Bates Street NW, an area of rowhouses built at the turn of the century for working-class families and in recent decades one of the city's most blighted blocks, is about to take on new life.

Scores of workers are fixing up 119 deteriorating rowhouses in the Bates street neighborhood, which is in the area of 1st, 3rd, P and Q streets. Eighty-nine of the homes are scheduled to be completed by the end of March.

Forty-five will be sold at market rates -- for around $66,500 -- while 44 will be sold to federally subsidized, moderate-income buyers for between $45,600 and $52,800. Those buyers -- including some families who were relocated from the area -- will make low down payments and pay mortgage interest rates of 4 percent, with the government making up the market rate differential. Another third of the houses will be rented to low-income families under a federal rent subsidy program.

Bates Street and its surrounding blocks, part of the Shaw urban renewal area, was in the center of a storm of controversy for more than a decade, as city and citizen planners argued over how to revive the neighborhood.

Built on a swamp by the Washington Sanitary Housing Companies, the Bates Street area originally had 300 houses. George Holmes, one of the developers of the current rehabilitation project, said the houses were once "some of the finest housing ever built for low-income families in the District."

"The tenant families paid rents of $16 a month with the stipulation that a month's rent would be returned if units required no repairs," said Jack White, another executive in the Bates Street development group, which also includes Lawrence Brailsford.White, Holmes and Brailsford also are partners in the National Institute for Community Development, which earlier rehabilitated 44 houses on Emerald Street NE.

Much of the Bates area housing deteriorated in the years after World War II -- a decline that accelerated after speculators bought houses from owner-occupants and rented them out. Blocks of the dwellings were acquired by city's urban renewal arm, the Redevelopment Land Agency, in the 1960's. Most of the area's 900 occupants moved out but some remained -- in houses that became increasingly dilapidated.

After years of delay, much of the result of indecision and inaction, the Bates group began a fast-moving, computer-monitored rehabilitation program in August.

Marcus Dasher, the city's neighborhood administrator for the Bates program, said that the old houses were sold to the redeveloper for an average $6,0009 The development plan was selected from a dozen competing proposals on the basis of financial ability and technical experience in inner-city work, he said.

"We want the Bates project to be a model for neighborhood improvement and revitalization," Dasher noted. The project includes new street lights, curbs and gutters and street and alley surfaces.

In addition, residents who have owned their own home in the area for years will be given an opportunity to g et low-interest loans to fix up their properties, Dasher said.

The development got under way with a $2.7 million loan from the city.

A $1 million line of credit was extended by National Savings and Trust Co. and $380,000 weas extended by the Bank of Columbia.

An unexpected rise in costs and additional work on deteriorated units pushed the average cost of the rehabilitation work up $34,000 to $36,000, developer White said. However, the Bates group plans to apply for the right to fix up 44 additional units after the first phase of the project is completed. "We hope to finish all the non-privately-owned dwellings before April of 1981," White said.

Fifty of the Bates houses will be equipped with roof collectors of solar energy to heat domestic hot water. Nine inches of insulation is being placed between new roofs and ceilings of the houses and new interior walls are being insulated behind the existing brick walls. Some of the houses will have small fireplaces and a few will have skylights. Many of the old dwellings have bay windows that are being rejuvenated.

A model house for the Bates Street project is at 1524 1st St. NW. One large house with four units in it is priced at $129,000 and is being sold by Jones, Wells & Associates.