Community groups, city agencies, gay rights advocates and advertising agents engaged in a political tug of war last week when a City Council committee held hearings on a bill that would permit the District to grant a coveted 15-year exclusive franchise for bus shelter advertising.

Community-oriented council members urged placing many of the new shelters in residential areas, while advertisers said more heavily traveled commercial locations would be better.

The bill's author, a Baptist minister, council member Jerry A. Moore Jr. [R-At-Large] proposed a ban on material considered "obscene or offensive to public morals," but gay rights advocates said that might prohibit gay-oriented ads.

The city's transportation department welcomed the possibility of getting shelters that might bring the added bonus of $225,-000 a year in revenue. But the District's fine arts commission said it feared the advent of commercial eyesores.

And none of the diverging views blotted out the dollar signs in the eyes of representatives from two major companies who want the franchie in a city they consider ripe for the market. Bus shelter advertising in the District is likely a $4.5 million-a-year business.

One company representative, Thomas Pelligrino, vice president of Bustop Shelters Inc., of New York, said, "This is a very desirable market because of the fact that it's Washington, D.C. The fact that out-of-home [out-door] advertising has never been allowed before makes it desirable." Pelligrino testified before the transportation and environmental affairs committee.

Henry Silverman, president of the Convenience and Safety Outdoor Advertising Co., also of New York, agreed that Washington would be a nice place in which to be the only company that has the right to sell outdoor advertising for bus shelters.

"The most important thing is it's the nation's capital and national advertisers want to advertise here," Silverman said. "What advertisers are interested in is a high degree of pedestrian visibility. Washington has that. That's what the advertiser wants."

Having Silverman and Pellegrino agree is a rare occurrence these days. Their respective companies are presently involved in a court suit in New York City, feuding over which one has the right to that city's bus shelter advertising franchise.

The conflict has tied up awarding of the New york City franchise, which Convenience and Safety was supposed to have as of Jan. 11 When the subject of the squabble was raise by council member Polly Shackleton [D-Ward 3], Pelligrino's only answer was, It's in litigation and that's all I can say."

Last year, the council was on the verge of awarding a 30-year bus shelter franchise to Pride Environmental Services, an affiliate of the self-help group Pride, Inc. Just before the council was to act, however, questions arose about who would be Pride's partner in the venture -- at one point it was Bustop Shelters, at another it was Convenience and Safety.

Finally, Council member Wilhelmina J. Rolark [D-Ward 8] withdrew the proposal, saying she would rather open the process to competitive bidding. The new measure, sponsored by council member Moore, is the result.

Moore's proposal would provide for a 15-year exclusive contrat to erect, maintain and sell advertising on both dides of one end of the shelters. The city would receive at least $300 per year from each shelter or 20 percent of the annual gross advertising revenues. Shelter company executives estimated that the city could earn at least $1,000 to $1,200 from each shelter, with from $3,800 to $4,800 going to the company.

Preferential treatment would be given to bidding companies that are at least 50 percent owned by city residents who have lived here at least three years or by minorities. Convenience and Safety already has a D.C. partner -- William B. Fitzgerald, president of Independence Federal Savings and Loan Assocation, who accompanied Silverman to the hearing.

The district now has 219 shelters, without advertising, erected by the Washington Metropolitan Area Transit Authority. Another 72 shelters are to be built, but the timing of that construction is uncertain.

The D.C. Department of Transportation estimates that there are some 3,500 bus stops in the city where shelters could be erected and recommmended granting a franchise for erection of 750 shelters on which advertising would be sold.

Although specifications of the shelters have not yet been determined, the structures would probably be enclosed in see-through plastic or glass on two sides with lighted advertising panels on one end and the fourth side open and facing the street. The structures would be lighted at night and maintained at no cost to the city.

The bill provides that at least 10 percent of the total advertising space be reserved for public service announcments on "community, art, cultural, educational and similar events."

Last week's lengthy hearings were mostly procedural, airing views on the basic idea of granting such a franchise a the mechanics and seeking advice on the mechanics of how it should be done.

The committee will act on the bill later this year. If it becomes law, it will be up to Major Marion Barry's office to grant the franchise in line with provisions spelled out in the legislation. CAPTION: Picture, Ads on Metrobus shelters are in dispute. By Linda Wheeler -- The Washington Post