Mayor Marion Barry's administration is considering unconventional financing arrangements called "sales lease-backs," in which the city government would sell public properties to syndicates of individuals seeking tax breaks and then lease the properties back.

There is pressure on the District and other local jurisdictions nationwide to act soon. Lease-back deals have become highly controversial, and several experts fear that as pressure builds to change the law permitting them, a window of opportunity may be closing.

The District has several reasons for caution, however:

The lease-back deals are potentially controversial because in other jurisdictions they have been seen as having the connotation of "selling city hall"--indeed, at least one investment bank recommends the sale of city halls.

They are already controversial in Congress, which still controls the city's purse strings and tends to cast a wary eye on the federal income tax breaks lease-backs give.

And they could be damaging, if not handled with care, for a newcomer to the notoriously conservative municipal money markets, which the District will be entering for the first time later this year and early next.

Nonetheless, Ivanhoe Donaldson, Barry's deputy mayor for economic development, said in a recent interview that the District government is investigating such plans and is screening a large number of lease-back proposals.

Until now, the District has shown little interest in lease-backs, giving brokers of lease-back proposals what one of them calls "an almost glacial silent treatment."

City officials say they still are cautious. "We're proceeding very carefully, deliberately," Donaldson said. But he said that there are numerous opportunities in the District for sale and lease-back financing.

"The entire waterfront is coming up for reconsideration. There are proposals on my desk covering everything from lease-back of the D.C. Convention Center to you name it," Donaldson said.

"A deal for the Convention Center is not likely," he said, "but it's too soon to talk about just which ones we might choose. Right now we're trying to draw up standards so we can be consistent, so someone can't come to us later and say why did you choose this plan and not ours."

Among those urging the District to enter into sales lease-backs are the investment banking firms of Goldman Sachs and E.F. Hutton. Another firm, which asked not to be identified, has proposed sale and lease-back for development of the downtown campus of the University of the District of Columbia; for revitalization of a UDC gym (the former Jewish Center) at 16th and Q streets NW; for construction of public housing; for construction of a new correctional facility; and for financing the municipal office building already under construction at 14th and U streets NW.

The firm says sale and lease-back in the U Street project would save the city $6 million.

In a typical lease-back deal, the city sells a piece of property to private individuals. The investors can then take sizable federal income tax deductions based on depreciation of the property.

In exchange, the investors lease the property back to the city for less than what it would cost the city to finance and maintain it.

Goldman Sachs estimates that a city needing money to finance new construction on such projects as schools would have to pay 13 percent on conventional revenue or general obligation bonds, but could finance the same project by sale and lease-back for an effective rate of only 11 or 11.5 percent.

Opposition to such deals has mounted in Congress, however, because of the drain to the federal treasury caused by the generous tax breaks they offer investors.

Bond markets have traditionally shied from the unconventional, and the District is clearly keeping that in mind as it prepares to test municipal markets for the first time.

"I don't think it's too good to appear too innovative, too unconventional," said Elizabeth Reveal, the city's budget director.

At the same time, she said, "you do want to be seen as alertly administered." She said she believes that "under the right circumstances" lease-backs could be good for the city.

Said Alphonse Hill, the District's deputy mayor for finance: "We're tiptoeing through the raindrops."

Hill said he hopes that the city will prove, when it enters the municipal bond market, to have no need for the sort of lease-backs that are purely paper transactions, in which a large piece of property, such as the convention center, is sold and the cash used to retire long-term debt.

More palatable to both Donaldson and Hill are smaller transactions involving the development of a single project, which the District would either control in perpetuity or repurchase for a nominal fee after 15 years. These smaller lease-back offers, however, are less plentiful.

"The investors want the big deals," Reveal said.