CAPTION: Picture, The vacant Shaw Junior High School building at Seventh Street and Rhode Island Avenue NW. By Joe Heiberger -- The Washington Post

The city's housing department last week gave tentative approval to a $5.3-million project to convert the vacant Shaw Junior High School into 145 subsidized apartments for the elderly and handicapped.

The project is being planned by Asbury Methodist Church using HUD money supplied by the Southern Christian Leadership Conference. Asbury is an affiliate of SCLC.

Officials of the D.c. Department of Housing and Community Development told a group of Shaw residents last week that the church group would have lost the federal housing funds if the city hadn't approved the Shaw school conversion plan.

"We had an organization with an allocation that was in great danger of losing that designation unless thy could come up with a site," deputy housing director James Clay told a critical audience of Shaw community members. Many of the people who attended the meeting appeared to be upset by the selection of the Asbury group to develop the property.

Church representatives asked the city's housing agency for the school at Seventh Street and Rhode Island Avenue NW in August, and a month later Asbury was given one-year exclusive rights to develop plans for the conversion.

HUD had given the church group until Sept. 30 to a clear title to the property to be developed. The church group missed that deadline and must now ask HUD for an extension in order to develop detailed plans for converting Shaw school. The plans must then be submitted to the city's housing department for final approval.

The housing department and the church have to agree on a sale price for the building during the next three months. According to the church group's attorney, DeLong Harris, the price cannot exceed $3,500 a unit under HUD guidelines.

If the city approves the plans and if the federal government does not withdraw the funds, construction could begin as early as next year, houseing officials said. The church must make quarterly reports to the city on its conversion plans.

The 77-year-old school was closed two years ago after its ultramodern replacement opened.

Several members of the Shaw Project Area Committee attacked the selection of Asbury because they said the church, at 11th and K streets NW, is not in their community, that Shaw residents had not been consulted and that the city government ignored similar proposals made by the PAC.

They PAC is a citizens committee created by the city government to advise it on urban renewal plans for the inner city neighborhood.

"This thing came as a total shock," PAC President Charles Richardson said after the meeting.

Richardson said PAC wrote to city housing officials last year to inform them of plans to convert the building to low-rent housing for the elderly.

"We were having numerous meetings with a builder" to develop plans "then all of a sudden Asbury Methodist popped up and said they were walking around with this commitment in their pocket but they didn't have a site."

Richardson said the PAC would try to overturn the selection because the communtiy had been ignored.

"Why do you waste money setting up these community organizations if you are not going to pay attention to them anyway?" Moses T. Beveney, a longtime Shaw resident and PAC member angrily asked Clay during the two-hour community meeting.

"When are you going to stop this junk of going over the citizens?" Beveney asked to loud applause.

Clay admitted that PAC had not been "formally notified" because of the urgency to "preserve their (Asbury's) reservation" on the money committed by SCLC.

The city government has sought for the last two years to convert some of its old abandoned school buildings to housing to ease the critical shortage of affordable housing for the elderly and families earning $7,000 to $18,000 a year.

Although the city owns 20 former schools, most of which are boarded up and deteriorating, only the Carberry School in Northeast had been specifically designed for housing. The old Shaw school is the largest and most striking of the 20 buildings.

SCLC, a national civil rights organization, obtained the money two years ago from HUD to build housing projects in Baton Rouge and in District.

Asbury was awarded the Washington funds because of its interest in sponsoring a subsidized housing project,said Dr. Joseph Lowery, SCLC chairman.