Reporters looking for a way to circumvent a District of Columbia law forbidding real estate dealing by private clubs established the National Press Building Corp. 60 years ago, launching a career in development that lately has been mind-boggling even by Washington's free-wheeling standards.

The National Press Club used its newly formed corporation back in 1925 to erect a club building at the corner of 14th and F streets NW. With the help of a zoning exception granted by Congress and a loan signed with Charlie Chaplin as a witness, the new building soared 14 stories into the air, providing spacious quarters for the club and rental space to help pay construction costs.

Originally, the primary purpose of the building was to provide office space at reasonable rates for one-man bureaus and other Washington correspondents.

The building changed little until the 1960s, when the Capitol Theater was taken out and central air conditioning put in during a renovation. Then in 1982, the press club, which owns all the stock in the building corporation, decided to undertake a massive reconstruction of the old structure.

Before the work was finished, the development and construction cost a total of $130 million, according to the corporation, and money ran out early in the project

Negotiations leading to the merger last week of the 500-member Washington Press Club and the national press group spotlighted the continuing controversy over the NPC's finances. The Washington Press Club, formerly the Women's National Press Club, was created as an alternative to the national group back when the latter did not admit women.

An accountant's assessment during the negotiations that the National Press Club might have to raise dues by as much as 17 percent to meet annual payments of $350,000, starting in 1989 and lasting for nine years, to cover costs of renovating the club's new quarters troubled some WPC members.

A requirement that 81 percent of the building's office space must be leased and generating at least $9.1 million in annual rents before the permanent mortgage can be closed was another source of concern. Just over 70 percent of the space is already leased, but the rents are high and an oversupply of empty offices in new buildings in the area means that competition for tenants is stiff.

Despite the controversy and some individual misgivings, the two clubs voted by large majorities last week to approve the merger.

"It's anybody's bet whether the NPC will make it," said Cheryl Arvidson, a member of the Washington Press Club's merger negotiating committee. But she added that the committee was convinced that the larger club, its building corporation and the investment syndicate that now owns the building all will work hard to avoid a default. The financial situation depends on the leasing, which is an "iffy thing," she added.

Building corporation president William D. Hickman is much more optimistic, predicting that the 81 percent goal will be reached by the end of the month. Of the space already leased, about 85 percent is occupied by news organizations, including 7,000 square feet operated by the U. S. Information Agency as a center for foreign journalists, he said.

When cost overruns threatened to bring the reconstruction of the press building to a halt, the corporation's leaders knew they had to have infusions of cash. In danger of losing the building, they decided to sell it in order to save it and entered into a complicated financial deal with L-G Associates, a New York- and Boston-based investment group. The investors will earn 20 percent investment tax credits on the $15 million they are paying the corporation over a period of several years to complete the construction, as well as 90 percent of the building's cash flow before returning the structure to the press club in 45 years.

Hickman has denied that the sale was a "desperation move," as one attorney familiar with the deal described it. Such sales to syndicates are not unusual, he said, noting that the J. W. Marriott Hotel and The Shops at National Place, both linked to the press building, were sold in a similar arrangement.

News of the proposed sale, however, touched off a court challenge by minority stockholders, who complained that the deal was "unconscionable" and would unfairly cut into their earnings. They were angered that the corporation was losing $15 million in investment tax credits by giving up title to the building, and that the corporation made a deal that allowed the press club to pay only $3.5 million in rent over the 45-year period. The 47,000 square feet the club occupies in the renovated building would bring in $156 million in rent at competitive market rates over the same period, the stockholders contended.

The suit was settled nearly two years ago when the press building corporation bought out the dissident shareholders, who owned about 20 percent of the stock, at a cost of more than $4 million.

Under the terms of its deal with L-G Associates, the press building corporation has a one percent ownership in the syndicate and will operate the building. The building corporation retained ownership of the land under the building, and has a commitment for a $60 million permanent loan at 13 percent interest over 30 years, secured by the land and the building. The loan commitment, from Merrill Lynch-Hubbard, a Wall Street brokerage firm, expires in May 1987 unless 81 percent of the building's approximately 507,000 square feet of office and retail space is leased by that time.

About 70 percent of the space has been leased at asking prices ranging from $26 to $30 per square foot, with tenants in larger offices getting the lower rate, according to Coldwell Banker leasing agent Pendleton P. White Jr. About half had offices in the building before the renovation and stayed on, he said.

The average rent per square foot for office space in the neighborhood is in the low $20s, real estate sources say.

Hanging onto their offices meant a financial shock for some of the old-timers. One says that, effective with a rent increase scheduled for this month, he is paying twice the amount for half the space he occupied 3 1/2 years ago -- and he no longer has a window. The rent went from just over $600 a month for about 1,000 square feet in 1982 to $1,300 for under 500 square feet now.

A British reporter who is a longtime tenant said he moved out of the press building when he was told he could no longer have an office with a window.

Hickman said the club lost "less than a dozen" of its former tenants. They included some of the building's more major tenants, however -- two wire services, Reuter and United Press International, and McGraw Hill Inc., all big users of office space who do not plan to return.

The tenant mix also has changed in recent years, Hickman said. "We have more foreign and electronic journalists than before. We used to be honeycombed by one-man shops" but their number has dwindled to be replaced by bigger press organizations.

Most of the construction work has been completed, with work yet to be done consisting mainly of finishing offices not yet leased. Although the dust has settled, all is not forgiven and forgotten.

"Some people think the new club is terrific and others, like me, think it's like an upscale Holiday Inn," said Australian journalist Bruce Wilson, who moved his office out of the building during the three-year renovation because "it became intolerable trying to work in a place that was being built around you."

Unhappiness with the new look and new press club management has spawned a dissident newspaper, named Bottoms Up, which reported in one of its first issues that members "believe the rental of club facilities is seriously infringing on members' space . . . ."

"We feel it's not treated contract, but "nothing was done in secret. The minutes of the board meeting were posted afterward," he said.

"We have a place now that no one should be ashamed to bring a guest or a news source to," Hess said. "A few years ago, some news sources I wouldn't have brought to the club to eat because the food and service was so lousy."