As a development site, the Camp Simms tract in Southeast Washington is much too valuable to have its potential squandered in an unnecessary dispute between residents of the area and the D.C. government.

The 25-acre former National Guard camp is one of the few remaining undeveloped city-owned tracts in the District. Thus, its value as leverage in guiding economic development outside downtown Washington shouldn't be taken lightly.

Shortly before the D.C. government purchased Camp Simms from the federal government, officials developed estimates showing that the site could generate 225 jobs as a retail/commercial center, and $1.5 million in annual tax revenues. Camp Simms' location -- in one of the economically deprived areas of the city -- probably accounts for estimates that seem to be fairly conservative.

Residents of Ward 8 communities near the site want it developed as a retail/commercial center, but the District sought and received developers' bids calling for a mixed-used development, including housing units. In an area that has been deprived for so long of commercial services, it's easy to understand why residents would feel so strongly about their preference for development at Camp Simms.

This isn't merely a case of community leaders being hostile toward their government, or of residents being unrealistic about legitimate commercial needs in their neighborhoods. Their position is precisely the point made by the D.C. government itself a few years ago in the following observation:

"East of the Anacostia River, especially in wards 7 and 8, the lack of commercial services is a major issue. . . . The city loses important revenue because many residents shop in nearby suburban centers. City residents should be able to satisfy almost all of their shopping needs in a local neighborhood center or in a nearby commercial area which serves several neighborhoods."

There probably is some merit to the city's insistence that housing be included in the Camp Simms development. But the District has a responsibility first, and the wherewithal to do something about the large inventory of boarded-up residential units in Anacostia.

In Camp Simms, the local government has a crucible in which to test some economic development strategies that could be applied to other large city-owned tracts.

Far Southeast neighborhoods desperately need basic services such as supermarkets and drugstores. But building another strip center is hardly a wise use of the Camp Simms tract.

Here, the District has a rare opportunity to accomplish three things with city-owned land: Induce retail and commercial The District has a rare opportunity to induce retail and commercial interests to invest in a blighted area. interests to invest in a blighted community, strengthen its business retention program and improve services and employment opportunities for area residents.

Camp Simms puts the District in a position to make an offer that food retailers such as Giant Food Inc. can hardly refuse. For years, Giant has said it would build supermarkets in the city if the D.C. government or developers offer a site big enough to accommodate its prototype 55,000-square-foot stores, large delivery trucks and ample customer parking.

While it's assumed that a food store of some kind and other basic retail services will be incorporated in the development at Camp Simms, other commercial tenants usually associated with the central business district shouldn't be ruled out as potential users.

The key, of course, is for D.C. officials to market sites such as Camp Simms, the D.C. storage yards and other tracts in Northeast D.C. as viable locations for commercial tenants that are affected by the pressures of redevelopment, escalating rental costs and high taxes in built-up commercial areas.

New York City has a program that merits study for possible adaptation in the District. Two years ago, New York's Financial Services Corp. established an industrial retention and relocation (IRR) program in which the FSC reimburses commercial and industrial firms for expenses incurred in moving from dense, high-cost downtown areas to designated sections in other parts of the city.

Halfway through the program, which is funded by an initial $40 million grant from the city, FSC has approved nearly $12 million in grants to 248 eligible firms. In a related program, firms that take advantage of the IRR and companies that relocate to New York City from other areas, receive discounts of 30 percent and 20 percent, respectively, on their gas and electric bills.

The utilities, in turn, receive tax credits from the city equal to the amount of the discounts given to eligible firms.

"The dual incentive is a very strong draw for companies to remain in the city," says Eric Andrus a spokesman for FSC. "Instead of other choices -- either going out of business or going across the river to New Jersey or to Connecticut where costs aren't as high as in downtown New York , they can remain in the city."