The Stanton Hill apartment complex in Southeast Washington was a nice place to live in the late 1960s and early 1970s. There was spacious living quarters, dishwashers before they became standard apartment house features and moderate rents.

"I'm very proud of it," said developer Myron P. Erkiletian, who built the project for $4.5 million in 1965 and still owns parts of it. "It's one of the best communities we ever did."

But today, Stanton Hill, 412 garden apartments just south of the Suitland Parkway, is in decline -- not yet a slum, but with enough evidence of decay to indicate that the end is in sight unless there is a substantial transfusion of hard cash for repairs and maintenance.

Stanton Hill's problems quickly become evident on a walk through the complex's dozen three-story buildings. Trash litters the grass-and-dirt entrance to the buildings. Sidewalk lamps are broken off. Sidewalks and the parking lot pavement are sagging and cracked; one building is boarded up because of fire damage.

City officials are concerned about the decay at Stanton Hill because of the ever-shrinking rental housing market in the District, a city where 70 percent of the people rent their housing.

Without a fast solution to the development's problems, the officials say, the city could lose another 412 of the 112,000 rent-controlled units in the District. Particularly acute is the problem of maintaining rental units for low-and moderate-income persons, like those at Stanton Hill, where there are 1,200 to 1,400 residents. Their median family income is $13,979.

At the heart of the problem over the decline and possible demise of Stanton Hill is the controversy over the city's rent control law.

Under rent control, Stanton Hill tenants living in one-bedroom apartments pay an average of $220 a month, while other residents pay $255 for two bedrooms and $307 for three bedrooms.

But Joseph schuble, executive vice president of Dreyfuss Brothers, the project's manager, estimates that without rent control the fair market rents at Stanton Hill would be 15 percent higher, or $253 for a one-bedroom unit, $293 for two bedrooms and $353 for three bedrooms.

"Schuble and Stanton's Hill's chief owners, Erkiletian and funeral home owner John T. Stewart Jr., contend that the city's rent control law has placed a stifling lid on rents in recent years, impairing their ability to raise enough money to make long-neglected repairs at the beige-and-brown brick complex.

"The rent control law, Schuble says, "took a project that was operating healthfully, physically and economically," and turned it into a loser.

Tenants view the problems in equal certain terms. They say that the owners and Dreyfuss Brothers should shoulder the blame for Stanton Hill's disrepair because of their alleged failure to spend enough money on maintenance.

At one time, the city cited 1,416 housing code violations at Stanton Hill. In late October, the city said that 1,042 violations had been taken care of, but later it retracted that figure and said it didn't know how many have been corrected.

"In 1978, we stopped making any capital improvements -- no repairs unless there were housing violations," Schuble said."The minimum was done."

The decline of Stanton Hill comes at a time when the D.C. City Council is starting to consider proposed changes in the D.C. rent control law. Council Chairman Arrington Dixon has suggested scrapping the law and replacing it with a series of tax law changes that he say would eliminate much of the administrative headaches involved with the current statute.

But Dixon's proposal also would result in bigger annual rent increases than the city has granted in recent years, up to 25 percent yearly boosts for apartments renting for more than $725 a month. Tenants living in units renting for $250 or less a month could get rent hikes equal to the annual jump in the federal cost-of-living index.

But among other things, renters not building owners, would be allowed to deduct real estate taxes paid to the city from their income taxes. Tax credit or direct subsidies would be given to lower-income tenants who pay more than 35 percent of their income for rent.

The city's rent control law expires at the end of September.

Whatever the cause of the illness at Stanton Hill, the owners say they do not intend to continue to lose money, as they say they have last three years, even while ignoring an estimated $300,000 worth of major maintenance problems.

Erkiletian siad investors in the project reaped an average combined annual profit of $100,000 through 1976. But he says, "Since rent control, it's been all downhill -- fast."

The project lost $31,000 in 1977 and $2,600 in 1978. The owner cut their losses two years ago by deciding not to do $66,000 worth of needed repair, Schuble said. The project lost $101,500 last year, he said.

"We don't have the funds to pay the operating losses," Erkiletian says. "We're not going to continue to pour money into it. Right now we're in a big mess."

As one way to cut losses and show the remaining tenants that closure eventually is a possibility, Dreyfuss last November stopped rerenting units as they became vacant. As a result, only 372 of the units are occupied. u

"If you close it down," Schuble said, "you eliminate all costs except the mortgage," on which $3.3 million is still owed. He said that for the first time in December the owners were not able to make the $28,500 monthly payment to the mortgage holder, the Prudential Life Insurance Co.

As Schuble and Stanton Hill's owners see it, the city rent control law works against their financial stability in two ways.

Under the city's two-year-old rent controls law, apartment owners can recoup the cost of the capital improvements on their on their properties by imposing rent increases of up to 10 percent. But Schuble said that such a provision means that owners often are unable to recoup their costs for several years.

At Stanton Hill, for example, the gross rental home totaled $1.1 million last year, according to Schuble. That would mean that Stanton Hill's owners could get $11,000 in rent increases to cover capital improvements at the complex. But with at least $300,000 in improvements needed, it would take nearly three years to recoup the costs.

"The city says you can get your money back," Schuble says. "But how do you pay the interest back over the years?"

Under another provision of the rent control law, apartment owners are entitled to charge enough rent so that they have a net operating income of at least 8 percent of the assessed value of the property $330,000 in Stanton Hill's case. Net income is defined under the law as the potential rental income minus uncollected rents, rental income lost because of vacancies, operating expenses and 2 percent depreciation.

But the cost of paying off the principal and interest on construction loans cannot be subtracted to arrive at the net operating income figure.

Schuble said Stanton Hill had net operating receipts of $348,000 last year. But to arrive at a profit or loss figure, the paid mortgage ($313,000) must be subtracted, as well as the unpaid mortgage ($28,500), the capital improvements ($44,000) and unpaid bills ($64,000).

The result, Schuble says, is an over-all loss of $101.500.

John Hampton, a special assistant in the city rent administrator's office, said that in "some instances" the rate of return formula will not work properly. That is because the property assessment, on which the rate of return is based, reflects a declining, rather than an appreciating value of the property. Stanton Hill is assessed at a fair market value of $4,125,000, according to city tax records.

Schuble said Stanton Hill's owners could make a small profit if the net operating rate of return percentage was increased from 8 to 11 percent.

Schuble argues that as long as the city keeps its rent control law, the Stanton Hill example represents a bleak future for rental housing in the District.

City officials dispute this, but Shirley Hall, coordinator of the city's tenant hotline, conclede that at least in the Stanton Hill case the constraints of rent control "well may have kept the owners from making needed improvements.

"The property at this time is substandard," Hall said. "It's not slum housing. It is habitable. It could well be Class A housing."

City officials and representatives of the Stanton Hill tenants and owners have started to talk about turning the rental units into refurbished condominiums, with the current tenants being given the right to buy their units at abour a 20 percent discount from the fair market value of $25,900 to $42,000, depending on the size of the apartment.

It is uncertain who would put up the estimated $300,00 that is needed to turn Stanton Hill into a housing complex that is something more than just habitable. City officials say the District government may make a loan for the project.

For the moment, however, Dreyfuss nd the owners are content to make patchwork repairs at Stanton Hill. When the roof leaked, Schuble said the solution was simple: "We basically went up there with a bucket of tar and a mop."

Schuble said that worn stair treads and sidewalks need to be replaced, chain link fences repaired, the parking lot repaved and a new swimming pool filtration system installed.

Many tenants agree about the need from the repairs. When Dreyfuss sought to boost rents last June at Stanton Hill by 9.4 percent, the standard increase for rent-controlled properties in the District, the tenants balked and persuaded the city's rental accomodations office to rescind the June rent increase and reduce the rents to the level they were in October 1977.

Dreyfuss fought that order and eventualy the ruling was held up, leaving the tenants to pay the higher rents until the case is finally decided. Predictably, the steeper rents and simultaneous decline of Stanton Hill have left many tenants at Stanton Hill more than a little angry.