A plan to redevelop several properties in the District's Shaw area is in jeopardy because:

A. The D.C. City Council is reluctant to approve $5 million in revenue bonds.

B. Banks won't lend the developers money to finance construction of the projects.

C. The developers have ruled out conventional bank financing because they want to avoid the high costs of debt service.

D. Most bankers believe an investment in the proposed developments is too great a risk even with the city's involvement.

All of the above probably apply, but the context in which banker and developer Jeffrey N. Cohen describes the problem is intriguing. Cohen says the project will be in jeopardy if the City Council refuses to approve the revenue bonds. "If we don't get the bonds, we're in trouble because no bank will loan us the money," he said Monday.

He was referring, of course, to the difficulty he and a community organization are having lining up financing for the initial phase of construction on the commercial and residential projects. Banks won't finance the project, Cohen contended, because for years the industry has "redlined" the Shaw community, refusing to make loans to residents and businesses there.

Coming from a banker, that's a pretty strong charge, particularly after a consortium of banks, headed by the National Bank of Washington, financed the city's purchase of the properties last year from Cohen in a complex deal. The transaction provides for the District to be repaid as the projects are developed.

Even if banks are unwilling to finance the Shaw project, the main source of Cohen's frustration apparently lies elsewhere.

Cohen is no neophyte when it comes to dealing with banks. Indeed, he is chairman of a bank holding company and owns 38 percent of the stock in its subsidiary, National Bank of Commerce. The principal stockholders in the bank have signed a contract to sell it to Dominion Bankshares Corp. of Roanoke in a transaction that would bring Cohen nearly $6 million for his 38 percent.

Dominion Bankshares and other applicants seeking mergers with District banks would be required under the recently approved D.C. interstate banking bill to assist in the development of economically disadvantaged and underserved areas, such as the Shaw community. Nonregional bank holding companies would be required to invest a fixed percentage of their assets in so-called targeted areas of the city.

If the District -- which would have no liability for repaying the bonds -- approves the bond issue, Cohen then will have to convince banks to sell the bonds. That might be an easier job several months from now when new entrants become part of the local banking industry. But, in another context, Cohen says of local banks: "That's not to say that any one of them wouldn't sell the (revenue) bonds" if the D.C. government approves them.

Cohen may have a valid point about the lending policies of D.C. banks, but it isn't that simple. If every bank in the District chipped in $5 million for conventional financing of the Shaw projects, Cohen and his partners would be reluctant to accept the loans.

"The numbers won't work with conventional financing," Cohen conceded when pressed to explain his dilemma. "We need the lower debt-service cost."

Translation: The sale of District-approved revenue bonds would allow Cohen and his partners to develop and rent commercial space at considerably lower costs than they could with conventional bank financing. The numbers would work, however, if lenders were to buy city-approved bonds. Lenders would be repaid from revenue produced by the projects and would be exempt from paying taxes on the interest they earned from the transaction.

Thus, the numbers -- not banks' refusal to make loans -- are critical to Cohen's plans. He knows that he can't give away space in Shaw for the same reason that banks may be reluctant to lend him the money. Heavyweights in the commercial real estate development business haven't yet invested in Shaw. Tenants who don't mind paying as much as $35 a square foot for space downtown perceive a risk in depressed areas of the city. Cohen knows his success in Shaw will depend on his ability to attract small and minority business owners, and he wants numbers that he thinks will do that. In short, it will take the city's involvement to make it happen.

His request for revenue bonds notwithstanding, Cohen insists, "The economics don't worry me." What does, he adds, is "having to convince people" that he is sincere in wanting to revitalize part of the Shaw community.

That, more than anything, appears to be Cohen's biggest hurdle.

The apparent reluctance by banks to finance the Shaw project "is not a good bellwether of change" in attitudes, confided a local bank official. "I don't think Jeff has the credibility as a major developer."