Taking a drive down Sheffield Street in Pittsburgh’s Manchester section, Duane Hampton laid down a challenge to Gwendolyn Johnson, who was visiting from Farrell.

"Can you point out rental units?" asked Hampton, property manager for Pennrose Properties Inc., which manages the public housing apartments.

Ms. Johnson is a resident of Steel City Terrace, which is slated for a redevelopment similar to Manchester.

Sheffield is old-fashioned blocks of two-story row houses, built up to the sidewalk. The area is on Pittsburgh’s lower North Side and is home to about 3,700 people.

Ms. Johnson looked for clues to try to pick out which buildings are public housing and which are privately owned. She considered such things as children’s toys in a rear yard and a blown-over doormat.

Finally, she admitted that she could not tell just by looking at the buildings.

"I absolutely don’t know," she conceded.

There actually was one indicator: all the units had been built within the last five years and looked new, although some had been built to sell, Hampton said.

The transformation of the neighborhood from decay to development started in 1994 when the board of the Manchester Citizens Corp. asked its staff to point out opportunities and problems, said Executive Director Rhonda Brandon.

The problems were severe: gangs, drugs, violence and badly built and mismanaged public housing, she said.

MCC decided it could lessen the impact of the gangs, drugs and violence by improving public housing.

Manchester was the home of 107 public housing apartments, all in three-story, cinder-block buildings. The first floors in each one were boarded up because of sewage problems, Ms. Brandon said.

"The units here, they were so terrible," said Denise Dean, MCC office manager. "They reeked of urine."

The buildings were havens for people looking to escape police or involved in the drug trade, Ms. Brandon added.

The public housing units had to go, MCC decided.

"We knew what we had to do," Ms. Brandon said. "It would cost $34 million and we didn’t have no money."

MCC asked the City of Pittsburgh Housing Authority to apply for money under a new federal housing program, called Hope 6, to demolish the existing buildings and replace them with a mix of public housing and for-sale units.

Falbo-Pennrose Joint Venture was brought in to build and then manage the rental units, a concept that was new to public housing.

Manchester received one of the first six Hope 6 grants in the country. The money leveraged additional funding from state and other sources.

Part of the problem with public housing is it tends to have a certain look.

"Wherever you go in this country, public housing is an eyesore," Ms. Brandon said. "You know it’s there."

The architects looked at the historic buildings around Manchester as a guide in designing the new units so they would blend in with the other buildings on the block.

The development, now in its fourth construction phase thanks to additional funding, did not erase Manchester’s problems. There still are boarded up buildings, abandoned lots and graffiti -- some of it apparently gang-related -- scrawled on buildings.

But crime has dropped, partially through an increased police presence made possible by federal funding. People are taking care of the new buildings, Hampton said.

Melissa Stammely, MCC case manager, was familiar with Manchester but took her job after being away from Pittsburgh for two years.

"This was totally transformed," she said. "This was not Manchester."

"In the 30 years I’ve lived in the neighborhood, it’s a big difference," added Ms. Dean.

Ms. Johnson was impressed with what she saw.

"Compared to the way it was, I saw a palace," she said.