Rockville collected $946,612 more in tax revenue during fiscal 1985 than city officials had anticipated, largely as a result of an increase in commercial development, a new city financial report shows.

The report, released last week, describes the city's financial position as of last June 30, at the end of a fiscal year.

It shows that revenue from Rockville's general fund, which pays for most city operating expenses, totaled about $16 million, a 10 percent increase over fiscal 1984, said Mary S. Parker, Rockville's finance director.

That figure does not include Community Development Block Grant funds from the federal government, Parker said.

Most of the increase is due to a 12 percent rise in property tax revenue generated by new commercial construction and higher property assessments, Parker said.

In fiscal 1985, building permits for $83 million in construction were issued, compared with $62 million the previous fiscal year, Parker said.

Revenue from federal, state and county governments rose by 7 1/2 percent, also higher than Rockville's budget estimates.

City investments earned nearly $1.7 million in fiscal 1985, with an average rate of return of 10.4 percent on the average monthly investment of $16 million, the report shows.

Rockville invests primarily in short-term securities and U.S. Treasury bonds.

In other Rockville news, the City Council, with one member absent, last week effectively killed a request to annex an 11-acre tract along Rte. 28, opposite Research Boulevard.

The property owner, Covenant Development Corp., had asked the city to annex the steep-sloping tract, which is virtually surrounded by city property, and rezone the land for office construction. The owner had proposed building about 200,000 square feet of office space and 670 parking spaces.

But the council deadlocked on a 2-2 vote, effectively killing the proposal, which had drawn opposition from some nearby residents over traffic and safety concerns.

While the city planning commission had recommended annexing the property, it urged that the land be used for residences, as called for in Rockville's master plan. Commission Slots Open Gaithersburg has extended until Tuesday its deadline for accepting applications from tenants who wish to serve on the city's new Commission on Landlord-Tenant Affairs.

The commission will consist of two tenants who do not own or manage rental property, two landlords and three persons who are neither tenants nor owner-managers.

Commission members, who will receive no pay, will serve staggered three-year terms, assisting city staff in handling landlord-tenant affairs.

Appointments will be made by the mayor and confirmed by the City Council.

Coming Up: Kensington Town Council, 8 p.m. Monday, Town Hall, 3710 Mitchell St. All other regularly scheduled Montgomery town meetings have been canceled because of the holidays.