The Arlington Planning Commission last night recommended denial of a rezoning requested by public relations executive Robert Keith Gray to permit construction of 38 $300,000 town houses in the county's scenic Potomac Palisades area.

Commission members said they wanted fewer units on the site and feared that the requested zoning would set a bad precedent for future development near the Potomac River.

The site is a roughly triangular 5.3 acres bordered by I-66, North Court House Road and Spout Run Parkway.

Gray, who is prominent in Washington public relations and lobbying circles, moved to a house on the site 23 years ago and bought a few neighboring parcels initially to ensure privacy. About 1980 he started to consolidate other parcels with an eye toward future development, said a spokesman. Gray moved from the site in 1981 after a fire destroyed his house. He did not attend last night's hearing.

Under the land's current zoning, Gray can build a cluster of up to 34 town houses, but that would not be economically feasible, said Paul Locher Jr., vice president of Robert Gray Properties. Locher said it has not been decided whether to pursue the rezoning request before the Arlington County Board.

Gray's proposal met county requirements for open space, setting aside just under three acres for common open areas. The site includes many steep slopes and a ravine. The plan was supported by some neighbors, including the North Highland Civic Association.

Some neighbors said the plan, which would give neighbors a say in the conditions to be imposed on a developer, was preferable to allowing the builder to put up single- family houses as allowed under the zoning code. Under this option nearby residents would have no say in the development.

John Jessup, reading a statement on behalf of the the National Park Service, which administers the nearby George Washington Parkway, urged the commission to reject the town house plan, saying the development would be visible from Spout Run Parkway and "result in the virtual destruction of the splendid natural features of the site."

Barnes Lawson Jr., an attorney for Gray, defended the plan, saying it was the best one for the community and the county government. He pointed out that Gray had reduced his proposal from 49 to 38 town houses and had altered plans in order to preserve more open space, to allow the public to traverse the site, and to set back the houses so they would be less obtrusive when viewed from Spout Run Parkway.