A developer has paid a community organization in Foggy Bottom $2.5 million to gain support for a plan to build more than 200 residential units in the neighborhood, money the group intends to use to fight expansion by George Washington University.

The unusual arrangement is the latest wrinkle in the ongoing efforts of the Foggy Bottom Association to remake its neighborhood, which residents complain lacks the kind of retail options, restaurants and other community staples that make an area a vibrant place to live.

The group made its deal with Trammell Crow Co., which paid the money after the Foggy Bottom Association agreed to the elimination of a legal restriction that blocked major expansion at the defunct Columbia Hospital for Women.

The Foggy Bottom Association had earlier gotten the hospital to agree that it would expand by no more than 230,000 square feet. Trammel Crow paid the association to agree to the lifting of that restriction.

The developer, which purchased the property last year, is now free to move forward with a planned 225 residential units and retail space that would encompass 330,000 square feet. Officials said the units will be completed in early 2006.

It's rare, perhaps unprecedented, for a D.C. community organization to receive such a windfall from a developer. The group's leadership immediately established a trust to use the money for a "defense fund" that is intended to protect the Foggy Bottom and West End neighborhoods from another aggressive developer: George Washington University.

Residents have complained for years that the university has expanded recklessly, buying property and housing students in their neighborhood. Several lawsuits, initiated by residents and the university, have resulted and some are ongoing.

"They want to keep growing until the whole neighborhood is part of their campus," said Ronald Cocome, president of the Foggy Bottom Association. The students and residents have "lifestyles that are so different. . . . Students come in at 4 in the morning and slam doors and have loud conversations. It's fine for a college campus but not when you work for a living."

George Washington officials say they are working hard to improve relations and ensure that residents and students can coexist.

Michael Akin, the school's point man in working with the Foggy Bottom and West End communities, said the university is working diligently to meet a 2006 deadline from the city's zoning board to have 70 percent of its undergraduate population living on campus. The school, he said, has added 2,000 new beds on campus in the past two years.

Akin said that as George Washington has expanded in the past 15 years, the school has at times been insensitive to the community. But that has changed, he said. The university has established a 24-hour hotline that residents can call to report problems caused by students in the neighborhood. Akin's office meets with residents regularly and recently co-hosted a block party to promote community spirit.

"At the end of the day, we're going to still be here, and we hope the residents are still here coexisting peacefully," Akin said. "We hope we can provide for the community . . . and change the way we are perceived."

While residents in other neighborhoods have been wary of the increased traffic and congestion that massive condominium projects can bring, the leaders of the Foggy Bottom Association say they hope the residential towers will bring new, affluent homeowners who can help lure neighborhood-friendly retailers.

Jeffrey Sherman, who is handling the project for Trammell Crow, said the developers already have secured a contract with Trader Joe's grocery to open a store under the West tower of the complex. Meantime, Trammell Crow wrote language into its contracts to ensure that the majority of its residents are owners who live in their units and do not rent them to students, Sherman said.

Of the 221 units that have been sold ahead of completion, Sherman said, "I can count on one hand the number of students, and those are grad students in their 30s."

Cocome said he is glad that new, permanent residents will be coming to the neighborhood.

"Our neighborhood has seen half our tax base wiped out by non-taxpaying residents the university has brought in," he said.

Not everyone is as upset with George Washington. Rita Champagne, a member of the Foggy Bottom Association, said she understands Cocome's concerns but added that she has tried to work with the school and the students. She is a member of a new group called "Friends," which meets regularly with university leaders to discuss concerns.

"We need to do more instead of sitting back and whining and complaining," Champagne said. "We need to talk things out and say what's on our minds, but nicely."