A classic suburban dispute between a developer and the residents of a neighborhood where he wants to construct an office building is under way in Falls Church. But this particular debate has a couple of twists that put the City Council in the uncomfortable position of choosing the winner.

Lawrence T. Jennings, whose Falls Church-based development company bought 3.2 acres of land at 421 N. Washington St. 10 years ago, wants to build a four-story structure containing about 15,000 square feet of office space on the plot. The firm's headquarters would occupy one floor and the remainder would be offered for rent, Jennings said.

The property has been zoned for commercial use for several years. The city master plan approved in 1978, however, calls for residential development. While the master plan is a statement of how the city would like to see land used, the zoning is established by a city ordinance.

There is another twist. Jennings has asked the city for financing through the Industrial Revenue Authority at interest rates several points below rates on conventional mortgages. Jennings said that, at market rates, he could not collect enough rent to cover his payments.

The developers' request for assistance bounces the ball into the City Council's court, because the council must approve use of industrial revenue bonds.

Citizens say they are anxious to preserve what they call "the village nature" of Falls Church. They argue that the council should not approve funding for a building that violates the town's master plan even though it is not a legally binding document.

The next meeting is scheduled for 11:30 a.m. today at the Community Center on Little Falls Street.