A long-simmering legal battle over multimillion dollar development rights on a third of a city block within sight of the White House boiled over this week in two court suits that threaten the redevelopment of Pennsylvania Avenue.

At stake is nearly 20 years of planning to revitalize "the nation's main street," now the focal point of not only historical interest but of intense commercial interest as well.

In a three-pronged suit filed Friday in U.S. District Court here, the Oliver T. Carr Co., the District of Columbia's largest downtown developer, seeks to block the Pennsylvania Avenue Development Corp. from seizing three key pieces of avenue property.

The three pieces -- the once-legendary Occidental Restaurant, the eight-story Occidental Hotel next door and an adjacent parking lot controlled by heirs of President Theodore Roosevelt -- were taken by eminent domain Wednesday by PADC, a federal agency charged by Congress with revitalizing Pennsylvania Avenue.

The Carr suit demanded return of the property to Carr and his business associates. But in addition if raised an issue that goes to the heart of the entire Pennsylvania Avenue Development Plan, approved by Congress five years ago.

It asked that Carr, as a property owner, be allowed to develop his own property in accordance with the approved avenue plan, without interference by PADC.

Other small property owners along the Avenue have charged that the PADC is more inclined to seize land and turn it over to big developers than to help or encourage existing owners to restore or redevelop their own land and buildings.

Fred Litwin's family has run a furniture store for 50 years in the PADC area at 637 Indiana Ave. NW. "There is real fear among the small businessmen in the area who can't afford a fancy lawyer," Litwin said. "They know that the government can take their business, take their building by eminent domain. And money is what is behind it."

Litwin has led a fight to save his early 19th century building as well as others in the area.

The dispute over the 1400 block of Pennsylvania Avenue dates roughly from Inauguration Day 1961, when John F. Kennedy rode down "the avenue of presidents" and found it something less than presidential.

Along his parade route stood once-grand Victorian and beaux arts buildings in varying states of decay, housing everything from banks to magic shops. Something, Kennedy decided, had to be done.

Following years of controversy over which of those buildings should be saved and which razed for redevelopment, the PADC was formed and the avenue plan passed by Congress in 1974.

But the flagship of the PADC plan was the historic Willard Hotel, boarded up since its closing in 1968. The PADC wanted the Willard to live again as a hotel, but until recently no developer would risk such a venture.

To add commercial incentive, the PADC offered developers a chance to develop the potentially high-profit adjacent Occidental properties in tandem with the less commercially attractive Willard restoration.

Carr, who already owned the Occidental buildings, put in a proposal in 1975 for his land and the Willard, and, his attorneys claim, was turned down only last December.

Until then, they say, Carr was led to believe he would at least be able to develop his own property.

But Wednesday Carr got his final answer: The government moved with a "quick take" eminent domain suit which made the PADC the instanT owner of the property, leaving Carr the choice of either a government check for its estimated value or a chance to protest in court.

Friday, Carr protested, asking for his land back, the right to develop it himself and assurance that the PADC would not turn it over to another developer, as it apparently intends to do.

Joseph Danzansky, chairman of the PADC board, said the Carr land had been taken to be given to developer Stuart Golding, whose proposal for the Willard and the adjacent properties, Danzansky said, had been selected by PADC.

That selection, PADC officials point out, followed on a careful and fair bidding process in which nine developers competed for the right to develop the two sites.

David Harris, acting director of PADC, said any lengthy delay in delivering the land to Golding, could collapse the existing agreement between the developer and PADC.

"If we were unable to live up to our time schedule, Golding could choose to leave the project. In that case, we would have to rebid the whole project and that would delay the whole development of that block as well as the restoration of the Willard.

"It would be tragic for the avenue and for the nation if delays are incurred and the Willard is allowed to deteriorate any further," he said.

Richard Carr, a project manager for his father's company, says they too are concerned about the Willard. "We're not happy that we might cause delay in [restoring] the Willard but we have to stand up for our rights and this is the time to do it," he said.

Attorneys say the present legal impasse could mean just such a delay -- from six months to two years, according to some estimates.