Colonial Terrace, a picturesque tree-lined neighborhood of garden apartments and duplexes perched above Rosslyn, is for the third time in recent years, embroiled in a controversy about its development.

Arlington County wants to rezone the ll-acre Terrace, which is bounded by N. Nash Street, Key Boulevard, N. Quinn Street and Lee Highway, to conform with a master plan passed last year for the area surrounding the Rosslyn Metro station. That would mean slightly reducing the density or, in the argot of planners, "downzoning" in order to preserve the area. The proposal has the enthusiastic support of the Colonial Terrace Community Association, which is composed predominately of renters.

Fifty of the 55 landowners in the Terrace, many of them absentee landlords, are furious at the prospect. Such a move, they say, is arbitrary and would only serve to scare off developers and reduce the value of their properties. Furthermore, they add, the new zoning classification would render many of the brick apartment buildings that dot the Terrace noncomforming, because it would allow a maximum height stories rather than the present eight allowed [WORD ILLEGIBLE] zoning in effect at the time the apartments were built.

The dispute also has caused disagreement among county staff members. At a hearing last week on the proposal, county planner Tom Parker reminded the County Board, "Your choice was to rezone (the Terrace) in order to preserve and protect . . . the mixed character (of) the neighborhood. I think it has been quite clear since 1972 that the County Board felt this area was unique in a number of ways.

"This is an extremely critical step," he continued. "There is an extremely strong demand for low-rise townhouse of 25 units per acre. (By downzoning) the County Board would clearly signal to the investment community that this is what you want. By leaving the zoning as is, you're continually frustrating (developers) who look at the zoning pattern."

Planning Commission Chairman Joan Allen said, "The people who wanted the conservation were renters. It is quite arbitrary to downzone that area and two blocks away to upzone. I've driven through the area. It's beautiful but some things you just can't keep."

Allen noted that 47 of 55 landowners in Colonial Terrace had submitted a petition to the board protesting the downzoning.

"I feel totally frustrated that for the past 20 years my taxes keep going up and I come up here and find a bureaucrat - and I can say that because I am one - who tells me what my best interests are," said Alice Sayre, one of about 10 landowners who spoke in protest of the rezoning.

"There are unique attributes which indicate that this area should be treated as an exception," said Community Association President Robert Dreher. "The tree-covered profile offers relief from the bleak view of Rosslyn and stems the march of highrise buildings toward the rive." Without rezoning, Dreher said, "as many as 2,000 people could be crowded onto that plateau."

"It is without reason, fairness and equity and would deprive us of our constitutional protection," said A. Everette MacIntyre, a landowner and Terrace resident for 50 years, who also told the board that the group might sue the county if the area is downzoned.

"Colonial Terrace has been a classic case in Arlington going back over many years," said board member Joseph S. wholey. "In my judgement the community should and does have the right to determine development."

On the advice of county attorney Jerry K. Emrich, who said he wanted to further study the legal issues involved, the board deferred a decision to June 27.

How much and what kind of development should occur in the Terrace has been a source of continuing controversy since 1972 when Atlanta developer John Portman proposed razing the neighborhood and erecting a 17-story steel and glass tubular cluster containing hotels, apartments and a convention center. Portman's backers were 20 elderly homeowners and landowners who said the area was deteriorating. They said they wanted to sell their land to Portman, who would pay them enough money to ensure comfortable retirements.

After nearly a month of bitter debate, the County Board narrowly defeated that proposal, which was opposed by many Terrace residents as well as other community leaders.