The city housing department has determined that McLean Gardens, one of the city's largest suppliers of moderately priced rental housing, can be converted to condominiums, clearing away a major hurdle for the California builder who has purchased the complex to do just that.

The builder, Dwight W. Mize, had said that, unless the units could be converted to condominiums, he would back out of the deal. If that happened, he said, eventually the rental complex would have to be razed for some new and more profitable development.

"Needless to say, I was pleased" with the decision, Mize said yesterday.

Mize announced last week he had signed a contract to purchase McLean Gardens for $30 million. He said he planned to convert the 723-unit complex into moderately priced condominiums.

On May 23, CBI Fairmac, current owners of the project, and Mize filed an application for a certificate fo eligibility to convert the complex to condominiums. They were "prompted" to file an application quickly, Mize said, because the D.C. City Council had before it a proposal by Mayor Walter Washington that possibly would have made the Gardens ineligible for conversion. A different proposal with essentially the same aims was adopted yesterday.

Maria Johnson, condominium regulation specialist for the housing department's Neighborhood Improvement Administration, said she reviewed the application and recommended its approval Friday afternoon. It was signed by the administrator of her department then. "There was no more pressure than normal" put on her to expedite the approval, she said. "Everybody wants theirs done first," she said, nothing that the process can take "a month, or a day or two."

Phil Mendelson, an officer on the McLean Gardens Tenants Association board of directors, complained that tenants were not informed ahead of time that the certificate of eligibility was to be approved.