Imagine an episode of Sesame Street set in a rundown neighborhood populated by a cast of Muppets who are worried about jobs, money, sexual identity issues. Among the human characters is none other than Gary Coleman, years past his Diff'rent Strokes days, now reduced to life as a building superintendent. Imagine these characters singing such instructional ditties as “The Internet Is for Porn,” “Everyone's a Little Bit Racist,” and “Schaudenfreude.” Can you say Avenue Q?

That's the title of the new Off Broadway musical co-produced by the Vineyard Theatre and the New Group, and it's safe to say that you've never seen anything like it. Set in a grungy outer borough neighborhood, the characters in Avenue Q (book by Jeff Whitty, music and lyrics by Robert Lopez and Jeff Marx), both human and puppet, are anxiety-ridden twentysomethings with a lot to learn about life and love. On the puppet side, the plot tracks the growing romance between Princeton, a feckless college grad looking for life's meaning and a decent job, and Kate Monster, who dreams of starting her own school in order to celebrate her puppet heritage; meanwhile, their friend Rod struggles to come out of the closet. (The puppets are designed by Rick Lyon, who also appears in the show.) On the human side, there's Christmas Eve, a neophyte therapist, and her unemployed husband Brian, who have plenty of relationship issues to work out, not to mention the omnipresent Gary Coleman. The action is framed as a wickedly updated version of Children's Television Workshop programming, with its learning-is-fun approach applied to some of life's more painful realities.

Anna Louizos describes her set for Avenue Q as “a demented Advent calendar”; the basic design is a streetscape encompassing three crumbling buildings. The design is heavy on detail, with lots of textures, colors, and architectural details. The set also pops open in several places to reveal tiny interiors for scenes depicting Princeton, Rod, and Kate in their homes. The look is both gritty and whimsical, and is filled with visual surprises.

“Jason [Moore, the director] and I talked about the show for a year,” says Louizos. “We really let our imaginations fly. I have a shoebox filled with five different quarter-inch models for the show.” What they learned through this long process, she says, was that “the focus needs to be on the puppets. The thing about Sesame Street is the simplicity of the sets. They have a certain urban feel, but there's not that much detail. Originally, I had very elaborate ideas — for example, I explored the idea of pop-up books — but the budget forced us to distill them, which, ultimately, I think, is better.”

The designer says she used New York as her research material, taking photographs, wandering through different neighborhoods, drawing on memories of life in the East Village. As she designed the set, texture and scale became two defining concepts. Speaking about the first, she says, “We needed to make it as real as possible — with real-looking bricks, surfaces, and textures. We knew people would look at it and say, “I know where that is.'” On the other hand, “We wanted the backgrounds to recede [behind the puppets], so the set has a patina, a gritty, gray glaze. It feels like an old Queens neighborhood that has not quite gentrified. There are bits of graffiti and peeling paint.” Regarding scale, she says, “The scale of people onstage with puppets was tricky,” so she tried to create a world that accommodated both groups: “The doorways are only 6' tall, the windows are 16-25" wide. The actors can survive on the set, but you all see the theatricality of it — the puppets make sense on that stage.” In addition, the pop-open sections — the Advent calendar touches — provide small-scale backgrounds for certain scenes in which the puppets dominate.

Louizos also provided a number of witty, imaginative touches, including a pile of boxes and pizza cartons that suddenly burst into song. Her most spectacular effect occurs in a dream sequence, in which the commitment-phobic Princeton imagines marriage to Kate. A giant Kate puppet, dressed as a bride, looms over the stage. “Rick designed it,” she says, adding that the puppet consists of three pieces — a giant head, and two hands — manipulated by two puppeteers. “I conceived it during a discussion with Jason, then asked Rick how we could do it. We all learned from each other on this show,” she says. “It's been very collaborative.”

Indeed, many hands were involved in creating the world of Avenue Q, including assistant set designers Heather Dunbar and Donyale Werle, master carpenter Adam Lang, assistant master carpenter Peter Govern, charge scenic artist Jenny Stanjeski, and assistant scenic artist Jessica Kaplan. Props are by Kathy Fabian and Eliza Brown. Scenery was built by Stagecraft Alliance, but Louizos notes that production managers Kai Brothers and Bridget Markoff were key players in realizing the scenery.

Louizos is juggling many projects these days; having signed on as art director for the final season of the HBO series Sex and the City, she's also designing several theatre productions, including the recently opened Golda's Balcony for Manhattan Ensemble Theatre, Me and My Girl at Goodspeed Musicals, and a new play, The Pavilion, for Merrimack Repertory Theatre. “It's feast or famine,” she says of her suddenly overfull schedule. “Right now, I have no social life. I barely have time to walk my dog!”