The Alexandria City Council, acting under a program that has come under attack recently in Congress, has sanctioned a tax-free $1.5 million loan that would enable a druggists' lobbying group to erect an office building near the future King Street Metro station.

The council's action means that the city's Economic Development Authority can issue revenue bonds to support a low-interest loan to the group, the National Association of Retail Druggists.

Council members defended the loan on grounds that national trade associations should be encouraged to locate in the city. Association officials estimate that the city will gain more than $23,000 in annual personal property and real estate taxes.

The industrial development bond program has been criticized for being used to finance widely disparate ventures ranging from topless go-go bars to major expansions of financially solvent companies. The House Ways and Means Committee is considering a report criticizing the program for misuse of public funds.

But the Alexandria council gave unanimous approval Tuesday night to the druggists' group loan, and council member Jim Moran called it "one of the better applications we have received.

"It's the type of application we want. The council has said all along that we don't want to use the bonds to finance companies that are going to compete with businesses already here," he said.

The council has in the past approved such bonding for retail operations. Nearly a year ago, the council was criticized after approving a $2 million application for an Alexandria car dealership that wanted to expand. During the past 10 years, more than $18 million of the $89.5 million in tax exempt bonds approved by the Economic Development Authority have been awarded to finance commercial ventures in the city.