A $5 million development with 165 apartments and town houses has been proposed for a cleared site at Dawson and Adams streets in Rockville.

The city announced that Anthony C. Koones & Associates has developed a plan for the downtown site. The project has been approved for a federal rent subsidy program (Section 8) by the Maryland Community Development Administration. Low- and moderate-income residents will be eligible for rent supplements and construction financing will be insured by the Community Development Administration, the city said.

Doug Horne of the Rockville planning office said that 60 units in the six-story apartment building would be allocated for senior citizens, 15 for handicapped persons and 25 for small families. The 65 town houses will have one to three bedrooms.

The redevelopment of the 6.2 acre site, where older apartments were razed recently, is a joint project of Rockville and Montgomery County. The two governments shared the costs of purchasing the blighted property, relocating the residents and razing the buildings. The county and city will share proceeds of the sale of the property to the redeveloper.

The project, scheduled to be started next year, has been described by Rockville City Manager Larry Blick as "a step in meeting Rockville's need to provide rental housing" for persons employed in both the public and private sectors.