The second phase of Ocean City's beach replenishment project is set to get underway and will include construction of a bulkhead and an expanded boardwalk, officials said this week.

Nancy Howard, the project's administrator, said Ocean City is widening the boardwalk from 24 to 32 feet from 10th to 27th streets to make it even with the boardwalk from 10th Street south. The steel bulkhead to protect the boardwalk from storms will extend from 27th to 4th streets.

Construction of the bulkhead, which costs $5.5 million and will be topped with a concrete cap that can be used as a bench, is set to begin Thursday, Howard said.

The first phase of the beach replenishment project began two years ago when sand from the ocean floor was pumped onshore to extend the beach. The sand-pumping project also builds protective dunes that stretch from 27th Street north into Delaware.

Howard said the entire beach replenishment project should be completed by Memorial Day 1991.

"We're hoping to get the sand-pumping portion of it {the project} completed this winter. That's ongoing right now. We're a little bit better than half finished with sand-pumping," she said.

Completion of the bulkhead is "the end of construction {on} the project. Then, of course, we have to monitor and do maintenance when we have to," Howard said.

She explained that sand dunes are created along the shore as the sand-pumping aspect of the project progresses. "The fencing people come along behind and put up the fences and build crossovers" atop the dunes to the beach, she said.

The part of the program that involves planting stabilizing beach grass on the dunes should begin in December. "Dune planting can't be done until after the first freeze," Howard said. "We have to do those plants in their dormant stage."

A bankruptcy court judge has ordered the Belvedere Hotel in Baltimore sold to a Florida developer for conversion into condominiums. The historic hotel will be sold to the Hertz Group of Miami for $5.5 million.

This week's sale ends the city's involvement in the hotel, after it provided $4.5 million to help with renovations and later to keep it from defaulting on other loans.

The bankruptcy sale will provide the city with $1 million in cash, plus ownership of a hotel restaurant, bar and food service facilities valued at $3 million, officials said.

Harrison & Bates Inc. has merged with the commercial division of Bowers, Nelms & Fonville Inc. to create Virginia's largest real estate firm dealing exclusively in commercial sales and leasing, company officials said.

The combined company, which will retain the name Harrison & Bates, will be responsible for leasing or managing nearly 8 million square feet of commercial space in Virginia and North Carolina. The residential portion of Bowers, Nelms & Fonville will operate as a separate company.

Malcolm W. Bates, president of Harrison & Bates, said this week that there are larger real estate firms in Virginia that work in both residential and commercial areas. But he said he does not know of a larger firm that concentrates solely on commercial buildings.

Terms of the transaction were not disclosed.

Harrison & Bates will employ more than 100 people.

Falling prices and mortgage rates combined with rising incomes in August to improve the typical American family's ability to buy a home, the National Association of Realtors said this week.

But the improvement was curtailed by the Persian Gulf crisis and weakness in the overall economy, the Realtors group said.

The group said its housing affordability index rose from 102.4 in July to 105.6 in August. That meant a family with a median income of $34,467 had 105.6 percent of the income needed to buy a median-priced existing home costing $97,000.

"Declining interest rates in early August, which brought borderline buyers into the market, had the biggest positive impact on the index reading last month," said Realtors president Norman D. Flynn. "However, the decline was short-lived due to the Middle East conflict and resulting United States military build-up in the Persian Gulf."

Flynn said that while the problems with the economy were not rooted in the Persian Gulf crisis, the Aug. 2 Iraqi invasion of Kuwait has "greatly increased the chances for a recession."

"Due to increasing oil prices, we expect rates to increase during most of the fourth quarter, pushing the housing affordability index down," Flynn said. "However, we don't expect the index to go much below the 100 mark."

The interest rate used to calculate the index declined from 10.15 percent in July to 9.98 percent in August but has returned to double-digits. The rate is a composite of fixed-rate and adjustable-rate mortgages as reported by the Federal Housing Finance Board.

The median price for a house fell $1,800 from $98,300 in July, while the median income rose $109 from $34,358 the previous month.

The building industry associations of the District, Suburban Maryland and Northern Virginia disclosed their 1990 Finest for Family Living Awards to local home builders this week.

The winners, selected by a team of local real estate industry professionals, were as follows:

For a small lot (less than 7,000 square feet), single-family detached house, priced under $250,000: Kettler Forlines Homes' Emerson model at Ashburn Village in Loudoun County; $250,000 to $350,000: Wormald Development Co.'s Frederick model at Worman's Mill in Frederick; $325,000 to $400,000: Legend Homes Inc.'s Rockwell model at Legend Gate in Burke; over $400,000: Sandy Spring Builders's "R" model at Spruce Tree Avenue in Bethesda.

For single-family detached priced at $150,000 or less: STOK Homes's SH-12 Eastport model at Hunter Trail in Stafford; $150,000 to $200,000: Revere Homes's Danvers model at the Dorchester neighborhood in Waldorf; $200,000 to $250,000: Miller and Smith Homes of Maryland's Devonshire model at Glen Allen in Bowie; $250,000 to $320,000: Cross Builders's Farmington model at Ashburn Village; $320,000 to $400,000: Miller & Smith Homes, Inc.'s Pendleton model of the Estates at Stepney in Catharpin in Prince William County; $400,000 to $500,000: Renaissance Housing Corp.'s Grand Renoir at Barrington in Fairfax Station; $500,000 to $700,000: Saddlebrook Development Corp.'s Newport II model at the Courts at Democracy in Potomac; $700,000 to $1 million: HBG Associates Inc.'s Camalier model at Chevy Chase Ridge in Chevy Chase; Over $1 million: Associated Builders's Clarkwood model at Woodlea Mill in McLean.

For custom home priced over $1 million, J.P. Kollar Builder Inc.'s Kollar residence at Falconhurst in Potomac.

For attached unit priced from $120,000 to $150,000: Kettler Brothers Inc.'s Havenor model at Tasker's Chance in Frederick; $150,000 to $175,000: Michael T. Rose Cos.'s Deerfield (Claremont II) model at Highbridge Park in Bowie; $175,000 to $250,000: Miller and Smith Homes, Inc.'s Cedar model at Timberview in Reston; $250,000 to $320,000: Oakton Homes's Madison model of the Mains at Annandale in Annandale; $500,000 to $700,000: Balbir Brar Associates's Audley model at Mayfair of McLean in McLean; over $700,000: Balbir Brar Associates's Curzon I model at Mayfair of McLean.

For new condominiums and co-ops priced at $105,000 or less: Coscan Homes's Aspen model at the Vistas at Lake Arbor, Mitchellville; $105,000 to $140,000: Miller and Smith Homes Inc.'s Augusta model at Eton Square in Alexandria; $140,000 to $180,000: Miller and Smith Homes Inc.'s St. Andrews model at Eton Square in Alexandria; $180,000 to $250,000: Michael T. Rose Cos.'s Patuxent model at Solomons Landing in Solomons, Md.; Over $250,000: Michael T. Rose Cos.'s Back Creek model at Solomons Landing.

For site and land planning of 25 acres or less: Kettler Forlines Homes's Carlton Place in Bethesda; 25 to 125 acres: CIH Ventures Inc. and Chrisland Corp.'s Woodmore in Mitchellville; over 125 acres: Potomac Investment Associates for Avenel in Potomac.

For special achievement in affordable housing: Dennis Rourke Corp.'s Potomac Grove town homes in North Potomac.

For rental apartment complex: The Artery Organization's residential units at the Ellipse at Government Center in Fairfax.

For residential remodeling or renovation over $500,000: TC Communities's Estate at Merryhill in McLean; $500,000 or less: Mitchell, Best & Goldsborough's McCormick residence in Chevy Chase.

For lifestyle package of an existing residential community: Potomac Investment Associates's Avenel in Potomac; resort community: Michael T. Rose Cos.'s Solomons Landing in Solomons.

Energy Efficiency Home over $500,000: C-I/Mitchell & Best Co.'s Eagle Ridge at Avenel in Potomac; $500,000 or less: Michael T. Rose Cos.'s Solomons Landing.

IN THE BUSINESS ... Long & Foster Real Estate Inc. acquired Frazee Realtors/Better Homes and Gardens of Rockville ... Home sales in Virginia totaled 5,569 in August, down 21.6 percent from 7,099 sales in August 1989, the Virginia Association of Realtors reported. In Northern Virginia, the total was 1,480 in August, down 15.4 percent from 1,750 during the same month a year earlier. The average sale price in Northern Virginia was $176,700 in August ... Construction contracts in the District totaled $117.7 million in August, up 26 percent from $93.4 million during August 1989, the F.W. Dodge Division of McGraw-Hill Inc. The increase was the result of a boost in nonresidential buildings: $116.1 million worth of future contracts were signed in August, compared with $66.8 million the year before. Residential construction dropped from $15.6 million in August 1989 to $1.2 million in August 1990; nonbuilding construction dropped from $11.1 million to $473,000 this year ... Housing permits in the Washington metropolitan area totaled 1,980 in August, down 39 percent from 3,202 units in August 1989, Regis J. Sheehan & Associates, a local consulting firm, reported. Single-family house permits were down 20 percent and multifamily permits were down 67 percent from August 1989. ... Dominion Lands Inc. and Abramson Properties are planning a development along Old Town Alexandria's waterfront called Harborside. Fifty-six town houses, each with a two-car garage and priced from $279,000 to more than $1.5 million, are planned for the development ... The Maryland Land Title Association elected Louis S. Pettey president for the coming term ... C.R. George Dove of the Weihe Partnership was elected 1990-1991 president of the Washington Building Congress ... Comprehensive Rehabilitation Services is planning a National Housing Rehabilitation Conference Nov. 28-30 at the Washington Marriott Hotel For more information, call 202-872-1500 ... ERA Gallagher & Co. is planning to raffle off a Centreville house valued at $1 million to raise funds for a memorial to Women in Military Service for America. Entries in the Nov. 10 raffle cost $25 apiece; for details, call 1-800-875-8822 ... The Northern Virginia Association of Realtors is planning a convention and trade show, "Excellence by Design," Oct. 16 and 17 at the Radisson Mark Plaza Hotel in Alexandria ... Log Home Living Magazine of St. Louis is planning a full-day seminar on Building a Modern Log Home Oct. 27 at the Rosslyn Westpark Hotel. Registration is $45. For more information, call 1-800-782-1253.