The city will spend $80,000 to study future development possibilities for the century - old Eastern Market and the adjacent commercial area - if the Capitol Hill community can agree on the scope of the proposed study and the makeup of a community review panel to oversee it.

"The city wants to complete the renovation of the market," Ben W. Gilbert, director of the Municipal Planning Office, told a meeting of neighborhood residents and merchants recently, adding that the city has already spent about $1 million to repair the market, located at 7th Street and North Carolina Avenue SE. "But we're aware of the fact that there are adverse interests involved here."

The Eastern Market, built in 1870, is the sole survivor of three farmersmarkets that once operated in the city. Shoppers can still buy fish, meat and produce there, and within the last decade the market has enjoyed a renaissance after a post war slump.

According to Gilbert, the study, announced by the mayor June 14, would include not only the market but the 7th Street, 8th Street and Pennsylvania Avenue SE commercial strips. The consulting firm that does the study would be selected with the advice of the community review panel and would be expected to come up with a comprehensive area development plan, including recommendations on parking problems and market management.

The consultant would study various possibilities for the north end - including its use as an upgraded cultural center, part of an extended market or as a restaurant. Since 1972 the 4,500-square-foot north end has been used rent - free by an arts group called Market Five Gallery. Alternate sites for the gallery would also be studied.

The future of the north end is the hottest community issue involved in the market study. Some community residents and groups want the north end used for additional market space.

At a recent meeting, however, Market Five Gallery members passed out copies of a resolution that said the north end should be studied "only for the purpose of upgrading the facility for use as a performing and visual arts space."

Gilbert emphasized that the scope of study is still in draft form and subject to community revision. He invited community groups to submit proposed changes and nominations to the community review panel to MPO by August 1. A request for proposals will be advertised as soon as there is community agreement on those matters, he said.

Peter Eveleth, chairman of the Eastern Market Coalition, a group that has been trying for the past year to obtain funding for a market study, expressed general approval of the city's plan.

"Whichever side they were on about the north endpeople involved with the market agreed that a study should be done," said Eveleth.

But Vivian Williams, who said she has lived in the neighborhood for 26 years, objected because the study would be funded mainly with community development block grant funds.

"We're having trouble all over the city with people trying to maintain a roof over their heads," said Williams. "The $80,000 should be used for housing for poor people."

The north end controversyhas raged since January 1977, when the Advisory Neighborhood Commission 6B held a community forum on its future use. In March 1977, after several heated meetings, the ANCrecommended to the city that the north end be used for market or restaurant facilities in an expanded, revitilized market, and that the Market Five Gallery be relocated to an unspecified site. In June 1977, the Eastern Market Coalition, set up by the ANC, applied for a $52,000 grant from the Department of Housing and Community Development to fund a feasibility study on the market - including the north end.

When the application was turned down, coalition members said they approached council member Marion Barry, who agreed to introduce an ammendment to a City Council resolution approving the District's application for community development funds. The amendment, which was supposed to be introduced June 27, would have directed the city to spend $52,000 to fund the study requested by the Eastern Market Coalition.

At the last minute Barry decided not to introduce the amendment. Market Five Gallery members attribute this decision to their expressions of concern that the proposed study was still geared to commerical use of the space. But Barry aides say the amendment was not introduced because Nadine Winter, who represents Ward 6, told Barry she would not support it because it duplicated the study proposed by the mayor. Both the mayor and Barry announced their rival plans to fund an Eastern Market study at a candidates forum on Capitol Hill Jun 14.