The federal government and a San Francisco hotelier have reached a deal that they say should start the stalled redevelopment of the landmark Tariff Building downtown.

More than 18 months ago, after a lengthy competition, the General Services Administration picked Kimpton Hotel and Restaurant Group Inc. to transform the vacant building across the street from the MCI Center into a 172-room hotel. But negotiations bogged down over financial and preservation issues, while the boarded-up building sat vacant.

The Tariff Building, also known as the General Post Office, fills the block bounded by 7th, 8th, E and F streets NW. The property, built from 1839 to 1842, was designed by architects Robert Mills and Thomas Walker, who between them were responsible for buildings such as the Capitol, the Treasury and the Washington Monument. It has been largely empty since 1987.

Under the deal announced yesterday, Kimpton will lease the building for 60 years. Rent is a mix of a base rent and percentages of the hotel's business; GSA officials yesterday estimated that rent will amount to $50 million over the term of the lease. Kimpton will pay $32 million to convert the interior of the onetime office building into a hotel. The GSA will spend $5 million to preserve the exterior.

From the start, Kimpton has said it would need some form of government subsidy to redevelop the building. But the GSA's top priority has always been renovating the building, not earning money for the government, assistant regional administrator Tony Costa pointed out.

Construction is scheduled to begin next summer and be completed in the fall of 2001, Costa said. In April 1998, when Kimpton won the right to develop the building, the company said it planned to have the hotel open by December 2000.

Kimpton and the government have not yet signed a lease, Costa said, but have "agreed on all the terms, and there ain't anything hiding behind anything." As the deal is structured, he said, Kimpton will require no further federal or local government subsidies to finance the project.

Kimpton specializes in renovating old buildings into hotels, mostly boutique-style properties with trendy restaurants. The Tariff Building "is a magnificent opportunity to revitalize one of the most important buildings in Washington," Kimpton president Tom LaTour said in a statement.

The delay in striking a deal angered neighborhood activists, who reacted yesterday with guarded optimism. As long as the project moves forward, "this will mean real jobs for District residents and revenue for the city, as well as the resurrection of a national treasure, the Tariff Building," said Terry Lynch, executive director of the Downtown Cluster of Congregations.

"It's certainly a step in the right direction and it's about time," said Charles Docter, chairman of Downtown Housing Now.

CAPTION: The Tariff Building near MCI Center will be converted into a 172-room hotel by a California company that will lease it for 60 years for about $50 million.