Two Southwest Washington community groups are squabbling over which of them should be permitted to become a partner in the development of their neighborhood's last large piece of cleared land.

At stake is who will get to spend the $300,000 to $500,000 in annual profits the development project is expected to net for the community. A city agency decree requires that a neighborhood organization be a partner in the development of an office-retail-hotel complex on the site.

The squabble features two coalitions: one composed of Southwest public housing leaders, and another of Southwest community organizations representing a wide array of the neighborhood groups, including some Southeast public housing leaders.

Both seek to be named partner in behalf of their neighborhood in the $264-million to $325-million project complex to be built on a 10-acre parcel called Portal Site at the foot of the 14th Street Bridge just south of the U.S. Department of Agriculture.

The public housing leaders, who have no formal name for their group, have allied themselves with one developer seeking development rights to the site. They say they want to spend the potential profits fixing up more than 1,000 city-owned apartments in Southwest.

"We don't want anybody else dishing out money to us," said Irene Cox, the president of the James Creek residents council and a public housing tenant. The competing group "is for people on the other side of the street Delaware Ave. and I don't think we would get a dime out of them."

The group on the other side of the street is called the Southwest/Southeast Economic Development Council (SEDCO). It was created by the major Southwest community organizations ostensibly to stave off just such neighborhood bickering in the face of the windfall.

SEDCO has allied itself with two other development teams, including the public housing coalition (a claim the competing group denies) and says it wants to spend potential profits helping the entire community. This would include public housing renovations, and a revolving loan fund for small businesses. It has pledged to give an unspecified amount to the tenant group.

"Is it fair to take all the money and give it all to public housing and give none for the rest of the community for such things as job training?" said Willie Lloyd Reeves, an attorney who is chairman of the community's Advisory Neighborhood Commission and a former SEDCO president. "Even if we gave all of it to public housing , what's the use with no employment prospects? My thrust is to make sure there are jobs for these people."

The new money would make the winning community group one of the richest in the city. For example, the area's Advisory Neighborhood Council has a budget of less than $20,000 this year while the Southwest Community House, a wide-ranging social services agency, operates on a $500,000 budget. Both groups have joined SEDCO.

The demolition of most of Southwest and the construction of the present-day community of high-rise, high-priced luxury apartments there was engineered three decades ago by the Redevelopment Land Agency, the city's urban renewal agency. The area also includes some of the city's oldest public housing projects.

The battle was precipitated earlier this year when the board decided to require that developers give community groups part ownership in the multi-million-dollar developments proposed for the Portal tract.

The community battle became public recently when the RLA held public hearings on the five competing development proposals for the site. City housing director Robert L. Moore, who is an RLA board member and responsible for the city's public housing, sided with the public housing tenants and closely questioned SEDCO representatives about their new coalition. The community equity requirement, he said at the time, was designed to benefit the community's poorer residents.

"Southwest urban renewal was a tragedy for the low-income people of Southwest," Moore said, and the requirement that the "community" share in the profits from the new development "was to make whole those who were harmed." He said he feared that SEDCO would be controlled by middle- and upper-income Southwest residents.

SEDCO leaders claim that RLA's requirement for community participation is inconsistent with Moore's interpretation. They cite RLA guidelines as only encouraging developers to give "meaningful participation" to "community-based non-profit organizations which have past experience in participating in" community development programs.

SEDCO's Reeves charged that, because Moore "is the director of public housing and is responsible for public housing, . . . if he can find other funds to subsidize public housing, his department benefits."

"The problem is the way the rules for the developers were drawn up by RLA," said SEDCO chairman Spencer Scott, who lives in federally subsidized housing. "If he Moore had wanted a special community group, that should have been in the prospectus."

Moore denies the charge.

Leon Fields, a SEDCO founder and Southwest native who lives in a federally subsidized cooperative, said there are many low-income people in Southwest who do not live in public housing.

The tenant group, with help from D.C. City Council member John A. Wilson (D-Ward 2), whose district includes Southwest, has aligned itself with Channel Place, a development team headed by the Rockefeller family.

"The Rockefeller group called us first," said Louise Paris, president of the Greenleaf Annex residents council. The other development teams "were just a little late and we had signed our agreement with the Rockefeller group before talking to anybody else."

That agreement calls for the public housing coalition to receive 4 percent of the profits -- the money left over after the developers pay off all their debts and pay back all other partners who invest money in the project, according to attorney Chester Davenport, a member of the Rockefeller development team. The tenants are not required to put up any money.

SEDCO, whose leaders say it is the first Southwest organization to unite the community's very poor with their more affluent neighbors, has joined with two of the development teams, thus doubling its chances of coming out the winner.

Portal Associates, the development team headed by parking magnate Dominic F. Antonelli, promised SEDCO a 2 percent ownership in the proposed development, guaranteeing the community a minimum of $1.6 million in profits. It also offered it a share of the complex's management fees, plus 5,000 square feet of valuable office space in the development.

Portal Development Associates, headed by the Western Development Corp. which built the new Georgetown Park shopping mall on M Street NW, agreed to give 5 percent ownership in the development to a community trust fund that SEDCO would administer.

Western officials could not be reached to further explain their proposal. Neither of the developers would require SEDCO to invest any money.

Another competing developer, The Banneker Associates development team, "didn't like the idea of SEDCO signing up all the teams to speak for one developer in the morning and another in the afternoon" at the public hearings, according to Banneker attorney and partner Bill Harris. Banneker is led by shopping center developer Theodore R. Lerner.

The Banneker group has proposed creation of a community foundation that would receive $5 million over 10 years and be run by an as-yet unnamed nine-member board of Southwest residents.

Another group, also calling itself Portal Associates, is headed by local developer Conrad Cafritz. It has proposed that three black businessmen who are limited partners in the venture give up part of their ownership to the tenants' group.