A Northwest Washington neighborhood just east of the Georgetown Reservoir that is shielded by unusual natural boundaries recently has faced a development challenge familiar to others in the city.

For more than a year, some residents of the small community resting in a valley between MacArthur Boulevard and the palisades of the Potomac have opposed a development plan that would have added l4 houses to the 60 already located in their two-block area.

Current zoning restricts the number of units on the property--a 1.1 acre site between Clark Place and Potomac Avenue--to nine single family houses. But the property owners, K&L Joint Venture, have sought a zoning change in order to build more.

A possible compromise plan, calling for 12 houses, was proposed Monday by the D.C. Zoning Commission in the latest of a series of hearings on the matter.

The debate has been intensified because of the neighborhood's setting, a geographically defined area set back from main streets.

Some residents said they moved there because of the location or because it seemed a good environment for their children. Georgetown University student Tom Hart said he came because it is "quiet and out of the way."

Residents have protested the increased parking and traffic problems they fear the new housing would bring by circulating petitions, hiring a lawyer and other experts and by monitoring the developer's proposal as it progressed through city government channels.

K&L partners, Charlotte Levine and her daughter, Lisa Kisber, bought the partly wooded acre overlooking the river in l981.

Levine told the D.C. Zoning Commission in a July 25 hearing that building only nine houses "is simply not economically feasible unless the houses are very large and very expensive and can be developed in such a way that they are set off from the rest of the community which ... does not contain any large, expensive housing."

In testimony before the zoning board, her financial manager William S. Harps said houses nearby sell for $128,000 to $146,000. If 16 houses were built on the property they would sell for about $200,000, Harps said, but reducing the number would increase the price to $300,000 or more.

"Potomac Avenue is like a country road. Improvements will only make it look like another street in the suburbs," said Kirk Rankin, an 11-year resident of the street, whose property adjoins Levine's.

Rankin, chairman of the Advisory Neighborhood Commission, (3B) and leader of the opposition to Levine's plan, said he is concerned about its negative environmental impact. He has questioned Levine's estimate that she will be able to save 80 per cent of the mature trees on her lot.

"Any development will kill a lot of trees," Rankin said. "Overdevelopment will kill even more and leave the property not nearly as nice as it is now."

Pierce Gault, a former assistant verger for the Washington Cathedral who has lived in the area 28 years, said he is concerned about the loss of open space. "We need some place to go to get away from all that for a little while," he said.

But residents said they are most disturbed by the idea of being asked to accept more intensive development because a developer cannot profit by building according to existing zoning.

"If a developer makes a bad investment, neither the neighborhood nor the city has a duty to make it up to her," said Ted Tschudy, a management analyst with the Agriculture Research Service.

This should "not be a case where the economic situation of the developer is a major factor in the zoning Commission's decision," echoed, Robert Stumberg, attorney for the residents.

Nathan Gross of the District's office of Planning said that a developer's investment "can be an issue in the commission's decision, but it cannot be the only or determining factor."

Levine, who has been developing properties in the Washington area since l954, said the houses she would have to build if only nine were allowed, would be so different from the federal style brick ones in the neighborhood that "a wall would be built around them," to separate them from the existing community.

"I have never had such a bad experience with a community in all my life," said Levine, whose developments include buildings near Dupont Circle and in Bethesda. She said her previous projects have been "an asset to the community" and that she has "never been destructive to a community."

"They don't want change," Levine said of the Foxhall area residents.

On a 4-0 vote Monday, zoning- board members decided to invite the developer to design a plan to build a total of 12 houses, including the renovation of two of the three existing houses, if provisions are made to save most of the trees on the land.

The potential solution to the conflict was made possible by a special zoning classification known as a planned unit development (PUD).

Last October, when the five-member zoning commission denied Levine's request for a zoning change to allow construction of 16 houses, which she later reduced to 14, they suggested that she explore developing her property as a PUD instead.

A PUD does not change the zoning, but it allows a developer on residential sites to build more or different housing other than that permitted under the zoning regulations. A PUD gives a developer greater flexibility in design and construction. In exchange, the development plan is more closely scrutinized by the commission. And the developer must show that the interests of the city are served by the PUD plan.

PUD's are usually considered for lots of three acres or more, but applicants may request a waiver of the minimum acreage requirement, as Levine has done. In such instances, the development plan must show "exceptional merit"--that is it must be an exceptional plan in order to gain approval.

Zoning commissioners said the "exceptional merit" in this case was that it would save more trees than would be saved by building according to current zoning.

"Twelve houses are better than l4 but not as good as nine," said Rankin who attended the zoning meeting, though the community still has the opportunity to rebut Levine's plan.

"It's back to the drawing board for us, for a plan to meet their requirements and that will further enhance the project for the community," Levine said.