By nearly every measure, the squatty four-block monolith on the edge of Chinatown is a glorious success.

The seven-year-old D.C. Convention Center is 98 percent booked and routinely turns away business. It has spawned a surge of nearby commercial development, generating tax payments that have more than offset the center's operating losses. It has made Washington a major convention destination, in a competitive field. And it has become an integral part of the city's life, playing host last week alone to jampacked rallies addressed by Nelson Mandela and Louis Farrakhan.

Now, District officials and business leaders appear to be pressing their luck.

They are proposing that the District build a new and larger convention center, an underground complex that will cost $400 million, four times as much as the old. The current center, with its 380,000 square feet of exhibition space, might be retained as an adjunct facility, it might be converted to other uses -- or it might be torn down.

The new center is needed, officials say, to attract the biggest and the best conventions, bringing in more free-spending meeting attendees and increased commercial development to shore up the cash-strapped District government.

"If you can generate more tourist business from an expanded center, then you have more need for hotel rooms, restaurants, tours and other ancillary services," said D.C. Council member Charlene Drew Jarvis.

But the new center is being proposed in an economic environment very different from the one in which the current center has prospered. D.C. officials are making their pitch amid these realities:

Nearly every large city in the nation is sharply expanding its convention space, increasing competition for conventions.

The national economy is softening, threatening a convention industry in which growth already is slowing down.

Washington's downtown real estate market has cooled, possibly limiting the growth of property tax revenue that would help offset the new center's operating losses.

"We're not seeing the growth in large meetings we saw in the early 1980s," said Chris Yoshii, senior associate for the San Francisco-based consulting firm of Economics Research Associates. "All around the country there are enormous expansions occurring in convention centers. It means the competition {for conventions} is going to be much more difficult. It's really kind of scary."

D.C. and convention center officials point out that the nation's capital is an extremely desirable convention destination. The halls of Congress and the White House are filled with potential speakers, and the city's tourist attractions encourage attendees to bring their families, adding to their spending.

If the District does not build a bigger center, the argument goes, Washington will slip to the second tier of convention cities, fighting against 50 or so centers located in lower-priced areas with lower crime rates. The D.C. center may lose business as a result.

Officials say, however, that a new center would have no trouble competing against all the new space coming on line in first-tier cities in the next few years.

"If this were Normal City USA, I'd worry," said Wylie L. Williams Jr., D.C. deputy mayor for economic development. "But for the nation's capital, which is a natural national and international destination, I don't think it would be of concern."

The current convention center, which opened its doors January 1983, is too small to host the largest national conventions. Based on square footage of exhibit space, it ranks 22nd in the nation, according to Tradeshow Week, an industry publication.

As convention center officials often point out, several large trade associations have decided not to bring their conventions back to the Washington center unless it is expanded. Many groups as they are forced to stuff exhibits into rooms designed for meetings or for socializing. And the center's two levels of exhibit halls irritate exhibitors who all want to be on the upper floor.

"We are due back in 1993 and it's going to be a real squeeze," said Cheryl Nordstedt, director of meetings and conventions of the American Academy of Dermatology. "We are supposed to return in 1996 and 1999 but I can't recommend it at this point because we won't be able to fit in there any longer."

Since the center opened its doors, the meetings industry, as it is called, has shown remarkable growth. Conventions that used to take up 200,000 square feet of exhibit space now demand 400,000, and conventions that used to use 400,000 square feet of space now need 800,000 square feet for their exhibits, a quantity of space available in only a few cities: New York, Chicago, Las Vegas, Atlanta and, soon, Dallas.

The center, which is bounded by 9th, 11th and H streets and New York Avenue NW, is smaller than originally designed in the mid-1970s, when its approval was held up for 20 months in Congress over fears that it would lose too much money. At the time, even the scaled-back version was projected to lose $500,000 a year. Its operations now lose 10 times that amount.

The Washington convention center has had no trouble getting bookings. In fact, it appears to have the highest occupancy rate in the nation: 98 percent. (That figure includes days needed to move in and out of the center.) In its last fiscal year, the center was the host of 29 major national conventions, a sharp increase from 1988 and the most conventions ever in one year.

But like most city convention centers, Washington's did not turn a profit and there lies an issue crucial to the debate over a new center.

Because competition for conventions is keen, centers cannot charge their tenants enough to recoup all their costs. Last year, the Washington center collected $7.4 million from its operations and spent $12.8 million to run the center. The District made up the difference with $5.4 million from the general treasury. Interest and principal payments on the $100 million that the District borrowed to build the center were about $9 million, also paid from District coffers.

But the convention center also produces various kinds of indirect tax revenue that officials say more than offsets those losses. Delegate spending creates jobs in such affiliated industries as hotels, entertainment and transportation, bolstering the economy. Restaurants pay more sales tax because they sell meals to convention attendees. Hotels and retail stores also pay more sales taxes.

Most important, commercial real estate development has flourished around the convention center, enhancing the District's property tax collections. In 1989 alone, the District collected $57.4 million in property taxes on the increase in value in land located immediately around the center, according to convention center calculations.

The property tax figure, attributable to such new buildings as the giant Techworld complex and the Grand Hyatt hotel, accounted for more than half of the total $93.9 million in convention-related tax benefits last year, according to the convention center.

"I don't think the convention center will ever directly make money, but you can't argue with the net tax benefit," said general manager George W. Demarest Jr.

The tax figures assume all increases in property taxes around the building are because of the center. Others point out that some of the new construction in the area would have taken place anyway.

"In my opinion, what has happened around the convention center has occurred independent of it, rather than because of it," said John P. Kyle, a principal with Vector Realty Group. "It is not a point of gravitation for office use. The reason the office buildings are there is that the downtown has expanded to the point where that is the only remaining land."

The plans for the new convention center, presented by D.C. Mayor Marion Barry at a press conference last May and drawn by local architect Theodore F. Mariani, call for a four-level underground complex, with 1 million square feet of exhibit space and a 3,000-car parking garage, under a six-block site north of Mount Vernon Square between Seventh and Ninth streets NW.

Above ground, the northernmost two blocks would be dedicated to housing, the middle two blocks home to the downtown campus of the University of the District of Columbia and the southern two blocks open for commercial development.

Although specific cost projections have not been made, D.C. officials have said the approximate cost would be $400 million. The financing method has not been decided upon. But if the District floats bonds to raise the money, which officials have said is likely, the interest and principal payments could reach $40 million or $50 million a year, Mariani estimated. He and Deputy Mayor Williams said in an interview that they did not know how large the operating deficit would be for the new center.

Little progress on a new center is expected until after the next mayoral administration is in place. Meanwhile, cities from San Diego to Boston are building new convention centers or expanding their convention space.

According to Tradeshow Week, 39 cities are expanding or are planning to expand their convention space, adding more than 3 million square feet of exhibit space. Another 29 cities are building or planning to build new convention facilities, adding 5.3 million square feet of space.

On the East Coast alone, Philadelphia's new $523 million center is scheduled to open in 1993, with 430,000 square feet of exhibit space. Baltimore is expanding its center as well, and Atlanta will increase its exhibit space to 1.4 million square feet by August 1992.

"Where is the pool of people who need all this huge capacity?" said Rep. Julian C. Dixon (D-Calif.) at a recent hearing on the Washington convention center budget before his D.C. appropriations subcommittee. "At some point in time, some community is going to get left holding the bag in this whole process."

Officials in the cities with expanding facilities say, as do Washington officials, that they must accommodate rapid growth in the size of conventions. However, industry expert Yoshii points to an important distinction in convention growth: It mostly has been in square feet, not in people. Convention attendance nationwide was 13.6 million in 1989 and 13.5 million in 1985 (it dipped to 10.7 million in 1987), according to Meetings and Conventions magazine.

In other words, few new delegates are pouring in to spend money in convention cities. And if the national economy continues to grow slowly, as it has done this year, companies also may cut back on convention attendance by their employees. The expanded convention center space is needed for exhibits, not people -- though it is people who would stay in the now-empty hotel rooms and produce the spending that leads to more District tax revenue.

"The larger centers are being forced to spend money to expand their facilities just to maintain their market share," Yoshii said. "If you don't expand you're going to lose business to cities that do. You have to build just to stay where you are. It's not an encouraging situation."

Demarest told Dixon at the congressional hearing that Washington was not likely to be stuck with unused convention space because the city is such a popular convention site. Meeting planners for large trade associations generally agree.

Associations, however, are not footing the bill for the new center. Because of the competitive nature of the convention market, it is unlikely that rental rates for the new center could be much higher than they are for the old. If the new center is to be a moneymaker, the money will have to come from related development.

But the Mount Vernon Square site has developmental drawbacks that the area around the current convention center did not. In addition to the woes of the commercial real estate market, a major rezoning project of the D.C. Zoning Commission is likely to reduce commercial development possibilities on the land south of the site. And to the north, above Massachusetts Avenue, the zoning is either residential or low-density retail.

"There certainly will be some {additional real estate development}, but in no way as much," said Luther H. Hodges Jr., a member of the center's board of directors. "I think you are talking about an investment to keep tourism and convention business from declining. There is a reverse to this: If you don't do it, you start losing."

Gross square feet: 800,000

Square feet of exhibit space: 381,000

Number of 1989 conventions: 29

Out-of-town attendance: 498,830

1989 operating revenue: $7.4 million

1989 operating expenses: $12.8 million

Operating subsidy: $5.4 million

Debt service: $8.9 million

Indirect tax benefits attributable to center: $93.9 million

SOURCE: Washington Convention Center