A three-judge panel of the D.C. Court of Appeals yesterday upheld the validity of a District initiative guaranteeing "adequate overnight shelter" for homeless people, giving advocates for the homeless a significant victory and apparently broadening the ability of D.C. voters to use the ballot box to establish new programs.

The panel's unanimous decision reverses last summer's decision by a Superior Court judge that held the initiative invalid because it required the city to spend money, a violation of city laws because the electorate does not have the power to appropriate funds. Initiative 17, requiring the District to provide shelter that is "accessible, safe and sanitary and has an atmosphere of reasonable dignity" became the first of its kind in the nation when voters overwhelmingly passed it Nov. 6, 1984, over the vigorous objections of city officials.

"We can find no legislative intent to exclude this type initiative from the initiative process per se . . . ," Judge Theodore R. Newman Jr. wrote for the court. "To construe the exception in the manner suggested by the District of Columbia in this case would be to effectively write the initiative process out of existence."

Mayor Marion Barry said the panel's decision would "seriously undermine" the lawmaking authority of the mayor and City Council and said he planned to appeal the decision to the full Court of Appeals.

Barry, calling the issue "so essential to home rule," said the District's opposition to the initiative should "not be construed as opposition to assisting the homeless." He said, "We are still providing shelter to anyone who wants it and we are spending over $10 million to carry out these programs."

The District had argued in its attempts to block the initiative that the proposal could force the city to spend about $60 million to build new shelters and turn the city into an East Coast "magnet" for homeless people. The District currently provides 944 shelter beds a night, according to city spokeswoman Lurma Rackley.

Mitch Snyder, leader of the activist Community for Creative Non-Violence, which sponsored the initiative, praised the appellate decision but disputed past city claims of skyrocketing costs and said that what is needed is "creativity" by managers of shelters and city officials.

"We're already spending enough money to eliminate homelessness," said Snyder, whose often controversial fight to protect the rights of the homeless was featured in a CBS television movie aired Monday night.

Other advocates for the homeless applauded the decision yesterday and said it carries broad implications for homeless persons throughout the country.

"It's a big, big victory," said Robert M. Hayes, attorney for the National Coalition for the Homeless, based in New York where a similar initiative is expected to be placed on the November ballot. "From the national perspective the [District] initiative has demonstrated how far ahead of the politicians the electorate is . . . in thinking that there is an obligation not to let the frailest people in the community live and die on the city streets."

K. Gregory Tucker, attorney for proponents of the initiative, said the immediate impact of the panel's ruling will be to require the mayor to assess what is needed to establish a program.

City Council Chairman David A. Clarke suggested yesterday that the administration overestimated the cost of implementing the initiative.

"I am not going to say it won't cost us money . . . ," said Clarke, who added that he thought it "strange, to say the least" that the city had appealed the initiative. "But I never read the initiative as requiring the city to provide the money. I read it as requiring that the city assure that these facilities are available . . . that they work with community groups like the CCNV to assure that these services are available."

In his 11-page ruling for the panel, Judge Newman focused on this idea of cost and the finding by Superior Court Judge Annice M. Wagner that the initiative violated the city's prohibition against electorate-approved laws that appropriate funds.

The judge said that although it was clear that the council did not intend to allow initiatives that automatically forced the city to spend money -- such as a law funding higher levels of unemployment benefits -- it was equally clear that it was not the council's intent to "exclude a matter from the initiative right because of its prospective financial impact."

In the case of the homeless initiative, the judge said the proposal did not contain "self-actuating funding mechanisms" and left final funding discretion for the programs in the hands of elected officials.

"The trial court concluded that the shelter initiative stripped the elected officials of discretion to make adjustments in funding of various projects," the judge wrote. "We disagree."

Attorneys and other organizers of initiative drives said that the importance of yesterday's ruling may lie in its broader impact on the initiative process.

"It has been difficult for the board to implement [the initiative process] because the meaning of the exception involving laws appropriating funds was not clear . . . ," said Edward W. Norton, chairman of the Board of Elections, the defendant in the original suit. "This was the area where people tried to beat back initiatives . . . . So to the extent that we have further guidance . . . makes [the decision] more important than its effect on the homeless initiative."

The chairman of the Rent Control Initiative Committee, a group attempting to place a pro-tenant initiative on the ballot, agreed.

"Any citizens who are dissatisfied with the actions of the executive or the council now have a much broader hand to propose their own legislation," said Chairman Benoit Brookens. "And it will, of course, keep our legislators in check. Voters now have a much freer rein to propose their own legislation."