The Arlington County Board blocked the sale yesterday of $3.8 million in industrial development bonds to purchase and renovate a vacant Fairfax Drive office building, contending that the government should not be subsidizing the private developer's project.

On a 3-to-2 vote, the board rejected the request from Fairmont Associates for bonds to buy a five-story office building on a one-acre lot at 4420 N. Fairfax Dr. Public officials consider the location, just off I-66, to be a "gateway" to Arlington's Rosslyn-Ballston Metro corridor, slated for massive redevelopment that has so far lagged because of economic conditions.

The board's vote, with members Walter L. Frankland Jr. and John G. Milliken in the minority, came after a long philosophical discussion of the purpose of tax-exempt industrial revenue bonds and their role in future development in Arlington. It was the first time the board has blocked the sale of such bonds, which had won the backing of the county's industrial development authority. Several other projects have been approved for bonds in the past. In rejecting this proposal, the board rejected the project's backing from the county staff, who viewed the project as a way of "breaking the inertia" of redevelopment activity in the area.

William B. Fetsch, representing the Edward R. Carr Associates, the project's main partner, said there were also plans to build an eight-story office building at the site, and added that it would create up to 300 more jobs. He called the decision a "setback."

Board members said that the bonds, used to attract or retain businesses that benefit a community, amount to an indirect subsidy by the federal taxpayer because of the bonds' tax-exempt status.

Board member Mary Margaret Whipple, noting that the assessed value of the lot and building is just under $3 million, said, "I don't see why the taxpayers should be subsidizing the cost of purchasing this. I don't see that there is enough to distinguish this from other projects which might come forward."

Board Chairman Ellen M. Bozman and member Dorothy T. Grotos also argued that the special high-rise commercial-office-apartment designation for the site was intended to be an incentive for privately funded redevelopment of the parcel just a few blocks from the Ballston Metro station.

Frankland and Milliken maintained that this was an appropriate project for such financing because it kept an established business in Arlington and attracted a new firm as a tenant. They also pointed to the new jobs that would be created and the improved appearance for the "gateway" from the renovation of the 20-year-old building that otherwise might stay vacant indefinitely.