It has been a long time in coming, but downtown 14th Street NW -- scarred monument to the rioting of 1968 -- is about to look alive. The keystone is a huge new D.C. government building going up at 14th and U, with the likely possibility that new and better things will spring up along the blocks around this municipal center. But in the process, one of the few inspired mainstays of the neigborhood -- The Source Theatre -- may be lost in an odd turn of real estate events.

In jeopardy is the Source's 109-seat playhouse facility, the Warehouse Rep, at 1835 14th -- which a private real estate partnership seeks to turn into an office building. It isn't a matter of the Source's being financially unable to buy this building; theater officials say they have raised the money for this not-for-profit organization to match the price offered by the private partnership, and even have provided the partnership with a list of more than 60 "other potential office buildings in the same neighborhood and of the size required."

Were this merely the way the open market works, you might say too bad for the theater. But the partnership has been seeking a financial break from -- here's where everybody fits in -- taxpayers, in the form of a low-interest loan from the D.C. Office of Business and Economic Development. The explanation by the partnership is that it cannot find other suitable office space; in turn, the office of business and economic development says it can't influence the applicants.

If this arrangement holds, the Source, which has been renting the bottom floor of the building since 1980, and which spent six months cleaning and repairing the facility for its shows, will be hard- pressed to survive. But why should a government agency making a loan to improve a neighborhood let an established imprvement wither to attract a would-be resource? It doesn't make sense -- and Mayor Barry himself might well see what he can do to keep the theater and attract the new firm as well.