Federal officials are balking at the District's plan to sell one of Washington's oldest buildings -- the fire department's former Engine Co. No. 5 at 3212 M St. in Georgetown -- without assuring its preservation.

In addition, the National Capital Planning Commission refused last week to approve the sale of the city's Georgetown incinerator in a separate historic preservation dispute with the city. The federal planning agency must approve the sale of "excess" public property in the District.

The commission approved the sale of 25 other city properties, however, including abandoned schools, police stations and fire houses. The District is hoping to raise an estimated $15 million from the sales. The fate of the old fire house and tavern site may be decided when the commission meets again today.

Commission members say the District has allowed the historic fire station, built in 1797 as a bank and later used as the town hall, mayor's office and a hotel, to deteriorate for almost 40 years. Now, they say, the District is unwilling to give assurances that it will be preserved if sold.

The city's director of planning and the mayoral representative on the planning commission, Alfredo Escheverria, told the commission that city officials do not want to rule out the possibility of razing the building.

A loophole in the city's Historic District Act allows the city or a buyer to demolish a building if it is deemed to be deteriorated and "unsafe," even if the building is on the National Register of Historic Landmarks, as is Engine Co. No. 5.

Federal planning officials say the old fire house is indeed deteriorated, but largely because of city neglect. The District has done little to protect or preserve the building since it was abandoned by the fire department in 1940, officials say.

"The city hasn't put a dime in that building for 40 years," says Nancy Taylor, chief of the planning commission's historic preservation branch. "It's in deplorable condition, with ceilings and floors rotten because of a badly leaking roof." She says the city should not be allowed to profit from its own negligence.

The second dispute involves the incinerator property at 31st and Water streets NW. One vacant corner is said to be the site of Suter's Tavern, where George Washington signed the agreement establishing the nation's capital and where Pierre L'Enfant reportedly drew up his plans for the new city.

Federal officials call this one of the city's more important archeological sites and want an exploratory "dig" conducted before the property is bulldozed and new buildings constructed.

Escheverria insists the city has no money to do an archeological dig, which he estimates could cost $50,000 to $60,000. The city sees the incinerator site as the most valuable of all 27 properties and hopes to sell it at auction. While city officials will give no estimates on the value of individual properties, they estimate all 27 could bring in about $15 million.

Taylor, who went through the building several weeks ago, helped draft the report of the Joint Committee on Landmarks, the city-federal group that reviews actions affecting historic city properties. The committee has urged that neither the fire house nor the incinerator site be sold until there are guarantees the fire house will be restored and an archeological dig carried out on the Suter Tavern site.

Commission officials have suggested that universities here might be interested in doing the archeological work at little cost to the city. New York University students are now doing archeological digs in Rock Creek Park with the National Park Service.

Officials said while the old fire house may have to be almost gutted, the historic shell and the old stable could be preserved. "A lot of buildings have been brought back from worse condition than this," Taylor said. Escheverria strongly objects to any conditions being put on the sale of the two properties, however. "The trouble with archeological digs is they (archeologists) could look for things all the way back to the Cro-Magnon era and 2,500 feet underground. . . . They are extensive and cumbersome. . . . The District doesn't have the funds to conduct that kind of survey," he said at last week's meeting. He said that it is only "speculation" that Suter's Tavern was located on the site, although Taylor says at least one historian has located the tavern there. He suggested that instead of an archeological dig, artifacts unearthed on the site by bulldozers and construction workers could be put aside and preserved.

One planning commission member, Ann Loikow, called it "incredible" that the federal agency would even consider approving the sale of properties that are in historic districts before the sales have been reviewed under the National Historic Preservation Act -- a review required by law.

Besides the old fire house and incinerator site, there are four other properties in either the Georgetown or the Capitol Hill Historic Districts proposed for sale: the Corcoran School at 2715 M St. next to Rock Creek Park, a vacant lot next to the Addison School at P and 33rd streets NW, and on Capitol Hill the former Ninth Police Precinct at 525 9th St. NE and a house at 403 11th St. NE.

The sale of the Corcoran School was opposed at last week's commission meeting by the director of the nonprofit Washington International School, Dorothy Bruchholz, who said she feared the 1899 school building would be demolished or altered. "We want to restore the school and we oppose any finding that its public purpose is exhausted," she said. City-owned property can be sold, with planning commission approval, only when it no longer serves any "public purpose," according to federal law.