Amidst the hoopla of a political convention, residents of Cambridge's model neighborhood began designing on Saturday the agency which will run the model cities program.

The Model Cities Convention--held in balloon-festooned St. Mary's Auditorium--voted to have a 24-member City Demonstration Agency in charge. Residents of the model neighborhood will elect 16 of their number to serve on the agency.

Justin M. Gray, assistant to the City Manager for Community Development, said after the meeting that Cambridge is the only one of the nation's 63 Model Cities to allow resident control of the governing agency.

8 'Non-Residents'

The eight "non-resident" seats on the agency will represent the City government and local agencies, universities, businesses, and charitable organizations.

A campaign song opened the convention--"Onward with Model Cities Go/Onward we go to meet the foe..."Residents voted by waving yellow cards, often while munching free sandwiches and shepherding restless children.

Gray, who supervised Cambridge's application for the program, was tired but jubilant after the six-hour convention. He said he was not disappointed that only a small percentage of the several thousand neighborhood residents were present.

Only Talking

"We're only talking now; wait till we get down to the issues," Gray said of the neighoborhod planning effort.

During the next month, a committee of area residents will complete the plans for the agency. After City Council approval, elections for seats on the agency will occur, probably before the end of March.