Public housing units in Alexandria's Cameron Valley are creating a dilemma for city officials faced with either demolishing the dilapidated structures and relocating 665 of the city's poorest residents or keeping families in substandard housing.

Sandwiched between the expensive homes of the Janney's Lane area, the collection of frame and mud-brick buildings that is Cameron Valley looks like something that should have been torn down 20 years ago, or at least 10 years ago, as a city task force recommended.

Instead, however, the Alexandria Redevelopment and Housing Authority has used the project to house 264 families -- most made up of single mothers and children -- with an average annual income of $8,200.

"Something has to be done now because if we don't resolve the problems at Cameron Valley today we will have a crisis on our hands in the next 10 years," said Angus T. Olson, executive director of the Alexandria housing authority. "People have been talking about doing something since the '70s, but everybody is activated now."

The Alexandria City Council met with the housing authority two weeks ago to discuss alternatives for the 40-acre site, including whether the city should try to sell the property to town-house developers or try to build new public housing units at the same location.

Built during World War II as temporary military housing, many of the poorly constructed buildings gradually have been sliding off their concrete-block foundations. Eighty of the units already have been demolished, and 17 of the 264 units still standing are condemned and boarded up.

The housing authority, however, does not have clear title to the property or to the proceeds from a sale. When the military transferred title of the property to the federal public housing agency in the mid-'50s, it included a clause that said any proceeds from a future sale would have to be paid to the federal government.

In addition, the property also is encumbered by a commitment ARHA made to the Department of Housing and Urban Development in the mid-'70s to maintain the public housing for 20 years in exchange for rehabilitation funds. At that time HUD spent $1.9 million to renovate the buildings, money raised through a tax-exempt bond issue floated by HUD.

Olson said ARHA would have to pay HUD $815,000 to cover the outstanding debt on the bonds if the buildings were demolished or otherwise removed from the stock of public housing units before the end of the 20-year commitment.

Relocating the Cameron Valley families without any proceeds from the sale of the property, however, would be "very difficult," said Olson. The housing authority in Alexandria is required, under a resolution passed several years ago by the city council, to maintain 1,150 units of public housing, no more and no less.

According to the current wording of that resolution, a unit of public housing must be backed by a long-term commitment that the unit remain in the public housing stock. Olson said that housing rent subsidies that are paid to the low-income tenant and need to be renewed every year by HUD would not fulfill the city's requirement. He did say, however, that the city could change the wording of the resolution in the future or even repeal it.

Olson said the housing authority is already in violation of that law by the condemnation of 17 units at Cameron Valley. With very little federal assistance available for construction of new public housing units and little public support in Alexandria to spend taxpayer dollars to replace the units, Olson said, getting the conditions of the Cameron Valley deed lifted is essential to any solution that does not displace the families living there today.

Mark Looney, coordinator of the Alexandria Landlord-Tenant Relations Board, said that several of the tenants had complained to his board about conditions at the complex but that there also were many concerned about ending up without a place to live. Olson said that the tenants were supportive of finding a solution to the problems at the complex.

The city council directed the housing authority to come up with several alternatives for the site and the relocation of the families. Olson said that one concept included selling the 10 acres that fronts Duke Street for commercial retail development and using the proceeds to build replacement units in the area of Cameron Valley that is now vacant.

ARHA has applied to HUD for funds to build 35 replacement units at that site, however Olson said that since HUD only has funds for 5,000 units of new construction for the entire country, it is doubtful that Alexandria will get any grants.

Olson said the front ten acres of the property were appraised at $3.4 million and that several stores, including Giant Food Inc. and Hechinger Co. Inc., were interested in the site.

Other possibilities include selling the remaining 30 acres to a residential developer and finding another site in the city for building new public housing units for the displaced Cameron Valley residents. Olson said it would be difficult politically to find sites for public housing in other places around the city. He said it took the housing authority seven years to settle on seven sites for small groups of scattered public housing and that there remains considerable resistance among Alexandria neighborhood groups to new public housing sites.

Another possible solution, said Olson, is selling a portion of the site for residential development to finance rebuilding new public housing units on the remaining acres. Olson said, however, that the existence of public housing on the site could lessen the developmental potential of the rest of the area and that public housing units can be expensive to build. He said that the latest units built in Alexandria cost $60,000 each, though there might be ways of building modular units at Cameron Valley that would cost much less.

Olson said the housing authority would present a list of options to the city council before it goes into recess in July, and that ARHA would approach HUD this summer to ask to have the terms of the deed lifted so that ARHA can sell some of the site and keep the proceeds to pay the cost of replacing the units.