The District government, which once sought to demolish the 61-year-old Tivoli Theater, has asked to have the structure designated a national historic place following a threatened cutoff of $228,000 in federal historic preservation funds.

The city's action, taken last week, comes 21 months after the now-defunct Joint Committee on Landmarks designated the Tivoli a local landmark as a reminder of the golden age of movie palaces and recommended that it also be listed on the National Register of Historic Places.

The District's request for the historical designation drew an immediate protest from J. Gerald Lustine, one of a group of developers seeking to build a shopping complex on the Tivoli site at 14th Street and Park Road NW.

"Why did they do that?" he exclaimed when told of the city's request for the national historical designation. "They must have lost their minds. We're trying to build a store up there. We can't build anything if the building stays."

Lustine said the developers, a group known as Park Central Associates Corp., "have tentatively agreed to keep up the facade 18 feet back [into the structure], but demolish the theater." However, he said no overall solution has been reached.

Carol B. Thompson, director of the city's Department of Consumer and Regulatory Affairs and the city's historic preservation officer, submitted the city's request to the Interior Department to designate the entire building as a historic place.

Thompson was warned in a Feb. 14 letter that the federal money could be cut off if she didn't submit the request by last Saturday or provide an explanation why it had not been done. Activists supporting the restoration of the Tivoli had appealed to Interior to prod the District to submit the application for the national historic designation.

The federal funds are partly used to assist in renovating some structures and to pay for staff work by the D.C. Historic Preservation Review Board.

Thompson's spokeswoman, Joyce McCray, said the delay was partly due to a backlog of other nominations to the National Register and that there were technical problems in properly completing the Tivoli nomination.

McCray said that despite the threatened fund cutoff, "It was our view that the money was not in jeopardy."

Eric Graye, president of Save the Tivoli, a band of about 200 Columbia Heights activists devoted to preserving the now-vacant structure, said the city's request for the national historic designation is "better late than never. They have finally done it, but only under our pressure."

He said the federal historic designation is "not automatic," but, if granted, "will make it more difficult to demolish" the Tivoli.

Bruce MacDougal, an architectural historian for the National Park Service, said the Tivoli's "chances are very good" for inclusion on the National Register of Historic Places, since the building already has been determined to be eligible.

The local historic designation for the Tivoli restricts demolition and also requires a public hearing by the Historic Preservation Review Board, which replaced the landmarks committee, before any significant changes can be made to the exterior of the building.

The federal designation would, among other things, allow anyone who redevelops the building to take a 25 percent tax credit for the cost of the renovations and improvements, provided it is rehabilitated according to federal guidelines.

"What we'd like to see is a creative, adaptive use of the building," Graye said, with the 10 two-story shops along the Tivoli's 14th Street side being reopened and the interior of the 2,500-seat structure being restored as a movie theater and community center.

The Tivoli has been the subject of a years-long fight between the Save the Tivoli group and developers and others in the neighborhood who want to raze it for new commercial development. Graye said restoration of the building "would act as a catalyst for economic development, a cornerstone for redevelopment along the northern end of 14th Street."

Some community residents have opposed saving the Tivoli, partly on grounds that until 1954, in the days of segregation in Washington, blacks could not attend events there.

The theater, closed since the last movie was shown on Christmas Eve in 1976, is in the middle of the 14th Street corridor that still bears the heavy scars of the rioting ignited by the 1968 assassination of the Rev. Martin Luther King Jr.

In its heyday, the Tivoli offered moviegoers the splendor of plush carpeting, plum damask wall coverings, an enormous ceiling dome with an elaborate chandelier and a $35,000 Wurlitzer organ to accompany silent films before "talkies" came to Washington.

Two years ago, the District sought to demolish the property and let Park Central Associates Corp. proceed with commercial reconstruction of the area. In addition to Lustine, the developers include Dart Group Board Chairman Herbert H. Haft, businessman Arthur McZier and the Temple Church of God in Christ.

But after Save the Tivoli sued to block the demolition, the city agreed to settle the case in July 1983, comply with normal historic designation procedures and revoke its commitment to the developers to seek the theater's demolition.