Controversy surrounding a boarded, littered building at Minnesota Avenue near Benning Road NE seems bound to recur throughout the District as the need for city-supported facilities escalates.

Neighbors insist that the one-story former insurance office at 4017 Minnesota Ave. NE must not be converted to a halfway house for 40 men leaving the prison system, because it is across an alley from a day care center, next to a Red Cross office frequented by senior citizens and central to a corridor they hope to rejuvenate.

"It's a ridiculous place; we cannot see revitalizing the area with this," said Martha Greene, president of the Minnesota Avenue-Benning Road Economic Revitalization Committee. D.C. Council member H.R. Crawford (D-Ward 7), citing millions of city dollars spent and planned for improving the shopping district, vowed to back his constituents and block the center.

But in a city that faces a federal judge's order to end prison overcrowding by July 1, an ever-growing homeless population and the September release of hundreds of mental patients from St. Elizabeths Hospital, the debate over where to place alternate and temporary homes will most likely become frequent and widespread. Halfway houses, officially called community correctional centers, accommodate both paroled prisoners and citizens sent directly by the court in alternative sentencing programs.

"We're looking at individuals who would be coming into the community in six months anyway," Arthur Graves, the D.C. Department of Corrections' acting assistant director for community affairs. "I would like to see everyone who is released come back this way. We think it would reduce recidivism."

The Department of Corrections uses halfway houses to prepare ex-offenders for return to their communities by providing counseling and financial training, and by requiring residents to work, seek work or attend school outside of the center.

In fiscal 1986, 3,109 residents stayed in the city's eight halfway houses, an average of 90 days. The corrections office reported that 57 percent of the residents successfully completed their stays, and that 43 percent violated terms of their stay or were rearrested.

Graves said that the city is accepting bids until June 30 for private firms to run halfway houses, and hopes to establish a total of 244 new beds this year.

The city's main determinant in location matters -- its zoning regulations -- allows "community based residential facilities" in residential areas and low-density commercial areas if the Board of Zoning Adjustment grants specific approval. The Minnesota Avenue site has C-3 zoning, which permits such community based facilities without board clearance.

Along with adult halfway houses, permitted facilities include drug rehabilitation centers, youth halfway houses and residences, homeless shelters and some health care facilities.

In practice, the location of community-based residential facilities has been heavily influenced by economics. Operators generally choose less costly residential neighborhoods to lessen their expenses, and sometimes open without zoning authorization, which stipulates that such facilities be 500 feet apart. Thus, neighbors complain, many affordable areas have become unfairly "saturated."

In the Minnesota Avenue case, the concern is the proximity to commerce and vulnerable segments of the population.

"It's just too close to the day care facility. And this is an area where we have an upbeat effort" in development, Crawford said. The city has invested millions of dollars in revitalizing the area, and may join a partnership to build a cultural center and office building next to the Minnesota Avenue Metro station, he said.

James Onley, who heads a task force appointed by Crawford to find an alternate site in Ward 7, said that the group has found a dozen buildings that it considers more appropriate, but has received no reaction from Eclectic Communities Inc., the contractor proposing the halfway house.

Larry McLeod, Eclectic Communities' representative, said that none of the other proposals was suitable, and that he foresaw no trouble on Minnesota Avenue, particularly after interviewing neighbors of other city halfway houses.

"Many of them didn't know it existed," McLeod said. In other cases, "fears were put to rest once the facility started."

McLeod emphasized that the facilities offer hope for the reformation of ex-offenders.

"We're talking about men who come from the city, from these wards," he said. "Without such a program, after leaving prison and finding little support and having no skills, they will probably revert to the life they knew. The only support network is the guys they left behind them on the street."