Michael B. McKenzie, the Source Theatre lawyer who was quoted in last week's column, would like to clarify his comments: "Legion Design has a history of government contracts, and allowing Source Theatre to purchase the Warehouse Rep building does nothing to change or better that relationship" with the government, he said.

Kwazi Holman, head of the District's Office of Economic Development, is the model of discretion on the subject of how he was able to resolve the conflict between the Source Theatre and Unified Industries, both of which wanted to buy the building that Source rents. Unified had a contract to buy the building at 1835 14th St. NW; Source had established a presence in the area. The firm that was to inhabit the building, Legion Design Systems, which is owned by some of the same people who own Unified, is a civil and mechanical design firm that works primarily on contract for the city government.

Holman says he did not suggest to the design firm that contracts might not be so plentiful if it didn't cooperate, and Joseph S. Meyer of Unified concurs.

"We try to take the positive approach," Holman said. "We don't try to threaten or coerce people . . . I appealed to their sense of community spirit." He has also offered the services of his office in helping the firm locate another space.

"The theater did a good job of promoting themselves," said Meyer. "I got stacks of letters . . . We hope it thrives."

Source's lawyer, Michael B. McKenzie, is not so sure the negotiations were totally on such a high plane. " Legion Design does a great deal of work with the city government. There was an implied threat, although it was never expressly stated, that their contracts might be affected," he said.

In the end, after several months of an apparent stalemate, Unified agreed to sell the $275,000 purchase contract to Consumers United Insurance Co., a community-oriented firm interested in developing the 14th Street area. It, in turn, will lease the building to Source, with the understanding that the theater can buy it in two years at the same price.

The parties contacted agreed that Holman gets the credit for resolving the dispute. "Had Kwazi Holman not gotten everyone into the same room, it would never have happened," said McKenzie.