A District government rent subsidy program designed to reduce housing costs for thousands of low-income residents spent only $3 million of its $15 million budget during its first full year of operation, records show.

Of the 2,018 Tenant Assistance Program certificates issued during fiscal 1987, which ends today, only 700 of the certificate holders have been able to lease apartments. Officials attributed the limited success to the city's low housing vacancy rate and a lack of participation by landlords.

Because it was evident early that the full allocation would not be spent, $4.1 million was transferred to the city's supplemental budget and $695,000 was used for another housing program. An additional $7 million was unspent, said Alphonso Jackson, who has been nominated by the mayor to head a new housing department that will administer the subsidy program.

The subsidy program pays 70 percent of the monthly rent for tenants, and Jackson said he considers it a critical housing program because it is the "next step from public housing to self-sufficiency."

From the beginning, the program, a major feature of the city's revised rent control law, has been plagued by a lopsided relationship between housing needs and available units. The certificates are being issued to a pool of 10,000 eligible residents, but only 250 landlords have agreed to participate in the program.

Under the program, tenants who receive a certificate are required to pay 30 percent of their adjusted monthly income for rent and the city pays the rest. Units must meet the housing code and the rent must not exceed the city's payment standard, which ranges from $651 for an efficiency unit to $1,318 for a six-bedroom house.

Cleo E. Harris, a disabled resident who pays more than half of her general public assistance check for rent, said she has been searching for an apartment since she received the certificate in May. She said she had been rejected by at least 35 landlords.

"It has been depressing," Harris said of her search. "I'm right back where I started from. I get a monthly check of $229 and I spend $150 for rent. I have to borrow from all the friends I have. I'm not surviving. I'm existing."

Despite the problems, the city remains committed to the program. For the coming fiscal year, the government plans to make between $12.5 million and $20 million available. The actual amount depends on whether Congress approves a plan to allow the housing department to carry over $7.7 million in unspent funds.

In addition, amendments to the housing law sponsored by D.C. Council member John Ray (D-At Large) allow housing officials to enter multiyear contracts with landlords who make units available under the program. Some landlords say the amendments will ease fears that they will be left with tenants who cannot afford to pay rent if the city program ends.

"We can take a multiyear contract to the bank, and it will allow us to borrow funds to put units back on the market and some that are substandard will be upgraded," said Donald Slatton, executive vice president of the Apartment and Office Building Association. "This is the kind of program that will not be a big boom, but has to grow as landlords work with the program."