Mary Treadwell, president of the P.I. Properties Inc., agreed in 1978 to relinquish management of the financially troubled Clifton Terrace apartment complex so her firm could keep its ownership of the property, but then repudiated the agreement, a former federal housing official testified yesterday.

Marilyn Melkonian, a one-time deputy assistant secretary of Housing and Urban Development, said HUD made a "major concession to forgo foreclosure" on P.I. Properties' almost totally unpaid Clifton Terrace mortgage when Treadwell agreed to let another firm manage the property. But Melkonian said that HUD quickly foreclosed on the property when Treadwell reneged.

"She believed she was in the best position to manage" the 285-unit Clifton Terrace project in Northwest Washington, Melkonian said on the 18th day of Treadwell's fraud and conspiracy trial. The former HUD official said that by relinquishing management of the property, P.I. Properties' officials would no longer have had day-to-day control of Clifton Terrace's finances and its numerous bank accounts.

Melkonian, a lawyer, said that HUD pursued "major undertakings" to try to avert foreclosure, including offering to subsidize the rents for 200 Clifton Terrace tenants. But she said that HUD was adamant that Treadwell and P.I. Properties be removed as the project's manager.

"Her track record as a manager was extremely weak," Melkonian said. "There is no doubt they failed to pay the most priority bills."

Treadwell is accused of using P.I. Properties, which is now defunct, to defraud the federal government and Clifton Terrace's impoverished tenants of thousands of dollars.

FBI agent Phillip Buvia testified yesterday that between 1974 and 1978, the period during which P.I. Properties either managed or owned Clifton Terrace, HUD spent more than $685,000 for real estate taxes on the property, water and sewer bills and repairs. He said that $378,866 of that amount came during P.I. Properties' ownership of the property, from July 1975 to the foreclosure in August 1978.

Buvia, who examined a plethora of P.I. Properties' records for the government, said those totals included $110,000 sent to the District of Columbia government as a reimbursement for emergency repairs that the city had to make to keep Clifton Terrace habitable.

Treadwell's defense has suggested that HUD did little to help Treadwell make the Clifton Terrace venture a success. Under cross-examination by Treadwell's court-appointed attorney, John W. Nields yesterday, Melkonian said a HUD study at the time of the foreclosure showed that another $750,000 was needed to properly refurbish the project.

John Nipper, a D.C. housing inspector, told the federal court jury of eight women and four men earlier in the day that he received frequent complaints of a lack of heat or hot water at the project. He said that in mid-1977 the city had to pay an overdue $74,222 Clifton Terrace electric bill for P.I. Properties.