Recent efforts to find a private investor to renovate the historic Valley Bank building in Leesburg could be derailed by a bill moving quickly through Congress, Loudoun County officials warned last week.

The Governmental Leasing Act of 1983 would affect the sale and lease-back arrangement the Loudoun County Board has proposed as a way to rehabilitate the deteriorating bank without spending county funds.

Barbara Evans-Smith, chairwoman of the Loudoun County Historic District Review Commission, said the Valley Bank building is of significant historic value, because of its architecture and location next to the County Courthouse. For these reasons it should be a top priority in the county's preservation efforts, she said.

Until recently it was. The county bought the bank in 1972 to use for offices, and County Administrator Philip Bolen said the county had received letters from developers in recent months expressing interest in buying the bank, renovating it and leasing it back to the county.

But those efforts are now on hold, Bolen said, until the county gets word on the fate of the new bill. If the bill passes--and sources close to the legislators expect that it will --it could make the arrangement far less desirable to the developers and more costly for the county.

Under current law, Bolen said, a developer would be able to buy the bank building with below-market industrial development bonds, renovate it, lease it back to the county and receive a 25 percent tax credit available for rehabilitation of historic properties. The developer also could deduct interest paid on the bonds and take an accelerated depreciation on the property.

Under the proposed law, however, the depreciation would be slowed from 15 years to 35 years, and the developer would have to chose between taking the rehabilitation tax credit or the bonds.

Word of the legislation spurred the Loudoun County Board recently to agree to send letters to Loudoun's representatives in Congress asking for an exemption for sale and lease-backs that involved historic properties.

The cost of renovating the Valley Bank building could range as high as $850,000 if the interior is brought up to modern standards, a cost the supervisors are unwilling to finance with taxpayer money. But some members fear that this could ultimately be the only alternative.

"If we cannot work something out with the private sector, we'll have to go back to the drawing board and see what the county can do," said Supervisor John Milton (D-Catoctin).