Seventeen of 32 private residential homes under contract with the D.C. Department of Human Resources are operating illegally because they have not been inspected for housing, fire and health standards, according to a draft report by the city auditor.

The report came in the wake of a fire at a Northwest foster care home Wednesday in which nine women outpatients from St. Elizabeths Hospital were killed and six injured. That home, at 1715 Lamont St. NW, was operated by a private group under an agreement with the hospital and remained open despite fire safety and licensing violations, city officials said.

According to the auditor's report, none of the 17 homes, which provide various types of care for both children and adults, had valid certificates of occpancy. Ten of the 17 had never applied for such certificates, the report said, while seven have applications pending from as far back as 1976, "indicating the existence of uncorrected violations."

The report also said that 21 of the 32 facilities did not have rooming or boarding house licenses. Both a certificate of occupancy and a rooming or boarding house license are required to operate such houses in the city. The house on Lamont Street was operating with a rooming house license and a certificate of occupancy, although city officials have questioned the validity of those licenses.

The report, prepared under the direction of city Auditor Matthew Watson, cited a number of irregularities in DHR contract arrangements with residential homes in the city. These included:

The DHR circumvented housing and health safety inspection laws by conducting its own inspections and by granting contractors 60 days to obtain "appropriate licenses and occupancy permits" after they began delivering services under the contracts.

"The law does not allow any use prior to issuance of a certificate (of occupancy)," the report said.

"DHR enters into contracts with organizations even when the contract facility has been refused a certificate of cocupancy because of multiple health and safety violations," the report said.

DHR inspections are not coordinated with those of the city's Department of Environmental Services, the fire department or the housing department.

In one case cited in the report, two surplus city public schools given to DHR were turned over to nonprofit organizations to be used as shelters for homeless men and women. Yet, the report said, neither the Department of Environmental Services nor the fire department were informed that the buildings were reopened and therefore did not inspect them before they went into service.

As an example, the report described DHR's arrangements in contracting for services with Rap Inc., a drug rehabilitation program at 1731 Willard Street NW.

As of April 2, that home-which houses 11 persons-had been cited for seven electrical code violations, 34 housing code violations, seven building violations. No application has been made for a permit to perform the electrical work, and no certificate of occupancy has been issued to that house.

City Administrator Elijah B. Rogers confirmed that Rap Inc. has not been issued a permit and that it is still servicing people under the contract.

"You can enter into a contract with someone contingent on them doing something," Rogers said. "If Rap Inc. were not in effect what would we do with these people needing this service?" he said.

Rogers said he was not aware of the city knowingly or otherwise, contracting with group care homes that were operating illegally.

The housing violations at Rap Inc., he said, are the responsibility of the landlord, not the people running the program. However, both the city and the Rap Inc. administrators have been working with the landlord to have the deficiencies corrected, Rogers said.

In a memo to Watson yesterday, Rogers said that Rap Inc. woudl not be issued an occupancy permit until the violations are corrected.

The administrator of Rap Inc. could not be reached for comment, nor could Albert P. Russo, director of HDR.

William Whitehurst, assistant DHR director, said he felt that "as a matter of policy I don't think the department would in fact violate the law. We try to rigidly adhere to all prescribed guidelines."

Whitehurst said he has not seen the report and could not comment further on its findings.

Besides the nine people killed in Wednesday morning's fire, six were injured and three are still hospitalized at Washington Hospital Center. One 79-year-old woman was listed in critical condition late yesterday suffering from second- and third-degree burns. Another woman, who underwent surgery for injuries she received when she jumped out a window, was listed as serious but improving, and a third was listed in good condition, hospital officials said.

In an attempt to prevent more such disasters in any of the city's estimated 450 unlicensed group homes, the auditor recommended in the draft report that the city cut off payments to any contractor who doesn't comply with the laws governing permits and licenses.

A similar stance was taken yesterday by the city's planning director and officials on the D.C. Zoning Commission.

The zoning commission yesterday extended a 120-day emergency order that had prohibited the establishment of new halfway houses caring for 30 or more people. The order, which would have ended today, was extended 120 more days.

The commission also set public hearings for May 21 and May 24 to discuss proposed zoning changes that would allow group care homes to be established anywhere in the city. At present the homes can only be placed in areas zoned for row houses and apartment buildings.

James Gibson, director of the office of Planning and Development, said his office is not 100 per cent satisfied that they have located all the unlicensed and licensed group care homes in the city. Preliminary reports on these facilities have indicated that some homes are arbitrarily dispensing medication to their residents, among other deficiencies, Gibson said.

At present, the planning office is involved in the evaluation of these homes with staff members from other city agencies, including DHR, Gibson said.

Officials have identified five of the victims of Wednesday's fire as Nell Dodson, 75, Margaret Garvey, 57, Angie Eammelli, 4,, Catherine Elsea, 61, and Nancy Inman, 62. Two other victims were burned beyond recognition and two have been identified but the police are withholding the names until their relatives are notified.

No burial services were set as of late yesterday. A memorial service is planned at the home at noon on Sunday. CAPTION: Picture, Rap Inc. building at 1731 Willard St. NW, cited for code violations. By Linda Wheeler-The Washington Post