RICHMOND, Va. (AP) _ Festival marketplaces - embraced by many cities as a way to stimulate their downtowns - are thriving in Baltimore, Boston and Atlanta.

But they have flopped in Richmond, Toledo, Ohio, and other cities - even though some were subsidized by taxpayer money.

Observers say a successful marketplace needs the right mix of shops and entertainment, closeness to water, and a large number of people nearby. Shoppers say they'll go if it's on the water, has an up-to-date look and sells what they want to buy.

Boston's Faneuil Hall Quincy Market, Baltimore's Harbor Place at the Gallery and Atlanta's Underground are flourishing, says Richard Bradley, president of the International Downtown Association in Washington.

The Baltimore Convention Visitors Bureau says Harbor Place has been successful because many other attractions also opened around 1980. They include the National Aquarium and the Maryland Science Center.

In Boston, tourists are attracted to the historic buildings in the marketplace area, says Rosemarie Sansone, director of business and cultural development. Faneuil Hall and Quincy Market opened in 1976, just across the expressway from the harbor.

''It happens to be within an area where there are already existing tourist sites that tourists would come to see anyway,'' says Sansone.

But elsewhere, festival marketplaces are closing or being converted to other uses. City Fair in Charlotte, N.C., opened in 1988 and closed three years later. Portside Festival in Toledo, Ohio, opened in May 1984 and closed in September 1990.

The picture is mixed at Norfolk's Waterside. It's worse at Richmond's Sixth Street Marketplace where, on a recent night, a few people sat at the bar at a seafood restaurant. A group of women strolled through a clothing shop. Young people in jeans and leather jackets passed the time of day. But few carried shopping bags.

''There are no shops where I would buy anything,'' says Josh Fertel, a downtown worker. ''My only reason for coming here is this food. They need to refurbish the entire mall. This area has no appeal. It's just run down.''

Last year, the Urban Land Institute in Washington recommended demolishing part of Sixth Street Marketplace and creating space for a park. But city officials said they were not ready to give up on the mall.

''It's too valuable downtown to think about closing it down,'' says Councilman Roy West.

Times have also been tough for Charlotte's City Fair, which lost two major department stores right around the time the marketplace opened in 1988, says Mena Roming of the city's economic development department.

She says rents were high and merchandise was expensive. ''It was usually busy only between 11 a.m. and 2,'' she says.

In the end, after propping up the project with $800,000 in subsidies, the city sold City Fair to American Fidelity Properties, which closed the marketplace in October 1991 and hopes to reopen it this fall, says Larry Rosenstrauch, Charlotte's director of economic development.

Toledo's Portside didn't generate enough traffic, either, says Waymon Usher, manager of financial assistance in Toledo's economic development department.

''Businesses began to fold,'' he says. Parking was also a problem, as were difficulties in the auto industry, which hurt the region's economy.

Toledo is working with the state to put a Center of Science and Industry in the marketplace, Usher says.

What may be the key to a successful marketplace? Water, for one thing.

Baltimore has the Inner Harbor. Waterside is on the Elizabeth River. Fanueil Hall is on Boston Harbor. And in Atlanta, a huge waterfall leads shoppers into the Underground.

Water ''masks noise. It provides sort of a soothing atmosphere, a focal point,'' says Michael Beyard, senior director of research at the Urban Land Institute.

But water can't guarantee success, says James W. Rouse, whose Enterprise Development Co. in Baltimore developed the Inner Harbor, Sixth Street and Portside.

Portside, for example, was on the Maumee River leading to Lake Erie.

End Adv for PMs Thursday, April 2