The Reagan administration, which has been committed to selling unwanted government land rather than giving it away, deviated from that principle last week, reportedly under pressure from Sen. Paula Hawkins (R-Fla.). As a result, an extremely valuable piece of land in Coral Gables that was supposed to be used as parklands forever will be turned into an office building and parking garage.

The arrangement has left city officials beaming and a developer smiling.

The General Services Administration, which approved the transfer last week, said that it "was an idea that almost everyone agreed with," according to Earl Jones, GSA's acting commissioner of the Federal Property Resources Service. And the Interior Department, which had said in 1970 that the property was to be used "in perpetuity" as parkland, said it was done at the "behest of the South Florida community," according to National Park Service spokesman Duncan Morrow.

The building site is along generally residential Anastasia Avenue in the heart of Coral Gables -- a carefully-planned, tree-lined city that was developed in the 1920s to have residential areas distinctively separate from commercial and business districts.

But here, near the very center of the city, the old 1930s Biltmore Hotel had fallen into disrepair in the 1950s. About that time the Veterans Administration took over the property and turned it into a hospital. That lasted another 20 years before the VA pulled out and the building again began to fall into disrepair.

In 1970, under President Nixon's Parks-for-People program, the Park Service turned 14.4 acres of land over to the city for park use, according federal officials, and over the years, tennis courts and other recreational facilities have been put up. Meanwhile, the VA turned the beautiful tower over to the National Park Service, which -- in 1972 -- declared it a landmark for its architectural beauty, and the following year deeded it to Coral Gables for preservation and redevelopment.

"What happened," said Park Service spokesman Morrow, "is they Coral Gables gave it back to us, we gave it to GSA and GSA gave it to the city under a program that allows development." The transfer was made without cost.

The project, in the long run, is likely to end up costing the federal government money since the historic property is eligible to earn the developers a 25 tax credit for preservation.

"I think this arrangement is in everyone's interest because they Coral Gables had a heck of a hard time finding a developer who was interested in handling just the old hotel without any additional land thrown in," said GSA's Jones. "A property conveyed for historic monument purposes can be a money maker but something conveyed as parkland cannot. That's why this happened." The developer, the Worsham Brothers Co., plans to turn the building into a 196-suite luxury hotel.

According to The Miami Herald, Coral Gables Mayor William Chapman credited Hawkins with expediting the negotations. Jones and Morrow both said they were unaware of Hawkins' role in the deal.