The District government is negotiating to buy The Roosevelt for Senior Citizens, hoping to maintain it as low-income housing for the hundreds of elderly tenants who live in the 16th Street NW building, District officials said yesterday.

The current owner, Frances Pew Hayes, recently entered into a sales contract with a private group based in McLean to sell the property for $2.58 million, and the city government for two months has been discussing buying the building from that purchaser, North American Financial Investments and Management Group NV.

Ned Walsh, real property administrator under the D.C. Department of Administrative Services, said yesterday that the city is studying various uses for the building including health and elderly projects.

The Roosevelt, located in the 16th Street corridor of the city that is undergoing substantial renewal, fell on hard times in recent years following its early days of grandeur as a hotel in the 1920s and attempts at a rebirth in the 1950s and 1960s as an apartment-hotel and then as a senior residential apartment house.

Hayes has been losing money on the property for some time because of the lack of older people who can afford the monthly rent on unsubsidized apartments, and more than 100 of the 359 units are vacant, said an attorney for Hayes, Joel N. Simon. The unsubsidized rents exceed $600 a month compared to subsidized rents of $310 to $525. Rents include three meals a day and weekly maid service.

Hayes had made no payments on the building's federally insured mortgage for a year, and the U.S. Department of Housing and Urban Development has threatened to foreclose on the property, Simon said.

The eight-story building is located at 2101 16th St. NW, across from Meridian Hill Park.

At the same time, Hayes and the city government have been involved in disputes over whether old or new city safety and fire regulations apply to the building, which has been cited for numerous code violations, according to Simon and city officials.

The elderly residents at The Roosevelt, almost half of whom live in federally subsidized units for low-income persons, met yesterday to form a tenant association. City law gives tenants the first right to purchase their buildings when they are put up for sale, if the tenants can meet the price offered an owner by a contract purchaser.

Many residents, informed in an Oct. 18 letter of the proposed sale to the private group, expressed concerns about the pending sale and complained about the lack of information about the new owners and their plans.

"There is no place for us to move," said one 90-year-old resident, who asked not to be named. "This is the best place I know of."

"People want to know what's going on," said Elizabeth S. Johnson, newly named as secretary of the tenants' association. "They always feel someone is trying to take advantage of them."

Pearson Ames, vice president of the North American group, the contract purchaser, said the company has "a number of options at this point" for the property. "One does involve a situation where they current tenants could stay there," Ames said.

He said the company is open to selling to the city government.

Conversion to condominium apartments is one of several options the group is considering for the building which needs extensive renovation, Ames said.

Simon said that Hayes, an elderly woman who has retired to Florida, had offered to give the building to the District government in the past since she started losing money on it, but the city refused it. City officials late yesterday said they could not immediately confirm that offer. CAPTION: Picture, An investment firm has a $2.58 million sales agreement to buy The Roosevelt; Map, The Roosevelt. The Washington Post