In a flurry of activity, the D.C. City Council passed emergency legislation yesterday granting District homeowners and some renters relief from propoerty and income tax payments owed the city. The Council also approved a bill that would allow homeowners who have received water and sewer bills of more than $75 to stretch out their payments over a three-month period.

The property tax relief measure exempts the first $6,000 of a home's assessed value from taxation, which means an automatic $109 tax credit for all District homeowners. The bill also provides additional tax breaks for elderly, blind and disabled homeowners and renters.

The second piece of emergency legislation passed yesterday by the council was drafted after many of the city's 120,000 water and sewer customers complained of receiving extraordinarily large bills due to increased water and sewer rates and a longer, 11-month biling schedule.

The legislation provides that residents may stretch their payments over the next three months, directs that the D.C. Department of Environmental Services create a mechanism for reviewing and correcting errors in the bills and prohibits the department from cutting off water and sewer services while disputed bills are under review.

The water and sewer bill relief act was passed as emergency legislation because many residents were faced with bill they could not afford to pay and, until yesterday, had only 30 days to pay before their utilities were cut off.

The property and income tax relief measure was passed as an emergency bill because of an amendment, introduced to Council member Marlon Barry (D-at Large), that would include residents of the vity's 66 cooperative apartment buildings as beneficiaries of the tax breaks.

Major amendments, such as the one offered yesterday by Barry, require another reading and vote by the Council. Permanent tax break legislation could not become law until after the city's Sept. 15 property tax payment deadline. The emergency legislation passed yesterday will stay in force until permanent legislation goes into effect.

The tax relief legislation does not guarantee that homeowners will pay less taxes this year than last because resident property tax assessments in many neighborhoods have soared, requiring some homeowners to pay a larger tax increase than the $109 credit they will receive.

This year, city officials estimate that the tax credit will cost the city $5.5 million in foregone revenues. However, the city should get almost all of the lost revenues back as a result of higher assessments. The rest of the deficits, they said, will be financed through federal antirecession grants.

The property tax relief package also includes a "circut breaker" for elderly, blind and disabled homeowners and renters who make less than $200,000 yearly.

For an eligible homeowner, for example, who receives a $3,500 yearly income and owns a home assessed at $40,000, the present property tax is $529. But the combined property tax exemption and "circut breaker" would reduce the homeowner's tax burden by $494.

The bill also provides income tax breaks for elderly, disabled and blind renters who earn less than $20,000 a year.

Ed. Meyers, staff director for the Council's committee on finance and revenue, said the committee has determined that about 15 per cent of a tenant's rent goes to pay his landlord's property taxes.

"Using this formula," Meyers said, "an elderly, disabled or blind person paying $250 a month in rent pays $263 a year to landlords indirectly" to cover an apartment building's property taxes.

Meyers said the eligible renters will be to deduct their indirect property tax burden from their District income taxes under terms of the tax relief bill passed by tha Council yesterday.

If Barry's amendment is passed by the Council when it considers permanent property tax relief legislation, residents of cooperative apartments will benefit indirectly. The amendment would grant a 12 per cent tax credit on the assessed value cooperative buildings - which the cooperation association can then pass onto owners of individual apartments within the cooperative.

In other action yesterday, the Council also removed the District's teacher retirement pension fund from a bill what would establish a system by which the city will determine which local financial institutions become depositories for an estimated $1.5 billion annually in city funds.

The bill, which will receive final reading July 26, stipulates that as much as one-third of the city's funds should be set aside for deposits in financial institutions on the basis of their lending and hiring practices in the city.