The District government has signed a lease agreement paving the way for a nonprofit community group and developer Jeffrey N. Cohen to redevelop the former Children's Hospital site and several nearby properties in Shaw, D.C. officials and the developers said yesterday.

The city acquired the property from Cohen last February in a complicated $12.5 million deal. Under the agreement signed Tuesday by Deputy Mayor Curtis McClinton and the Shaw-Coalition Redevelopment Corp., the nonprofit group will lease the property from the city then sublet the properties to Cohen, who will build a $140 million commercial and housing development.

Revenues generated by the proposed development will be used to repay the District for its costs in acquiring the property and to provide the nonprofit group with funds to help subsidize housing costs and provide jobs.

"This was the last major hurdle which has stood in the way of really commencing the development process," Cohen said. "There will be lots more negotiating to do, but the train has just come out of the station."

Cohen said that the developers would unveil specific plans for the redevelopment of the old Children's Hospital site, the Lincoln Theatre, the Manhattan Laundry and Thompson's Dairy in the next three to four months.

The project initially was criticized by City Council member Frank Smith Jr. (D-Ward 1), a Shaw-area Advisory Neighborhood Commission (ANC), and the 14th and U Streets Coalition for having been negotiated in secret without the benefit of a D.C. government appraisal of the land value and without allowing for adequate community participation.

Ibrahim Mumin, chairman of the nonprofit group, said yesterday that some of the complaints were dealt with by expanding his group's board of directors to include two from ANC-1B and two from the 14th and U Streets Coalition. A majority of the 15 board members live in Ward 1, which includes the Shaw neighborhood.

Kwasi Holman, executive director of the D.C. Office of Business and Economic Development, said that negotiations are still under way to determine what percentage of the revenues that go to Mumin's group will be reinvested in community development efforts in Ward 1 and how much in projects outside the ward. A proposed amendment to the nonprofit group's bylaws would earmark 80 percent of the revenues for activities in the ward, he said.

"While these issues remain to be formally resolved, we have a basic agreement to resolve them," Holman said.

Lozzie York, a board member of the 14th and U Streets Coalition, said that she and other members were not satisfied with the negotiations surrounding the lease agreement and planned to meet late yesterday with members of the ANC to discuss the matter further.

One of the unresolved issues, she said, is whether the District government conducted its own appraisal of the value of the property or relied instead on an appraisal prepared for Cohen.

York said that Smith, the Ward 1 Council member, had promised to clear up that question for her group before the District signed the lease agreement, but never got back with the answer. Smith could not be reached for comment yesterday.

Holman said that, "While we were not able to achieve complete unanimity within the community, we believe that this reconstituted board can resolve remaining issues of concern to the community."