Montgomery County is a finalist in a nationwide competition for a $35 million federal grant that local officials would spend on a monorail linking the Grosvenor Metro station with Montgomery Mall in North Bethesda, transportation planners said yesterday.

The project -- dubbed the Air Train -- would be built on a 2 1/4-mile route, linking the transit hub and surrounding homes, the Rock Springs office area of North Bethesda and the shopping mall, which was recently refurbished. Fares would probably be less than $1, Montgomery Planning Director John J. Clark said yesterday.

Montgomery officials have discussed the monorail idea for several years, but it has gained momentum because of federal transportation legislation passed by Congress last year that establishes a program for "suspended light rail" technology.

Under the program, federal transit officials established a competition between cities for the right to build the system as a way of demonstrating use of a monorail that is supported from above on a slender, unobtrusive guideway. The monorail cars at Disney World and other places run on rails below the vehicle.

After reviewing 17 proposals, officials chose Montgomery, Milwaukee County and the Bay Area Rapid Transit District (BART) in San Francisco to compete for $35 million that would go toward designing and building the monorail system. The winner will be announced by next summer.

"A major consideration was to ensure that the systems selected under this program will indeed serve a legitimate mass transit need, and not merely provide an interesting exhibit," Transportation Secretary Andrew H. Card Jr. said in announcing the winners.

In San Francisco, BART is proposing a monorail between its Oakland Coliseum-Airport station and Oakland International Airport, and Milwaukee County wants to build one between a medical complex and a planned research and development center. Monorails generally are faster and cheaper than subways.

Montgomery officials said they are optimistic they can meet Card's test. For one thing, there is virtually no transit service now between the Metro stop and the mall, which means most people travel the route in their cars. Getting from Grosvenor to the mall is difficult; drivers must backtrack on congested Tuckerman Lane and Old Georgetown Road and cross both spurs of Interstate 270.

Clark said the monorail would serve the major parts of a city: residential areas, a high-density employment center of more than 20,000 workers and a high-density retail shopping center.

Unlike much of the Metro system, Clark said, which generally is designed to carry people in the rush-hour direction, a monorail in the North Bethesda area would carry both inbound and outbound riders. Some riders would be taken from a park-and-ride lot at the mall to the Metro station to go to Washington, while people who work at the Rock Springs center or the mall would come from the city. An estimated 15,000 people would ride the monorail each day, Clark said.

Even if Montgomery wins the competition, the proposal faces other obstacles, such as financing. Nearby residents could also question whether the project would tear up neighborhoods and add to the noise problem there.

"The fear is that this would be an elevated system" like in Chicago, Clark said. "But it would not be noisy or dirty."

He said a monorail with an unobstructed view would attract people "who just want to ride for the sheer enjoyment of it."