The unexpected resignation of Cambridge Housing Authority Chairman Mary Castriotta last month capped an event-filled summer that opened up the possibility of revitalizing a lethargic housing authority and of improving the state of public housing.

Castriotta, whom tenant groups have accused of shady and corrupt practices in CHA matters, announced August 26 that she would leave the housing authority because of poor health. Speaking to reporters from her bed in Cambridge City Hospital, Castriotta said she had suffered two heart seizures and had been advised by her doctor to leave the CHA before her five-year term expires in October.

Although Castriotta indeed has health problems (she is now at Mass General), many tenant groups here have speculated that a problem of another nature forced her to opt for resignation. As the summer progressed, Castriotta found her iron grip on CHA operations slipping, in large part stemming from the July appointment of a pro-tenant commissioner to the five-member CHA board and the resignation of her ally Charles A. Ferraro, CHA executive secretary. His day-to-day running of housing authority activities in the last year led to charges by a State Community Affairs official that the CHA was guilty of fiscal mismanagement.

Brian Opert, a specialist in budgets and management with the community affairs department, said last December that the state was paying all of the housing authority's deficit. "The CHA has been crying poverty for years," he said. "They have a history of penny-pinching."

Opert added that the state has long subsidized 30 per cent of the CHA's day-to-day operations. Even with this aid, the CHA has failed to improve the living conditions in city housing projects, he said.

When Ferraro announced in August he would resign at year's end, he declined to specify reasons for his decision and refused to comment on charges that he has mismanaged the CHA. He said only that "personal reasons" led to his decision to leave the housing authority.

Both Ferraro and CHA chairman Castriotta were perceived by Cambridge tenants as obstacles to housing reform and as public officials who denied tenants the right to participate in policy-making.

The hold of Castriotta and her friends on CHA was severely diminished this summer with the appointment July 3 of Suffolk law professor Gerald J. Clark, an avowed housing reformer, by City Manager James L. Sullivan.

The city manager had been brooding over a CHA appointment for some time, but signs were clear long before he submitted Clark's name that a reformer would join the CHA. The appointment was the sole prerogative of the city manager, who had been brought to Cambridge by the four city council liberals with the backing of Mayor Walter J. Sullivan and Vice Mayor Leonard J. Russell. Manager Sullivan had a mandate to reshape the CHA.

Clark replaced John Clinton, a Castriotta friend and father of independent City Councilor Daniel Clinton. The city council confirmed Clark's appointment in a July 6 special session.

The balance between reformers and Castriotta's camp then tipped to the reformers' side, leading Castriotta to charge in her resignation statement that CHA Commissioners Clark, Norman Watson and James Stockard (the reformers) had formed a conspiracy with an intent to "misuse and abuse power."

By the time she announced her resignation, Castriotta had only Vice Chairman Walter J. Reed on her side. Reed now will act as CHA head until the city manager names a replacement for Castriotta.

In a move to mollify Cambridge tenants, City Manager Sullivan announced early this month that nine representatives of local tenant groups would act as a screening committee to select Castriotta's replacement. The move appeared to further insure the possibility of reforming the CHA in the next fiscal year.

In a related CHA matter, the Teamsters Union Local 122 filed suit in Middlesex Superior Court against City Manager Sullivan, the mayor and the city council on July 6 to invalidate the appointment of Clark to the CHA.

The Teamsters suit charged that Sullivan violated a state housing authority law that requires "a representative of organized labor" to be among the five CHA commissioners. The law also requires Sullivan to select nominees submitted by the AFL-CIO Labor Council, the suit said.