St. Elizabeths Hospital, the city's crumbling psychiatric facility in Southeast Washington, will be replaced in 2003 with a state-of-the-art hospital, mental health officials said.

The final approval of $75 million in funding will come when President Clinton signs into law the District's budget for fiscal 2000, as he is expected to. After that, construction can begin next year in a section of the hospital's campus off Alabama Avenue SE, near the uncompleted Congress Heights Metro station.

"I think it will be a much more humane environment, state of the art in terms of both treatment milieu, as well as cost efficiency and space efficiency," said Scott H. Nelson, the court-appointed receiver for the D.C. Commission on Mental Health. "We will save substantially on maintenance costs."

Three new buildings are designed to house 320 patients, about half the current number. About five of the existing buildings are intended for administration and maintenance use, but even so, the hospital will shrink from about 80 buildings--many of them more than 50 years old--to about eight buildings.

Hospital officials said they plan to pare the existing population by shifting most long-term, noncriminal patients into community settings, as mandated by a 1974 class-action lawsuit and a 1980 federal consent decree.

The hospital has long been a headache for the District. In 1987, the federal government turned over operation of the 326-acre campus off Martin Luther King Jr. Avenue SE to the District but failed to provide funding for needed improvements, city officials said. In 1997, the hospital and the commission on mental health were placed in federal receivership, and last year, the hospital lost its national accreditation.

In the past, patients have gone days without heat in winter and air conditioning on sweltering summer days. Last winter, the hospital rented extra boilers, but some rooms still weren't heated properly because of faulty air ducts, authorities said.

The hospital has been spending about $17 million a year for maintenance of the buildings, many of which are in disrepair, officials said.

"It's so much easier to build a new facility," said Maria Stetter-Burns, chief administrative officer for the D.C. Commission on Mental Health. "The move is very, very cost-effective. It's faster, it's cheaper and easier to deal with."

Nelson said a New York consultant told him this year that as psychiatric hospitals go, the facilities at St. Elizabeths were the worst of the worst.

Of the new facility, he said: "The lighting, the colors, the furnishing, the use of space is all configured for observation, therapy, privacy, various kinds of treatment on the wards. The heating, the ventilation, the air conditioning will all be brought up to modern standards."

The new facility got the requisite approval from the mayor, D.C. Council and Congress. Still, it has not been without critics.

Helen Bergman, co-director of Community Connections, a private, nonprofit group that provides outpatient treatment in the District, said she thinks the city might be able to build a smaller, less expensive hospital if it treated more short-term, noncriminal patients at private hospitals, such as George Washington University Hospital. She said some hospitals are open to discussing the issue.

"I think all the avenues have not been explored," she said.

Nelson said community hospitals often have refused to admit short-term, severely mentally ill patients who are involuntarily committed. But he added that he is interested in seeing whether local hospitals would help with any overflow of such patients.

E. Fuller Torrey, a psychiatrist who worked at St. Elizabeths and now heads the Stanley Research Foundation of Bethesda, which researches schizophrenia and bipolar disorder, agreed that the number of short-term beds should not shrink further than planned.

"I think the position that you can get high-quality care for the severely mentally ill at [community hospitals] is mythological," he said. "They have simply not delivered that type of care in the past to people who are severely mentally ill.

"If you squeeze the beds down to an inappropriate size, you will see even more mentally ill people on the streets and the D.C. jail will see even more than they're getting," Torrey said.

Plans call for one unit of the new hospital to house 225 patients with criminal backgrounds, including John W. Hinckley Jr., who shot President Ronald Reagan. A 75-bed building will house mostly short-term, noncriminal patients, and the third will accommodate 20 children.

It's unclear what will become of the land and dozens of abandoned buildings. Some buildings might be razed, but others are protected as historical landmarks. Recently, city officials have discussed the issue with federal authorities. The federal government still owns the western section of the campus.

"We don't have a specific plan; that's part of what we're looking at . . . businesses, residential, open space, how does it meet the needs of the surrounding neighborhood?" said Andrew Altman, director of the Office of Planning for D.C. government.