Erika Mills has waged a 10-year battle with Alexandria city officials, protesting again and again that the assessed value placed on her historic, three-story house at 1115 Prince St. is too high.

When the envelope containing her latest assessment arrived in the mail Saturday, the 53-year-old homeowner hit the roof. Her assessment had climbed nearly 30 percent from a year ago.

"The are now saying this house is worth $139,600, but I haven't put any improvements into it ever." fumed Mills, who noted with irony that even her roof has not been properly repaired in years. "The houses on either side of me have all been improved and restored, yet they're assessed at about the same price. It's not fair and it's unjust."

Mills' plight has been shared in recent days by thousands of Alexandria property owners who found that their property has increased by an average of 11 percent citywide - and sometimes a great deal more:

In Old Town, a house on lower Prince Street (nine blocks closer to the Potomac than Mills' house) was assessed at $390,000, a nearly 100-percent increase from last year's $200,000 level;

On Duke Street, across from a vacant lot and near a highway entrance, a town house valued last year at $79,500 was assessed at $98,000 - a 23 percent rise;

In Seminary Hills in Alexandria's west end, a home valued at $105,000 last year was valued at $175,000 this year, a 66 percent increase in value.

Not a single neighborhood experienced a decline in assessed valuation this year, according to city officials, who added that property values have risen steadily at about the same 11 percent rate for the last decade.

But the increase is seen by some as a mixed blessing for Alexandria's 119,000 residents, 25 percent of whom are homeowners.

"We are in danger of downgrading the quality of life in the city," said Charles R. Hooff, a native Alexandrian whose real estate firm was founded by his grandmother.

"The wild increase in assessments and increase in taxes will force many longtime residents to sell, but they only get replaced by people who won't live here more than a few years. The idea of a neighborhood where people knew each other is going fast. It's all part of an urban growth process, but it has elements of being a vicious cycle as well," he said.

"I am very much worried about the whole situation," said C. S. Taylor Burke, a seventh-generation Alexandrian who is president of the Burke & Herbert Bank & Trust Co. "Inflation creates great increases in the value of a house, but you can only get at that . . . if you sell the house or refiance it. I don't know how a young couple with a family does it these days. Land in Old Town is now valued at $25 per square foot," he said.

According to David J. Chitlik, director of Alexandria's real estate assessments division, "State law requires us to estimate the amount a home would bring if it had been sold last Jan. 1. We start from scratch every year. We don't compare one house with another. We only look at how much the house would bring on the open market."

Although Chitlik's office sets the assessed value on a home, the City Council sets the tax rate, which currently is $1.54 per $100 of assessed value. The council is expected to cut the tax rate, possibly by as much as 10 cents.

Meanwhile, Mills, the estranged wife of a career Foreign Service officer, clings to the idea - now seen as "old-fashioned" - of paying off a house in the early years of life in order to live in it at virtually no cost in later years.

"We bought this house for $15,000 in 19588 and had montly payments of $78.50 each month. It will be all paid off this month," she said yesterday. "The idea was that we would live mortgage-free when we were older. But now with increase in taxes, I don't know what I am going to do," she said. Mills added that her income is less than $20,000, based on a stipend she receives from her husband, who lives in Greece.

Last year Mills paid $1,700 in taxes, and expects to pay more than $2,000 in taxes this year. According to real estate broker Hooff, banker Burke, and others, most people in Mills' position today would either sell the house built in 1816 for what she admits would be "an obscene profit," or refinance it.

"I don't want to go into debt again, ever," said Mills, a woman who writes long, letters to city officials complaining about her assessments. "And I don't want to sell this house, because I love it.

"This used to be a wonderful neighborhood, with a wide variety of people, but now they are all young and rich and it is all so homogenized. Besides," she asked, "where else could I go?" CAPTION: Picture, Erika Mills says assessment is up on her home, despite its decline. By Margaret Thomas - The Washington Post