The Fairfax County Board of Supervisors is expected to decided Monday whether to acquiesce to demands from the Department of Housing and Urban Development that the county approve a controversial public housing project.

The board decision would come only one day before a HUD deadline on the fate of the hotly disputed Rolling Road Estates housing project.HUD has said the county must approve construction of the project by Tuesday or lose $3.8 million in community development block grant funds.

Meanwhile, the county received a letter this week from the HUD Washington area office that may affect the board vote on Rolling Road Estates - a subsidized development of 100 two- and three- and four-bedroom townhouses that has been vigorously opposed since October by residents living near the proposed site of the project. Under current plans, the project would be built on a 35-acre site in the Pohick area.

The letter, from HUD's new Washington area office director Terry Chisholm to Fairfax Executive Leonard Whorton, stated that HUD was withdrawing earlier objections to a county requirement that all public housing projects with 50 units or more go before a special public hearing.

The Washington area office had threatened June 9 to withhold the $3.8 million if the county did not rescind the public hearing requirements as well as approve Rolling Road Estates by Tuesday.

Supervisor Alan H. Magazine (D-Mason), who supports the project, called the HUD letter a "compromise solution." He said the softened position resulted from a proposal he made to Chisholm last week.

"I told him I thought there was one swing vote on the board that could be persuaded to approve the project if only HUD would back off from demanding we stop the public hearings," Magazine said.

Magazine, who would not reveal the name of the board member, said he could not guarantee that the member would approve the project. Since the nine-member board began dealing with the issue in November, the project has been narrowly rejected more than once - on 5-to-4 votes.

"This letter shows a great amount of good will on the part of HUD, and a recognition that compromise just might be in the best interests of Fairfax County," Magazine said.

The board delayed making a decision on the long-running dispute this week to seek an opinion from HUD Secreatry Patricia Harris on the validity of the threat from the area HUD office to withold funds.

"It seems that Harris' position contradicts the position the (Washington) area office has taken with us," said Supervisor Marie B. Travesky (R-Springfield), who opposes the subsidized development that would be built in her district. "I thin it inadvisable for us to act without hearing from Harris herself."

Travesky was referring to a news article last week that reported that Harris opposes HUD threats to cut off community development block grant funds as a way to force communities to develop low-cost housing.

At least some Fairfax board members were preparing for the possibility of a negative vote on the project.

Supervisor James M. Scott (D-Providencel), who supports the project, said that if the county loses the block grant funds, notice should be given immediately to 27 county employes who are paid with grant funds, since 10 days notice to such employes is required by law.

County Executive Leonard [WORD ILLEGIBLE], however, said these employes could be paid from the county's own general fund during the 10-day period.

Meanwhile, a lawsuit filed against the county in February by citizens opposed to the housing project is still pending. Board Chairman John F. Herrity is among those who filed the suit.

In late April, the board delayed acting on Rolling Road Estates for 90 days until the suit was heard, a move that provoked a second threat from HUD to cut off the county block grant funds.

The suit alleges that the project is a public facility, and thus, under state law, a public hearing is required before construction can be approved. However, HUD contends the housing project is not a public facility.