A D.C. Council proposal to require "fair" distribution of group homes and halfway houses throughout the city attracted strong criticism yesterday at a public hearing in which some witnesses argued for stricter provisions and others said the measure is unnecessary.

Some advocates for the mentally ill and mentally retarded also said the bill, introduced by council member H.R. Crawford (D-Ward 7), would further stigmatize residents of community-based facilities.

"The assumption on which {the bill} appears to be based -- that there is something bad about such facilities -- is simply mistaken," said Lee Carty, a representative for the Mental Health Law Project.

"If enacted in its present form, the bill would therefore serve to codify further stigmatization of a population already victimized by prejudice and discrimination," Carty said.

The placement of group homes, long a prickly issue in those District neighborhoods where they are disproportionately concentrated, is receiving renewed attention as the District government moves to add 300 such facilities over the next four years to comply with court orders for deinstitutionalization and to relieve overcrowing in the District prison system.

The council bill is designed to strengthen the government's existing equal-distribution approach by requiring the mayor to establish a formula to "mitigate the adverse impact of the concentration of community-based residential facilities within a particular ward of the District."

But Beverly Russau, coordinator for the Office of Community Based Residential Facilities, testified that zoning laws and the Barry administration's continuing efforts make the Crawford measure unnecessary.

And other witnesses testified that placement of group homes is so damaging to property values in their neighborhoods that they should be compensated by the government.

They suggested that the compensation could be in the form of money or an increase in city services to the area.

Vince Gray, executive director of the D.C. Association for Retarded Citizens, differed, however, and noted that an October survey of 62 homes for the mentally retarded found that the homes had had no adverse effect on property values.

Some neighborhood groups have taken legal steps against proposed group homes. The Civic Association of Georgetown filed a lawsuit Wednesday in Superior Court asking the court to rescind the District government's purchase of the former Hurt Home for the blind.

The District bought the facility for $2.9 million this year and plans to use it as a residential facility for emotionally disturbed children. The Georgetown group previously had filed a suit in U.S. District Court, but a federal judge said the matter should be resolved in Superior Court.

Barry administration officials have said the purchase of the Hurt Home demonstrates the city's intention to place group homes in some of the more affluent areas of the city.

The District has 589 community-based residential facilities, with the largest number, 158, in the mostly middle-class lower end of Ward 4 and the smallest number, 21, in largely affluent Ward 3.

In response to criticism of his proposal, Crawford said he was willing to make changes and said he in no way intended for the bill to be viewed as having a negative affect on residents of group homes. He said his main concern is making sure that District residents with special needs be allowed to live anywhere in the city.

Crawford's bill received support from a number of witnesses representing the city's advisory neighborhood commissions. They said existing laws have not prevented a saturation of homes in some areas because group home operators have received exemptions.

They urged Crawford to stengthen the bill by developing a fairness formula and altering zoning laws.

Frieda Murray, chairwoman of advisory neighborhood commission 6C, said some group homes in her ward are not properly supervised. She said residents have complained of loitering, public urination and open drug use. She suggested that the bill be written to avoid any special treatment for some parts of the city.

Murray said she did not want to see only "the gentle old ladies" go in group homes west of Rock Creek Park while adult offenders are placed in halfway houses east of the Anacostia River.