More than 170 new bus shelters have gone up in the city in recent months in a program designed to install lighted cover and seating at up to 500 Metrobus stops here at no cost to either Metro or the District.

But residents in several older sections of town, particularly those on Capitol Hill and around Dupont Circle, are upset.

They think the shelters, and the advertisements that appear on them to underwrite their cost, are unsightly.

"Here we have a historic area that's supported to be protected, and they put up billboards," said Dick Wolfe, a Capitol Hill resident. "You walk down the streets at night now and all you see is these . . . ads."

The shelters are being installed for free by a private firm. Convenience and Safety Corp. (CSC) of Washington, in exchange for an exclusive contract, valued at $10 million, to sell display advertising space on one side of each plexiglass bus shelter. CSC is co-owned by a New York based bus shelter firm and William B. Fitzgerald, president of Independence Federal Savings and Loan Association and a longtime supporter of Mayor Marion Barry.

Under the contract the city will also reap an annual fee of $300 per shelter or 10 percent of the advertising revenue, whichever is greater. CSC will clean and maintain the shelters.

"The need is indisputable," said John Drayson, deputy administrator of theprogram, who says 300 new bus shelters will be put up around the city by next spring. The 340 bus shelters that Metro has already installed were put up with federal subsidies that are no longer available, Drayson said.

"This is an affordable effort by the city to provide a service to bus patrons. The feedback we have received has been very positive," Drayson said.

Not everyone feels that way, however. Linda Minich, an Advisory Neighborhood Commission member from Dupont Circle, said, "We're not against bus shelters; nobody is. They are just completely incompatible with a historic district and the city is simply not following its own rules here."

Katherine Soffer, a spokeswoman for the Capitol Hill Restoration Society, added: "Here we've worked very hard to [pass legislation to] keep the facades of our houses and storefronts meeting esthetic guidelines, and the city comes in with these things. It's an insult."

Ronald Lewis, the director of the city's Office of Historic Preservation, says the law that set up the new shelter program made no provision to protect these areas.

"We have no say about these shelters because they require no permit," Lewis said.

Site selection and approval is completely up to the city's public works department and the contractor, Drayson said.

Only historic Georgetown and the Mall and U.S. Capitol enclave, where all private construction projects must be approved by the federal Commission of Fine Arts, are excluded from consideration.

"We testified very strongly against them, and somehow the areas under our jurisdiction escaped," said Charles Atherton, secretary of the Commission of Fine Arts. "We have always been against advertisments in the public space in this city. . . . They're a form of intrusion sort of like Muzak would be in the public space."

Drayson says he is sympathetic, but that new historic district designations are "popping up all over the place now, and if we start eliminating them all and then any new ones retroactively, the whole program would collapse because it's not economically viable."

Minich and others also complain that the city has refused to consult with the ANCs before selecting shelter sites. "The law says they are supposed to consult the ANCs, but they simply haven't. And when we've asked for a list of future sites, we are told they don't know where they're going."

Drayson said his office started out by sending the ANCs a list of 240 possible sites. But after many of those were eliminated because of space or other problems, his office decided to wait to advise ANCs until a site was certain, "rather than upset people or promise people something that wasn't going to occur." That, he admits, has sometimes provided little lead time.

"You know, we are hearing from the same people we heard from before [the city passed the shelter legislation]," said Drayson, who says Dupont Circle and Capitol Hill are the only two areas that have registered complaints.

Some residents are prepared to fight.

"We are looking into our legal options and planning to appeal to the City Council to amend their bill [to protect historic districts]," said Soffer. "Why shouldn't the city have to live by the same rules as we do?"