Work began Monday on a mini-city within New York City to be erected on the Battery Park landfill adjacent to the World Trade Center.

The $1.5 billion project is an imaginative effort to restore life in the lower tip of Manhattan - an area that is deserted outside of business hours.

When it is completed in 1968, Battery Park City will have 16,000 units and an estimated population of more than 40,000. That's the size of Sarasota, Fla.; Salem, Mass.; Joplin, Ma.; or Corvallis, Ore.

The 100-acre site a few short years ago was decaying waterfront along the west side of Manhattan on the Hudson River. It required more than tow million cubic yards of landfill to whip into some semblance of usable land area.

The first idea for reclamation of the area came more than a decade ago from the then-governor of New York. Nelson A. Rockefeller, who saw it as a perfect complement to the twin towers of the World Trade Center then under construction. In fact, 24 acres of landfill dug from the site of the 110-story towers were used to build the base for Battery Park City.

The Battery Park City Authority was created by the state legislature in 1968. In 1972, the authority sold a $200-million bond issue for planning. An effort three years later to market an additional $30 million in bonds for initial construction ran into the fiscal storm that was raking the city and state.

The state's Urban Development Corp. and the Big Apple were on the verge of financial collapse. "It was impossible to sell bonds," recalled Thomas F. Galvin, Battery Park City project manager. "So we sought FHA mortgage insurance."

It took three more years of application, processing and federal bureaucracy, but this past May the Battery Park City Authority received a conditional commitment for $68.5 million in FHA mortgage insurance from the U.S. Department of Housing and Urban Development, which will enable the authority to sell $30 million in bonds to construct the first 1,642 units.

With this handle out of the way. New York City government last month gave final approval to the project. The city Okay came a short time after Charles J. Urstadt, chairman and chief executive officer of the authority, vassed that failure is give approval now "could effectively kill Battery Park City."

The paperwork was completed in two weeks and last Friday te first heavy equipment rolled onto the site, as expense of sandy landfill with an unconstructed view of the Statue of Liberty.

Galvia preliminary construction will be completed in 13 months. Erection of the first group of buildings will take another 12 months, at which time the first tenants will begin to arrive.

Upon completion, the city-within-a-city will have a mix of low-and-high-rise buildings with three 34-story towers and three others of six, seven and eight stories.

"A third of the site will be open space," Galvin says. "We hired landscape architect Lawrence [WORD ILLEGIBLE] to design the open space for us. He did the Ghiaodall Square development in San Francisco.

"This is a true when development," Galvin says proudly.

"Battery Park City will have its own schools, shops, retail stores, cafes, restaurants, boutiques, in major shopping center with a movie theater and, eventually, a hotel. There will be a marina. And these will be 6 million square foot of office space."

In addition to the breakmaking view of the harbor and Statue of Liberty. Battery Park City tenants will have parks and a riverfront esplanade.

"There will be a complete separation of people and cars," Galvin said. "There will be pedestrian walkways so never the twain shall meet."