Washington's largest exterior painting, a 10-story-high illusionary mural on two sides of a downtown office building, has been partly obliterated after the National Park Service threatened to withhold a developer's $412,500 in preservation tax credits if it was not painted over.

The Park Service told the owner, the Wynmark Development Corp., it would not be certified to receive the tax credits if the painted architectural effects, designed by noted muralist Richard Haas, remained on the east front of the 1923 Lincoln Building at 514 10th St. NW, across from Ford's Theatre.

A work crew repainted the front of the building a beige tone on March 19 at a cost of $10,000. Richard Naing, Wynmark's president, said the Park Service has subsequently certified the building for the tax credit.

A large portrait of a young Abraham Lincoln with an ax for wood chopping and an illusionary "window" with a glimpse of the Lincoln Memorial painted on the building's south side will remain. But Wynmark said it is questionable whether the mural, which is done in a style reminiscent of Art Deco, will be finished on the building's north side. Haas had planned to show the presidential Lincoln at Gettysburg with another illusionary "window" and a painted view of the Old Post Office building. To continue painting and hold on to the tax credit would require a reversal of the Park Service's position.

Cynthia MacLeod, chief of the Park Service's regional preservation office in Philadelphia, said the mural "changed the character of the plain white building. It certainly was lively and interesting.

"We determined that the historic character was altered by this paint treatment and therefore we couldn't certify it as meeting the secretary of the interior's standards" for the tax credits. "It's not necessarily a negative comment that the mural didn't meet the secretary's standards, just that it changed the character of the building. That's not what this program is designed to do."

Haas, a critically acclaimed master of trompe l'oeil, or illusionary art works, called the Park Service's action "bureaucratic insanity."

"It's as though the Park Service told Daniel Chester French who sculpted the statue of Lincoln in the Lincoln Memorial , 'Okay, you can carve the statue of Lincoln on the sides, but leave the front as a solid "block," Haas said in a telephone interview from his New York studio.

"I only undertook the commission on the agreement that I could do all three sides," he said. "The building was less than nothing -- an eyesore because of its shabby nature. It didn't disappear, it projected its ugliness. The mural was a carefully thought out, harmonious piece to weld and unite the area. Now it's an unfinished piece."

Haas said he was particularly upset because this was his first mural in Washington. Haas, who has almost single-handedly revived a once-lost art of architectural and artistic embellishment, is working on similar commissions in Miami, Phoenix and Fort Worth. In the past decade, he has designed exterior murals for SoHo and the Times Square area in Manhattan, the Boston Architectural Center and in Chicago.

"I can't understand why an organization which is charged with upgrading the quality of life in the city and in the immediate environment of its own holding would not approve the mural," he said.

Haas' design on the east side of the narrow building, which the Park Service ordered painted over, included illusionary marble columns, blue tile piers and other architectural elements.

One of Wynmark's owners, Mark G. Griffin, said that when Park Service officials "saw the mural, they were aghast. They said they didn't know that architectural detail would be incorporated."

Griffin recalled MacLeod saying that " 'you had a tall, ugly building and you didn't restore it and you made it beautiful.' That was the gist of it.

"They think it should be restored to its original condition, which would include its drab exterior," Griffin said.

James Bayley, the architect for the restoration of the Lincoln Building, said he discussed the Haas mural with Park Service officials here and in Philadelphia before the work was commissioned and whether it would affect the certification for the tax credit. He said a Park Service official in Philadelphia assured him that the Park Service was not interested in reviewing the mural, in part because a painting could always be changed.

Bayley said he sent a letter to the Park Service detailing the verbal understanding, to which the federal agency never responded.

"We started the painting in October," Bayley said. "The south and front were finished the first week in December. We stopped then, because the weather was too cold, planning to paint the north side this spring."

Bayley said the Park Service on March 15 ordered the entire front painted over under threat of losing the $412,500 in tax credits. The Economic Recovery Tax Act of 1981 entitles owners to a 25 percent tax investment credit if they rehabilitate a building according to the standards set by the Interior Department. The Lincoln Building is in a historic district and thus eligible for such a credit.

Griffin said, "There are two elements of disappointment, that a Haas mural would be inconsistent with a building of that type and that we were led to believe that the mural wouldn't jeopardize our tax credit. Then we spent $75,000 on the mural and they try to take our tax credit away.

"We've had nothing but positive response on this mural," he said. CAPTION: Pictures 1 through 3, The Lincoln Building, before part of the mural was painted over. The side with Lincoln's portrait remains the troupe l'oeil work on the front has been obliterated. Front view of the Lincoln Building with Richart Haas' trompe l'oeil work. The Lincoln Building before Haas painted his design. Photod by Anice Hoachlander. Copyright (c) by Hambright Associates.