The 1968 law permitting private developers to erect buildings over Washington alleys and streets - and paying the city rental fees for the "air rights" - will be used for the first time with a 12-storey office building planned for the corner of 15th and K Streets NW.

The proposed building, which would in effect turn a now open public alley into a lighted tunnel, has already won approval from the National Capital Planning Commission and will be the subject of a public hearing May 16 before the D.C. zoning commission.

Leasing the air rights, for 99 years, will provide the District with a "considerable" but as yet undetermined amount of money, say District planning officials. However, an opponent of the building, Harriet Hubbard of the Dupont Circle Ctizens Association, told the planning commission: "The rent will be minuscule. There are no facts and figures on how much the District will get . . . not one document showing any benefit."

An official in the D.C. assessor's office said this week the fee should be a "significant" one since the developer will build underground, beneath the alley, and have 10 or 11 stories of office space above it. "It's almost a fee taking (purchase of the land, with the creation of a little 15-foot wide, 15-foot high tunnel through the building," said Robert Briden, an assessment standards specialist with the city.

The proposed $15 million glass and precast concrete building would replace the 1926 H.L. Rust Co. building at the corner of 15th and K Streets, a narrow 1927 building beside it on K Street, the Grotto Restaurant at 1013 15th Street and part of a parking lot beside it, according to developer John Akridge.

The alley itself, between the Grotto and H.L. Rust buildings, is a dingy, unlit affair with little that can be said in its favor other than that it breaks the mass of buildings and provides a narrow glimpse of sky. But it would be the first public alley to be covered under the 1968 space utilization act, known familiarlyas the "Woodies bill." Woodward and Lothrop had proposed to build an aerial walkway over G Street, between 10th and 11th Streets, to connect its two downtown buildings. But Woodies never built the walkway.

Washington has several public air-rights structures, including two walkways built more than 25 years ago over Independence Avenue NW, connecting Agriculture Department buildings; the Forrestal Building, which sits on pilings over the 10th Street Mall, and the new Labor Department building, which squats astride Third Street NW facing Constitution Avenue, and also covers the underground passage of 195, the Center Leg Freeway.

The granddaddy of air rights buildings here, however, is the 1964 Air Rights Building in Bethesda, built over the B&O Railroad tracks.

The Capital Hilton, formerly Statler Hilton, at 16th and K Streets NW, has an alley-like tunnel through it - between K and L Streets - for taxis and guests, but it is not a public alley.

The prerequesite for building over an alley or street for private developers, under the law, is that the builder own property on both sides of the street and that the "statute not be used to deprive any real property notowned by the lessee of the easement of light, air and access." Theoretically, someone owning opposite properties on Pennysylvania Avenue could ask to bridge it, but it is unlikely the planning commission or the zoning commission would approve it.

The 15th Street alley the John Akridge Co. is proposing to cover woul still be open and accessible to property owners at the other end, none of whom has objected to his proposed building, says Akridge.

"The city loses nothing but gains a new building that will produce at least five times the taxes of the buildings now on the site . . . which is only about $30,000 a year . . . and the rental of air space will produce additional thousands for the city. It will be a significant benefit and the city will have a lighted new alley."

The zoning commission hearing will be held at 1 p.m. May 16 but the location has not yet been chosen, zoning officials said.