At a public hearing last week, 119 District residents told city officials how they should use $30 million dollars in federal community development block grant funds.

The hearing, held by the D.C. Department of Housing and Community Development (DHCD), kicked off a process that will end June 30, when the District must submit its application for community development funds to the U.S. Department of Housing and Urban Development.

Neighborhoods eligible for the grant money include Anacostia, Downtown, Fort Lincoln, 14th Street, H Street/Stanton Park, Marshall Heights, Near Southeast, Parkside, Southwest, Trinidad, Washington Highlands, and parts of Northeast and Northwest.

Some areas submitted their own neighborhood development plans. These plans, plus the ideas expressed at last week's hearing, will be used by city officials to prepare the draft application, due to be completed in March. More citizen comment will be gathered at meetings in each ward on the draft application and at a second public hearing.

The final draft application will be submitted to the city council in April. The council will hold hearings on the application in May, and the approved application will be submitted to HUD by June 30. The funds, if approved by HUD will become available Oct. 1.

According to officials, the District is slated to receive $32.8 million in community development funds for the next fiscal year. HUD normally withholds 20 per cent of the grant - $6.6 million in this case - to assure that in debtedness on urban renewal projects is paid off. The District has asked HUD to waive the witholding requirement, but DHCD officials don't know when a final decision will be made.

Reginald Green, assistant chief of the community program services division of DHCD, said that last week's hearing got the planning process off to a good start.

"People really focused on the issues," Green said in a telephone interview. "Home ownership was the big issue - the fact that the poor are being uprooted out of the city and that low-income homeowners are having their taxes raised."

Rehabilitation loans for law and moderate income homeowners are one way to allocate community development funds, Green said. The funds may also be used for street improvements, urban homesteading, modernization of public housing, loans for renters to buy their homes, social services, utility improvements, and other projects that would contribute to neighborhood improvement.

Citizen participation in the planning process for community development block grants is required by the Housing and Community Development Act of 1977. District residents have also been invited to submit proposals for possible funding under a new federal program of Urban Development Action Grants. About $400 million is available in federal matching funds to communities across the nation for restoration of seriously deteriorating neighborhoods and renewal of commercial activity in blighted areas.

People who did not attend the hearing may submit written statements to Lorenzo Jacabs, director, D.C. Department of Housing and Community Development, 1325 G St., NW., by 4:45 p.m. January 20.