 high water mark. The problem was that the continued filling of the river's marshy bottom meant that the federal government was claiming jurisdiction over city lands as much as two blocks east of the river.

The settlements over the ownership that have occurred since 1981 provided for parks and public access to the river at certain points (almost half the waterfront is now devoted to parklands) and gave the city and private landowners clear titles to the most of the disputed lands, clearing the way for development.

With the settlements, Alexandria's waterfront land "literally went from no value to . . . one of the most desireable sites for development in the Washington area," said David J. Chitlik, city real estate assessor. The TransPotomac Canal Center site, for example, three years ago was assessed at $4 a square foot and now is valued at $20 -- a 400 percent increase.

City officials, anticipating the settlements, had set height limits and rezoned much of the city's 55-acre waterfront between the federally owned Jones Point Park, under the Woodrow Wilson Bridge, and Daingerfield Island Park, south of National Airport. The city's aim was to prevent construction of high-rise buildings and industries as well as to veto the idea, once suggested by federal officials, of an elevated highway along the waterfront.

The city aimed for a mix of residential, office, commercial and recreational uses. And in a bid to retain the flavor of the waterfront with its four deep-water piers as a working seaport, city planners stipulated that existing waterfront operations such as Robinson's Terminal, a subsidiary of the Washington Post Co. which imports newsprint and paper from Canada, could remain operational as long as they were economically viable.

Meanwhile, Alexandria and the National Park Service joined forces outside the courtroom to produce a comprehensive waterfront plan, completed in 1981. It was used as a policy guide in working out the settlements of the federal suit.

"The overwhelming consensus was that waterfront development should be a compromise and that's what's resulted," says mayor Beatley.

"I think there's no question that out of the controversy is coming a better development for a variety of reasons," says George S. Colyer, director of comprehensive planning for the city. To have development "happen in the '80s is better than it would have been in the late '70s because Alexandria has become a little more sophisticated and so have the developers and architects."

There were and still are protests. Environmentalists demanded any plans for the waterfront provide more open space for recreation and parks. Working with the National Park Service, they were a major impetus behind the federal government's decision to sue the city over the land ownership question.

"I'm terribly, terribly concerned about the different buildings that I understand are looming in the future" said environmentalist Ellen Pickering, a former City Council member. "I think those buildings are going to inundate the waterfront and kill it.

Pickering has "not one single, tiny regret," about the federal suit that she helped prompt. If not for the suit, Pickering says, "there wouldn't be any Oronoco Bay Park, no Founder's Park, no Pommander Walk Park, the foot of King Street would not have been recaptured, it was all private property."

In Old Town the new waterfront development is raising other concerns. While most residents welcome the cleaning of the river and the removal of industries, some express fears of an onslaught of tourists, traffic and what one long-time Old Towner calls the worst of perennial problems -- parking.

"I can feel the density," said Jack K. Henes, who lives in the 400 block of Prince Street. "I'm glad to see the waterfront developed . . . . I don't like to see cement trucks going down the street but I don't know if we are going to have enough parking on weekends."

What's as perturbing for Henes and other Old Town residents is the perception that their political clout at City Hall is being impinged by new forces. "I think the vested interests of development and the politics of bringing money into the city are going to be more influential," Henes says.

"It's a very delicate balance between what people can live with and when they throw up their hands and say 'we can't do anything' and when that happens a residential area deteriorates," said Dimond, president of the Old Town Civic Association.

Jane Witt, a former resident of Old Town, speaks darkly of the changes sweeping the historic district. "We're forcing out things we need for the quality of life," she says. "Two hardware stores have just closed . . . pretty soon we'll have to go to shopping centers to shop and I don't like that at all.

"It's so busy," Witt said. "I just can't imagine anyone can get any rest in the evening . . . we're beginning to be like Georgetown. A lot of these places have discos upstairs and now we have carryouts; we're going to have a 'Popeye's' here."

William M. Glasgow, 58, recalls with nostalgia the oyster fisherman, the Potomac River steamships and shooting at rats as they leaped from the city's sewage pipes dumping into the river. ("I'd shoot them and I'd know I'd be hitting them and then they'd turn and just look at me because they were so big.") He finds the new waterfront a pale reflection of the old one.

"It's the difference between what was an active waterfront and what is a sterile development," he said. "That's what happens when you push industry out of the city."

Mayor Beatley dismisses such criticisms and exudes confidence that the waterfront development will not change Alexandria's character fundamentally. The people who wanted to stop all development "were not people living in the real world," he says. "They were dreamers who thought we had powers we don't have . . . . We never had a choice between growth and no-growth. Our choice was between growth we could live with and outlandish growth."

In Alexandria's West End, where the city's population growth is the sharpest, the waterfront's development has stimulated demands. Last March Holmes Run civic activist Bernard Brenman told the city: "We are supporters of the waterfront and Old Town, and when Old Town decided to put in all-brick sidewalks we didn't object and we agreed to pay our half. And when the city decided to acquire historical buildings we didn't object, we paid our half."

"Now our time has come," he said. ". . . And we expect the rest of the city of pay their half."

And to nudge the city fathers Brenman recently submitted a proposal for a park in Holmes Run to the city planning office. The title of his plan: "The Western Waterfront."