The 33 new brick town homes gracing the working-class neighborhood of Govans in the northeast part of this city aren't privately owned. But they aren't public housing, either.

The homes -- and 77 more that are slated to be built -- are part of an innovative national experiment in "mutual housing" that aims to make housing permanently affordable for lower-income residents and to give the whole community a stake in it.

As in cooperative housing, residents set occupancy rules and maintenance standards. But the housing itself is controlled and owned by a broader, nonprofit corporation -- the Baltimore Mutual Housing Association.

The MHA is run jointly by a board composed of residents, their neighbors, business people and city officials. Its task is to try to balance the interests of those who live in the homes, those who live nearby and the citywide interest represented by government.

Although there are similar projects in other cities, the 7.5-acre tract of town homes in Govans was chosen as the only demonstration site in the country to test the workability of mutual housing. A total of $1.78 million in financing has been provided by the federal government, the State of Maryland and the City of Baltimore, as well as from private loans and grants.

"This is really public-benefit housing" because it exists to permanently serve the welfare of the city and neighborhood, not just the people who reside there at any particular time, explained MHA President Nancy Haragan.

Community representation on the board of directors reassures nervous neighbors that the design and operation of the housing won't grate on homeowners down the street, MHA officials said at a symposium here recently. The MHA board also has several slots for people who are on its waiting list; they represent the interests of future residents and make sure production of future units stays high on the MHA agenda.

Haragan, who also is assistant vice president of Baltimore-based USF&G Insurance Co., represents part of the business-sector presence on the MHA governing board. She and others involved with MHA spoke at the symposium, which was sponsored by the Neighborhood Reinvestment Corp. (NRC), a quasi-governmental agency that spearheaded planning for the Baltimore demonstration.

"The key aspects of mutual housing are really time and control," said Tom Adams, associate director of NRC assigned to the mutual housing project. "Time, because our housing will be made available in perpetuity; and control, because the neighborhood people call the shots" on questions such as unit design and occupancy rules, he said.

"The community really grabbed on to this idea and made it its own -- that has a lot to say about its chances for success," Haragan added.

"Previous [federal] programs emphasized hardware -- the buildings -- while we focus first on the software -- the people and the neighborhood," Adams said. The Baltimore MHA, for example, began to recruit families to live there during the year before the first phases of the project were built.

Although they do not own their units or gain any profit when they move out, residents do have the right to stay in the units indefinitely.

The city government and business community see the MHA's role in stabilizing the neighborhood as a critical part of economic development for Baltimore. Local businesses have contributed one-quarter of the development costs for the first 33 units -- a hefty $400,000 -- through a fund-raising campaign headed by USF&G.

Financing for the first phases of the mutual housing came from a $325,000 HUD urban development action grant, another federal grant via the NRC, membership fees paid by residents that amounted to 5 percent of development costs, the business contributions and a $630,000 mortgage. The mortgage has been extended by a consortium of Baltimore banks that are subsidizing the interest rate by lending at 75 percent of the prime rate, with a ceiling of 11 percent on the 30-year loan.

"Economic development is not just jobs but also viable communities and affordable housing," Haragan said in explaining the business sector's motivation for joining the MHA drive. "This is as important to my company as is our skyscraper downtown.

"There is a lot of self interest" in USF&G's promotion of the MHA, she continued. Businesses see that "stable neighborhoods create a stable commercial climate" and that risk of residential instability is much lower in such areas. As an insurer of homes and small businesses in the city, the insurance company can benefit directly from institutions such as the MHA, which prevent neighborhoods such as Govans from deteriorating, according to Haragan.

Among other business contributors to the MHA's capital grants fund are the investment banking company Legg Mason Wood Walker Inc., Whiting Turner Contracting Co. and Baltimore Gas & Electric Co.

Mike Seipp, deputy commissioner of the city's housing agency, said the Govans project was particularly welcome because "we had almost forgotten about the working-class areas" while the city concentrated on its downtown and inner-city projects.

"There are signs of destabilization in the outer-ring areas, as working-class people are being eeked out of the market slowly but surely," Seipp said. "We were losing [a type of] population we needed to keep in the city."

The MHA is designed to house moderate-income as well as lower-income families in an attempt to mix the two groups in roughly equal parts. Half of the residents are to be those with incomes in the $16,000 to $24,000 range; and most of the other half will have incomes somewhat higher. Monthly charges to residents are $260 to $365 (for one- to three-bedroom town houses), excluding utilities, with initial membership fees averaging about $2,500.

Variations on this mutual housing program have been established elsewhere around the country, including a District of Columbia Mutual Housing Association. The D.C. MHA thus far has focused primarily on improving management in the city's low- and moderate-income co-ops, but shares the Baltimore structure of joint resident and community control. Development of new housing is a major mission of MHAs in Madison, Wis., and Minneapolis.