The District of Columbia government during the past two years has collected $1.4 million in a special fund to help low-income tenants displaced by condominium conversions, but has spent only $45,344, according to a report by the D.C. auditor.

Twenty families have been assisted by the fund, which was created in June l980 as part of a bill that strictly regulates condominium conversions. Tenant groups persuaded the D.C. City Council that the then-rampant conversion of apartment buildings to condominiums was displacing large numbers of poor families who could not afford to buy their converted apartments nor pay higher rents for new apartments.

The fund was to be used to help displaced tenants pay higher rents in new homes for up to three years.

City housing official Miriam Jones, who heads the city's conversion and sales regulatory office, which oversees the fund, last week gave a City Council committee several reasons for the low level of spending.

She said that in many cases developers who had permission to convert had not yet begun work, so tenants in their projects had not been displaced. In other cases, she said, the buildings slated for conversion were in affluent upper Northwest and the tenants did not qualify for assistance. Developers who convert rental property to condominiums must contribute to the fund whether or not they expect any tenants to qualify for the aid.

"Given the fact that everybody says conversion is such a problem I was shocked that so little had been spent," said council member Betty Ann Kane (D-At large), who requested the auditor's report. "I cannot believe that those were the only qualified people who had been affected."

Two other council members have suggested that much of the money remains because the displacement of lower-income tenants was exaggerated.

Tenant activists said they have not kept track of payments from the fund. But Keary Kincannon of the Southern Columbia Heights Tenants Association, one of the city's largest tenants' groups, said "displacement has slowed down tremendously" because of the near-collapse of the condominium market here.

To qualify for the subsidy a tenant must have lived in the building for six months before the conversion, must rent another apartment or house in the city and must meet certain income guidelines. For example, one person living alone must earn less than $15,100 a year to qualify, while a family of four must have an income less than $21,600.

According to the auditor's report, 48 projects had paid into the fund and families in 15 projects had received the subsidy, which is the difference between the amount of the tenant's old rent and the new rent.

Washington has led the area in condominium conversions with 14,897 since the mid-1970s. Condominiums became the "starter homes" for many young singles and couples who wanted to own real estate but found themselves priced out of the single-family home market by high sales prices and high interest rates.

Tenants and their advocates lobbied City Council members heavily, charging that the conversions were unfairly uprooting many elderly and poorer tenants into a housing market where there was little desirable affordable housing.

In an effort to discourage more conversions and protect tenants, the council by a unanimous vote passed the 1980 law under which tenants were given the first right to purchase their building, elderly tenants were allowed to remain in their units, and a majority of the tenants had to vote to approve the conversion.

If the conversion won approval, the developer then paid the city four percent of the proposed sales prices for all the units. That fee can be reduced to as little as $50 per apartment if the developer produces a plan that allows low-income tenants to buy their apartments or to remain in the building under five-year leases.

Tenants who bought their buildings and converted were not required to pay the fee until they began actually selling units.

Kane said a recent amendment to the law will expand it and allow tenants displaced since 1976 to quailify to receive assistance. But she said a council report shows that only 95 additional families would become eligible.

"Either something is wrong with the way it is being carried out or the need is not that great," Kane said.

Charlene Drew Jarvis, chairman of the council's committee on Housing and Economic Development said, "What it indicates is that there were few people displaced who were low-income people" if it is assumed that tenants were informed that the fund was available.

Jarvis said it was her impression that the conversions displaced many elderly tenants whose income did not allow them to qualify for the subsidy.

Council member John Ray (D-At large) said "we simply don't have people who qualify for the money. That is probably an indication that the level of displacement was not was great as originally thought."

All three of the council members suggested that perhaps the money could be used for other types of housing assistance. The law creating the fund and including the other tenants' protections will expire in September unless the council acts to extend it.

"I think it is interesting that we have that pool of money sitting there when we are supposed to have this desperate housing need," said condominium developer G.V. (Mike) Brenneman. He said he thinks the fund was created "out of a perceived need but I don't think anyone checked on the real need."

Attorney Benny Kass, who represents many tenants' groups in purchasing their buildings, said that "in the last two years there hasn't been that much displacement. The displacement took place before the real impact of the act."