Three buildings shown in a photo in Saturday's Virginia Real Estate section are not those donated to the Arlington Housing Corp. for rehabilitation. The buildings pictured have no connection with the story.

Acquiring older buildings and rehabilitating them for low-income housing always was difficult, and recent cutbacks in federal funding have increased the difficulty. But a nonprofit group in Arlington County has come up with a novel way to reduce development costs: Find the properties you want to renovate and get them for free.

That's just what Arlington Housing Corp. did with three apartment buildings a few blocks from the Rosslyn Metrorail station. Knightsbridge Development Co., a local real estate firm that bought the properties three years ago for $1.1 million, last month donated them to AHC.

In an exchange approved by the Arlington County Board, Knightsbridge will receive variances in height and density limits for a luxury condominium it is building nearby.

Arlington Housing Corp., a private, nonprofit housing developer, will rehabilitate the buildings and then rent the apartments for moderate rates, with government subsidies for lower-income families.

"This project would be absolutely impossible without the donation," explained Robert M. Santucci, senior project manager for AHC. "It seems to balance everyone's needs."

Knightsbridge had acquired the three 40-year-old buildings at 1537-45 Key Blvd. to tear down so that it could erect much taller buildings as permitted by county zoning rules on both that land and the nearby plot where the condos will be.

Instead, the three older structures will be left in place. The condominium project, the Atrium, will have 14 stories. The original zoning on that site would have allowed only 10 or 12 stories, said Knightsbridge Vice President F. Pearson Ames. That height bonus is especially valuable because of the condo's location. "It sits on the highest point of Rosslyn," Ames explained. "The fourth story of the building will be at the level of the Marriott Hotel's rooftop.

"Apartments in the air are worth more. People are looking for vistas, for views. The more height we can get, the more desirable the building is.

"We could have sprawled the same number of units all over the site, but we got better views and preserved more green space."

Sixty percent of the apartments in the Z-shaped building will overlook Georgetown and other parts of the District, Ames said. Glass elevators rising from the structure's atrium also will look out over Washington.

The building will have its own health club, tennis courts, and underground parking. Each apartment will come furnished with a computer.

The property will have 357 apartments; one-bedroom units will range in price from $85,000 to $90,000 and up. The top two floors will have penthouse duplexes, some costing as much as $600,000. Depending on interest rates during construction, the total cost of the project will be about $50 million, Ames estimated.

Construction of the Atrium began two weeks ago. Sales will start in October, and the first units will be ready for occupancy in the spring of 1985.

Arlington Housing Corp. hopes to have its three small buildings rehabilitated and fully occupied by the end of next year, according to AHC's Santucci. Only 10 of the buildings' 49 units are occupied now. Other residents had left over time because of uncertainty about the properties' future. Current occupants are guaranteed tenancy in the rehabilitated buildings.

To accommodate more large families, 12 of the 36 one-bedroom units will be combined to form three-bedroom apartments. That will leave a total of 43 units once the renovation is completed.

Arlington Housing Corp. will carry out minor renovations over the next two months, including combining the apartments. AHC is accepting applications for the vacant units, with preference being given to lower-income families. Efficiencies will rent for $265, one-bedroom units for $330, and three-bedroom units for $500. New residents will begin moving in about Oct. 1.

In the following months, AHC will complete the plans for major renovation and will secure financing for that work. The $570,000 rehabilitation job should start in the summer of 1984 and will take about four to six months, Santucci said.

While that work is going on, the families will have to move out of their apartments. AHC will help them to find other housing for that period. The nonprofit group will guarantee the 10 current occupants rents not higher than they are now, but the other, new tenants may have to pay more than the present levels while they are relocated.

Once the renovation is completed and all the residents are moved back in, rents will be increased. Efficiencies will be $306 a month, one-bedroom units, $360; and three-bedroom units, $545.

AHC has secured a commitment of federal Section 8 funds to help the lower-income households. After the rehabilitation, they will pay a maximum of 30 percent of their gross income for their housing expenses. The federal government will make up any difference between each household's contribution and the total charge on its unit.

Some of the current residents have lived in their apartments since the 1940s. Several of them, now retired federal employes, first rented their units when they began working for the government during or shortly after World War II.

Janet McCoy, who has lived in the building since 1979, was one of the tenants who spoke in favor of the proposed transfer of development rights when it was before the Arlington County Board. Earlier this week, McCoy expressed satisfaction with the plan. "Everyone won in this situation," she said. "Knightsbridge got what they needed, and some low-income housing is being created."

AHC's Santucci has another reason for being enthusiastic about this partnership among a private developer, the county, and his nonprofit group. "What it may represent is the first use of a model that may work in this time of Reagan administration budget cuts," he said.

"We are saving roughly $24,000 per unit in the price. We can get away with a $600,000 mortgage. If we had to acquire the buildings , the mortgage would be more like $2 million. It's money that doesn't have to be borrowed from the public or taken from the U.S. Treasury."