BEVERLY HILLS, CALIF. -- This glamorous city where famous streets are traveled by Rolls-Royces en route to Gucci and Giorgio is down in the dumps over a federal rating that defines it as economically distressed.

City residents take home an average of $38,000 a year, among the highest in the state. Vast estates secured behind iron gates tell of greater wealth.

Yet the federal government says Beverly Hills is qualified to apply for $56 million a year in business development grants for small cities suffering "physical and economic distress."

Absent from the new list by the U.S. Department of Housing and Urban Development are such small desert communities as Banning, Blythe and Barstow, Calif., where dusty roads crowned by convenience markets are more common than boulevards lined with luxury shops.

"This has got to be the all-time example that there is something wrong with the method they use to determine eligible cities. It's kind of bizarre," said Ronald Lindsey, assistant redevelopment director for Maywood, where the average resident makes about 60 percent less than a Beverly Hills dweller.

Federal officials said the listing is a fluke, adding that Beverly Hills is unlikely to receive a grant.

While Beverly Hills has a sizable collection of poor elderly residents, city grant specialist Audrey Arlington said the city has no intention of applying for federal assistance.

"We have not paid a whole lot of attention to this whole program because it's not suited to our particular needs," she said.

In a federal evaluation of 10,000 cities, Beverly Hills was ranked at the 49th percentile on a 100-point system in which a rating of 1 signifies the greatest need.

Critics say the rating points to a bias in the eligibility criteria toward Eastern cities, which tend to be older and grow more slowly than Western towns and therefore rank higher in measures of distress.

"We've got to use standardized data. It's probably the only way to be as close to fair as possible," said Jack Flynn, a Department of Housing and Urban Development spokesman.