The city Department of Housing and Community Development has shelved plans to spend $250,000 on a study of ways to develop Adams-Morgan into a tourism center known as the Latin Quarter.

Robert L. Moore, department director, said the action, decided last week, was taken because "response from the community indicated a need for a broader proposal," and because a city employe's role in the proposed study represented a possible conflict of interest.

At an ANC meeting two weeks ago, Adams-Morgan residents and community leaders opposed the study because of its emphasis on Hispanic culture, charging that it did not take into account the racial diversity of the neighborhood.

In addition, they objected to the tourist theme, and what they cited as a potential for displacing residents.

The possibility of conflict of interest arose over the actions of Alfredo Echeverria, a staff member of the Department of Environmental Services, who wrote and submitted the Latin Quarter proposal to the city. In early August, Echeverria said he resigned his city job on June 30 and continued to act as a consultant for the Office of Planning and Development on sludge and sewage matters.

Echeverria is still a city employe, however, and Moore said this week that housing department officials were "never notified" that he had not resigned on June 30 as he was supposed to have done. Moore said Echeverria's status "certainly . . . entered into our decision" to shelve the study proposal.

Echeverria said Moore "misunderstood my situation." He added that he wrote the Latin Quarter proposal "as a community service at the request of the Council of Hispanic Agencies. I received no compensation, and had no expectations. There is no conflict of interest at all."

Skip McCoy, executive director of the Office of Planning and Development, said Echeverria is now acting head of the office's plan implementation division, and is scheduled to move onto the planning staff permanently within a few weeks.

The housing department had planned to allocate $250,000 in Community Development Block Grant funds to a study of the Latin Quarter, which was proposed to attract some of Washington's 12-million tourists a year to Adams-Morgan, where many low-income Hispanos live.

According to the proposal's backers, the Latin Quarter's goal was to increase the area's economic base and find ways to finance low- and moderate-income home ownership for residents.

James Clay, deputy director of the housing department, said in a telephone interview that "there was a great deal of confusion and misunderstanding" over the proposed study. He added that when Moore decided to withdraw the proposal, Aida Berio, director of the D.C. Latino Affairs Office, agreed.

Clay said the money that was earmarked to fund the proposal will be set aside until revisions are made.

"We aren't going to start from scratch. We'll work with the community to clarify the concept we have. One aspect is tourism. We have to zero in on data," he said. He added that the revised proposal will consider housing and economic development "needs" and a feasibility study of programs for the neighborhood.

The request for funds for the Latin Quarter proposal was submitted to the housing department in March by Echeverria. City officials appeared ready to fund the proposal in late July, but postponed the action when the Adams-Morgan ANC protested that it had not been given proper notice or a chance to comment on it.

The ANC was given 30 days to comment, which would have been up this week. But at a meeting last week at the Office of Latino Affairs, Clay announced that the proposal was being withdrawn. Representatives of the ANC, the Adams-Morgan Organization, Council of Hispanic Agencies, 18th and Columbia Road Business Association, Perpetual Federal Savings and Loan Association and other community residents had gathered to discuss revisions in the proposal.

Funds for the Latin Quarter proposal were to have gone to the D.C. Office of Latino Affairs, which, in turn, would have contracted with Echeverria to do the study, according to Aida L. Berio, director of the office. Clay said that in the future, after the suspension ends, the housing department would have to concur with the Latino office in the choice of a contractor to conduct the study.

According to a housing department spokesman, the original proposal requested $430,000 but housing officials cut the amount to $250,000 for 1979 and 1980, with additional funding possible after the results of the first two years were analyzed.

After the department announced its decision to suspend the funding, Ann Hughes Hargrove, chairman of the Adams-Morgan ANC, said: "This is what the ANC requested -- a revised proposal. We'll be delighted to work with everyone concerned."

The proposal had called for the formation of a tourist investment corporation, which would provide capital and loans to tourist businesses, a small business investment corporation to assist small entrepreneurs, a community development credit union and a housing development corporation.

In preparing a revised proposal, housing department and Latino Affairs Office staff members will be "meeting and comparing notes on the most rational way to move, and will be putting a skeletal outline together," Clay said. "Then we'll be meeting with the community."