BALTIMORE -- When Charles and Lola laubheim moved three years ago to Coldspring -- Baltimore's city-sponsored "new town" in town -- theywere returning to a familiar hillside they knew in the 1940s for its cool breezes and lovers' lane.

Honeycombed with futuristic condominium town houses, it was a long leap from the mowed-lawn life style they had known in suburban Mount Washington for several decades. But, the Laubheims say they have not regretted the move.

"We liked the location, the appearance, and we liked the mixture of people -- all ages, all races, all the religions and sexual preferences you have," said Laubheim, a retired English professor at 62. "In the summer, when the pool is open, its like a country club around here." Coldspring is nestled on a hilltop near Rte. I-695, Jones Falls Expressway and Coldspring Lane. It's a 10-minute drive from downtown.

A terraced development, which one architectural reviewer touted as "this country's first try to bring housing design and construction into the 20th century," Coldspring is now five years old and partially finished. Construction of office and retail space has begun and is expected to be completed by 1985. Its 700 residents live in a network of futuristic town houses that criss-cross a peak near Loyola College.

When it first opened, in 1978, Coldspring was a smash. "We sold the first part of the project without even advertising, without really trying," said Frank Rich III, vice president of Coldspring New Town Corp. A year later, construction began on a second section of 128 units.

Then the once-healthy project experienced a drastic decline in sales, followed by two lawsuits -- still in litigation -- over alleged building defects. The sales slowdown isn't over yet, Rich acknowleges.

Seventy percent of the second section of condominiums have been sold. Prices range from $85,000 for a three-bedroom house to $102,000 for a single-level unit on the top floor of the staggered structures.

Coldspring was designed by Moshe Safdie, the Israeli-born architect who designed Habitat 67, the beehive housing project that was a visual and media sensation during Montreal's Expo '67.

The groundwork for the 375-acre Baltimore project was laid by city planners, who, using $30 million in federal community development block grant and neighborhood development program funds, oversaw site preparation, design work, relocation costs, roads, sidewalks, utilities, the pool and the tennis courts.

To help draw buyers to the project, Baltimore floated a bond issue that created funds for mortgage financing at 7 1/2 percent -- a low rate even then. One of the Coldspring's first families, the Laubheims bought their home the following year for $56,000 after just one visit. Currently, 252 units are complete; 35 are still on sale.

Immediately after the city commissioned Safdie to design Coldspring, his work here was wowing architectural critics anew. This planned community of cantilevers and grooved, concrete exteriors was heralded by some as an antidote to urban blight: Here, it was said, was a made-to-order, middle-income neighborhood that by 2040 could house 10,000 people, buyers who would be enticed by safe streets, three lakes and easy access to the downtown.

Today, Coldspring's first generation of residents, such the Laubheims, include the young and old and the blue- and white-collared. The designs are simple, with clean lines, high ceilings and private, fenced-in backyards or patios. Rooftops zig and zag. Walkways abound.

Cars are bannished to garages and hidden from view. A nature center occupies one flank of the community, an Asian meditation center the other. The lakes won't be filled until the project is farther along, but there is a day-care and recreation center, replete with pool and tennis courts. It's a new world, if not particularly brave: A courtyard sign warns against skateboarding, bike riding and roller skating.

"It's a nice combination of giving people privacy and a sense of community," said M.J. Brodie, Baltimore's commissioner of housing and community development and a Coldspring resident. "We don't have acres and acres of asphalt."

The next phase of the Coldspring project calls for 168 town house condominiums that will nose out from the hillsides. Next, plans call for a mid-rise, federally subsidized rental complex of 151 one-bedroom units for the elderly.

Alan Fink, director of development for Coldspring New Town Corp., said he is optimistic that the entire project will be completed despite lagging real estate sales in general, high interest rates and cutbacks in federal funding of construction subsidies and block grants.

The second phase of the project, set to begin in 1983, calls for twin, 12-story buildings, one with condominium apartments, offices, and 30,000 square feet of retail space. Under consideration for the second building are a "life-care" facility for the elderly or a hotel and conference center, Fink said.

Coldspring's plans also call for an executive and technological park to be finished by 1985 that will take advantage of the community's proximity to two of the city's major arterys. However, "it's all predicated on financing and market conditions, and they are uncertain at this time," said Coldspring's Frank Rich III.

Once complete, the private-sector's investment in Coldspring could reach $300 million, said Frank Rich Jr., chairman of the board of F.D Rich Co., the parent firm of Coldspring New Town Corp. "We're still in the emerging portions of the project," he said, which so far "has not been a profitable one. We haven't made any money, that's for sure. We invested it and like to think that its recoverable."

Even so, the recent slow sales of town houses have not dampened the ardor of some Baltimore officials. "We still ballyhoo it," said Lawrence Merrill, Brodie's assistant. "It's clearly a success, no question. One of the important measures of that is that we created a market where there was none."

Nevertheless, Merrill and Brodie are pessimistic about the prospect of building other communities with a similar mix of public and private funding. "Reaganomics," they agree, has seen to that. Next year, the city is facing a 15 percent cut in housing and development funds.

"You can't take 15 percent off a house -- you build fewer houses," said Brodie. "You certainly couldn't start a Coldspring in this atmosphere."