A Falls Church developer is planning to build a $20 million shopping center that will contain about 20 stores including a Safeway, a Zayre department store and a Peoples Drug store at a busy intersection in Brookland, a community now largely bereft of grocery and drug stores.

The shopping center, planned nearthe corner of Fourth Street and Rhode Island Avenue NE, is scheduled to open in about a year, but its future is completely dependent on the federal and District governments financing the bulk of construction costs, said developer David J. Rosenstein, of the Redstone Development Corp.

District officials, who are supporting the project, hastily called a public hearing last week to inform Brookland residents for the first time of the proposed project. It has received mixed reviews.

Virginia Matthews, the advisory neighborhood commissioner for the area surrounding the proposed center, supported the project.

"I've been working on that for the last three years diligently," she said in a recent interview. "We have a number of people in the neighborhood who cannot go anywhere unless they're bused. If there were stores, they could go right down there. All the people around here, on North Capitol Street, and on all the side streets want this."

But local storeowners complained that the new shopping center might drive them out of business. "There is a genuine concern about the effect that a large retail center would have on small businesses," said Doug Daiss, the owner of Stanley's Five and Dime, a Brookland variety store. "We're talking about businesses that have been out here for years and years," he said.

Brookland, a middle-class community of mostly owner-occupied homes surrounding Catholic University, now has two small neighborhood shopping areas. One is at the intersection of Fourth Street and Rhode Island Avenue near the site of the proposed shopping center and a second is strung along 12th Street NE, between Monroe Street and Michigan Avenue NE.

But both these commercial strips are filled with small mom and pop stores, such as dry cleaners, antique stores, small dress shops and other specialty shops. A Safeway in the 12th Street shopping corridor and another at 18th Street and Rhode Island Avenue have closed in the past two years, forcing many residents to drive to Maryland or shop at the Safeway store at Third and Rhode Island Avenue NW.

The new shopping center is proposed for a 12-acre site that is bounded by Rhode Island Avenue on the south, Fourth Street on the west, the Metro Red line on the east and the Edgewood Terrace Apartments on the North. It is half a block from the Rhode Island Avenue Metro station.

Officials from Safeway, Peoples Drug and Zayre suggested the 12-acre site for the shopping center, said Rosenstein and all three have signed leases to take space in the project, he added.

Safeway spokesman Larry Johnson said his company liked the location because, "We feel it's one of the high traffic areas in the city without a viable shopping center. . . .We're hoping to service the South Dakota Avenue corridor back to the District line and the Bladensburg Road area. There's nothing there."

A Zayre spokeswoman said that company had no comment on the project and Peoples spokesman Joe Pollard, vice president for advertising and public relations, said he could not confirm a lease agreement for space in the project.

Rosenstein said his company has an option to buy the site for $3.4 million from a Florida company, the current owners.

"We have a good reputation as a shopping center developer," he said. "They Safeway, Zayre's and People's probably felt that if there was anyone who could put this deal together, we could. I think the stores went around and saw there was no retail core down there, and a lot of people they could sell to," he said.

His company has built at least eight shopping centers in the suburban Washington including Loehmann's Plaza in Fairfax, Mount Vernon Plaza in Alexandria, and Allentown Mall in Prince George's County, he said.

City officials hurriedly called last week's public hearing so the District could apply to the U.S. Department of Housing and Urban Development for a $4.4 million loan for the project. HUD requires a public hearing as part of its application process for such loans, which are formally known as Urban Development Action Grants.

Another $10 million would come from the city's sale of tax exempt Industrial Revenue Bonds. District officials have promised many developers that their projects would be among the first industrial revenue bond issues, which could be a year away.

Industrial revenue bonds, a popular mechanism used by local governments to finance business projects, are sold to private investors who are repaid from the proceeds of the business enterprises.

Rosenstein could go to a bank and borrow the money, but at current interest rates the project would never generate enough money to pay back the loans, he said. The government monies carry lower interest rates that would allow the project to be profitable, he explained.

At last week's public hearing, some residents complained that they had only received four days notice to review the shopping center plans.

"Our concern is that the civic process has been run over by the desire to get a project going," said Paul Theiss, the cochairman of the Monroe Franklin Civic Association.

Robert I. Artisst, president of the Brookland Neighborhood Civic Association, described the financing as a subsidy for big business saying, "There is a large amount of underwriting by the D.C. government needed for this project."

Then he asked, "What percentage of the small businesses will be able to afford one of these shops? Are there any provisions to help the small businessemen keep afloat?"

Many of the speakers said that neighborhood residents should receive preference in getting jobs at the project and Rosenstein agreed.

In an interview after the meeting, Rosenstein said he intends to make sure community residents will have the first chance to apply for jobs on both the construction project and in stores after they are built. Safeway, Peoples and Zayres have signed agreements with the D.C. Department of Employment Services to give preference in hiring to District residents, he said.

"We're D.C. residents," he added. "I live in the city, my father lives in the District. We care about the city. We're sensitive to the fact that there is high black unemployment. We feel that since we're going into the neighborhood, we want the people of the neighborhood to be a part of what we're doing," Rosenstein said.