For more than four years the fate of the Chastleton Apartments at 1701 16th St. NW has been caught in a battle between its owner, who is set on refurbishing the old landmark, and a group of tenants determined to remain there.

The dispute has led to a series of lawsuits that cost both sides heavily in legal fees and overturned the rulings of several city agencies.

Now, another skirmish is brewing between the 81-member tenants association and the owner, Virginia Page, in conjunction with a corporation that has formed a partnership with her to help her out of bankruptcy.

Last week, the owners filed a petition with the Rental Accomodations Office, which administers the city's rent control law, for permission to renovate and upgrade the Chastleton's 315 apartments.

Tenants and neighbors immediately began planning and raising funds to oppose the petition. They have fought Page's original plan to convert the ornate fortress into a hotel, as it was from its construction in l920 until the late l950s.

If approved by the RAO, the project could require that tenants vacate the building. The proposed project also could cause the rents, now in the range of $250 to $500, to double, according to Page.

"We are not opposed to substantial rehabilitation," said Neal Davis, president of the Chastleton Tenants Association. "We are opposed to substantial rehabilitation that displaces people who are already living . . . in the building."

Page, who declared bankruptcy in l982, blames her troubles on the city government, which she said changed the rules after she bought the building.

Few signs remain of the Chastleton's glory days, when it housed many notable figures. Gen. Douglas MacArthur is said to have stashed his mistress there, and residents included Rudolph Evans, sculptor of the Jefferson Memorial statue, among others.

Today, the Chastleton's courtyard balconies sag, the lobby is bare, elevators run erratically and chipped paint adorns hallways and door trim. But the solid building, with its whimsical gargoyles, rumored to have been carved by the stonemasons of the Washington Cathedral, is still handsome.

"Instead of the showcase it once was, it's a scab . . . and has had a very degrading effect on the community," said George Nelson, a Dupont Circle Advisory Neighborhood Commission member.

The deterioration dates back to the early 1960s, when the building was first managed as an apartment, according to 20-year resident Rebecca Finkelstein. "It was hard to get repairs done back then," she said. "We had to keep after them all the time . . . and it went downhill."

Subsequently, more modest rents were introduced and the building attracted a new mix of tenants: today, they are mostly blacks, Hispanics, elderly persons and single women, acccording to Davis.

The larger changes began when Page bought the building for $4 million in l979, the tenants say.

Page, an electrical engineer, said she had completed several smaller condominium conversion projects in Kalorama and planned to make the Chastleton a hotel as her income cushion for retirement.

At the time, District laws permitted easy conversion of apartment buildings to hotels, Page said. But soon after she bought the Chastleton, the city moved to curtail the hotel conversions in residential areas because developers were using them to get around the city's condominium code. Chastleton tenants charged that Page intended to do the same, but she denies that.

But Page won preliminary approval from the zoning board to convert the apartments to hotel rooms--as they became vacant--before the city enacted emergency legislation, which later became permanent, to prevent such conversions.

"I had figured that it would take me about a year to empty the building and then I would begin the hotel renovation," she said of her original plans. "But I never planned to put anyone out on the street."

Page said she bought some tenants out by paying them a few months rent and relocation expenses. She later offered others $4,000 plus three months rent to move out, she said.

"We tried to make a deal with her, but we felt that $4,000 wasn't enough to move and find a place and pay for the security and all," said Finkelstein, longtime tenants association treasurer.

"With some of us, it is a matter of certain convictions," she said. "We want to keep our home. I like the location. . . . I don't want to move."

The Board of Zoning Adjustment, under pressure from the tenants and the local ANC, Page said, revoked her licenses for hotel room conversions, an action that was recently overturned on appeal.

Page said she warehoused apartments as they became vacant and, under an interim court ruling, rented some as $30- to $35-a-night hotel rooms. She said she lost a lot of money in the process.

Page is seeking to solve her financial problems at the Chastleton by a reorganization agreement with Interstate General Corp., a land development firm.

Interstate President Jim Wilson said he will move the tenants out of the building at his expense, rent them units he owns elsewhere for the same price and pay the cost of moving them back after renovation. He also will subsidize any tenants who cannot afford the new rents after renovation, Wilson said.

"But one thing we won't do is pay anybody blackmail to move," Wilson said. "And I won't subsizide anyone . . . who is making $58,000 a year. We're not talking here about a building full of low-income people."

The RAO is required to render a decision by the end of September on Page and Interstate's right to renovate and will base its ruling on whether the building's present condition is a health and safety hazard, the tenants' attorney said.

"The structure looks fine to me," Davis said. "Sure there are some things that need to be done, like the elevators. But the whole scheme is to get the building vacant."

"The only way we are going to be able to counter them is to get expert testimony from our engineers and architects," Martin said. Tenants are trying to raise funds to hire those expert witnesses, Martin added.

"We're fighting for the right to live there, for the people who live there to be allowed to stay," Davis said.

"These people aren't interested in housing; they're interested in money," Page said. "They figure if they hold out long enough, they'll get paid off."

"I think there is little doubt in anyone's mind that Virginia Page came in there expecting to make a killing without regard for the community," Nelson said. "And we the ANC oppose speculation. We want solid housing stock and a mix of incomes in our community."