A D.C. Superior Court judge yesterday upheld the city's authority to rezone the Georgetown waterfront, a quiet area of industrial buildings and old town houses that developers and the city plan to transform into a bustling section of new office buildings, hotels, shops and luxury apartments.

Considered to be one of the most valuable pieces of real estate in Washington development of the waterfront area has been slowed for two years while the city goverment and developers waited forJudge Sylvia Bacon to render an opinion.

The suit decided yesterday was brought in early 1975 by the Citizens Associations of Georgetown whose members wanted the waterfront to be rebuilt with single-family homes and very small commercial establishments similar in scale and feeling to the rest of historic Georgetown.

Olcott H. Deming president of the Georgetown association, said yesterday his group had not yet decided whether it will appeal Bacon's decision to the D.C. Court of Appeals.

Assistant Corporation Counsel Louis P. Robbins, who represented the city in the lawsuit, hailed the judge's ruling as a victory for home rule because it affirmed the District of Columbia's control over its zoning decisions.

Developers and lawers with an interest in the case said the court decision was a big step towards clarifying leal issues that long have clouded efforts to develop the waterfront area.

While they waited for Judge Bacon to make her decision in the case, some developers who own property in the waterfront area nevertheless went ahead with their building projects. A 218-room hotel and a complex of officers, stores and apartment units are currently under construction between 33d and Potomac Streets NW.

"Some people just found it impossible to wait," said Norman Glasgow, who represented several property owners who were named as defendants in the lawsuit.

"The big thing is that construction costs continued to go up" as the developers waited for a decision in the case, Glasgow said. In addition, he said, while they were held in abeyance, the property owners were paying interest on bank and construction loans and were incurring additional liabilties in connection with their projects.

"They found the least of two evils would be to proceed," Glasgow said.

Other developers, like the Georgetown-Inland Corporation, which owns six acres of land in the waterfront area, decided to postpone development plans until the legal questions were settled. Inland was a defendant in the citizen's suit.

Paul Upchurch, Inland's vice president and general manager, said yesterday that his company set aside plans for a $60 million office, retail, hotal and condominium project to be built along the Potomac when the citizens filed whtheir lawsuit in January, 1975.

Now, Upchurch, said, as a result of Racon's decision, Inland will review its plans and determine its next steps.

"We will have to digest what's happened and look at the market", Upchurch said. "Whether we develop it or sell it, the general plans we had probably will be accomplished."

Upchurch characterized the lengthy and completed legal dispute as "very costly and non productive for everybody."

Deming said the lawsuit has so far cost his Georgetown citizens group in excess of $50,000. In her decision. Baconordered the citizens to pay court costs that resulted from the litigation - such as the costs of depositions and filing fees - which could amount to several thousand dollars more.

Deming said his association favored "mixed development" along the waterfront, similar to the small homes, apartment buildings and shops that now exist in the Georgetown area above M Street N.W,

"In other words a liveable community where . . . the town doesn't pull up the sidewalks at night like they do in Rosslyn," a glassy, high-rise complex across the Potomac from Georgetown in Arlington County, Demming said.

Grosvenor Chapman, an architect and long-time spokesman for the Georgetown citizens group, said the planned waterfront development will "Manhattanize Georgetown" with big buildings, pollution, noise, traffic congestion and overcrowing.

Sara Blunt, an advisory neighborhood commissioner in Georgetown, said the decision "endorses the right of the Zoning Commission for a short-sighted, better-skelter approach towards zoning and land use."

She called Bacon's ruling "a blow to those who wish to continue to live in the District of Columbia."

The legal dispute raised by the citizens groups centered in a November, 1974, decision by the zoning commission that, in effect, reduced the watefront's zoning from high density commercial-industrial to mixed use, multi-density zoning.

The change allowed for the construction of hotels and motels in the area, a ruling that was strongly opposed by the citizens group, which favored residential town house and limited commercial development, in the waterfront area between M Street NW and the Potomac River west of 28th St. NW and east of Key Bridge.

In their lawsuit, the citizens argued that zoning in the city had to conform to a set of land-use objectives set down by the National Capital Planning Commission in 1968.They based their argument on language in the 1973 Home Rule Act, which said that changes in zoning must be consistent with the "comprehensive plan for the nation's capital." The 1968 objectives which called for low-density residental use in the waterfront area, were the only "comprehensive plan" in existence, the citizens argued.

The Home Rule Act took away from the NCPC control over city zoning and gave it to the mayer. If local plans conflicted with federal plans, which NCPC controlled, the commision could veto the plans.

When the city formally took over control of zoning in January, 1975, the citizens argued the November rezoning decision was inconsistent with the NCPC comprehensive plan and thus was contrary to the will of Congress.

Bacon concluded that the disputed language in the Home Rule Act about "comprehensive plan" referred to existing zoning maps and regulations as developed by the Zoning Commission - and not to the 1963 comprehensive plan developed by NCPC.

The entire thrust of the home rule legislation is toward self-determination," Bacon noted. To interpret the language as the citizens read it would be to give the National Capital Planning Commission and its 1968 plan "a pre-eminent position" in land use planning which Bacon ruled was not the intent of Congress when it granted the city home rule.

Bacon dismissed the citizens' further arguments that zoning commission staff members had improperly discussed the waterfront issue with developers, prior to the rezoning. The suit also contended that Mayor Walter E. Washington and City Council Chairman Sterling Tucker had received campaign contributions from developers interested in the waterfront while Washington and Tucker were members of the Zoning Commission.

Bacon said there was no evidence of abuse in terms of the contributions.

Additional projects now under construction along the Georgetown waterfront are a 218-room hotal and 75,000 square foot office building at 29th Street and Pennsylvania Avenue NW: and a six-unit apartment building on the west side of Thomas Jefferson Street NW.

Proposed projects include a 200-room hotel at the corner of M and 30th Streets; an office-apartment complex between 29th and 30th Streets NW; shops and 75 apartments near Wisconsin Avenue and M Street NW: and 100town houses between Potomac and Grace Streets NW.