A request to locate Taiwan's defense procurement division in a building at 1701 18th St. NW has received strong support from the State Department. But the proposed chancery has outraged many Dupont Circle residents and civic groups who claim that the offices would further erode their neighborhood.

The complicated and controversial case, for which the District's Board of Zoning Adjustment has already held 10 hours of public hearings, has become further confused over how to categorize the proposed use of the four-story building.

For the past five months, the Taiwanese have sought to use the building as a chancery, even though the United States no longer formally recognizes the Taiwan government.

The Taiwanese base their claim on a Sept. 13 letter from the State Department that confirmed that the application "should be treated as a chancery" because of the Taiwan Relations Act of 1978, which, in part, gave the Taiwanese group certain immunities and privileges.

But last week, Whayne S. Quin, the lawyer representing the Taiwan group, the Coordination Council for North American Affairs, backed off from his strong position that the application should be for chancery use.

"I think it's general office use," Quin said, adding that the Taiwan group "changed our theory" because of opposition to the chancery application by neighborhood groups and the District's planning department. He said, however, that the same Taiwan group would occupy the building.

Oddly, the 18th Street building, constructed around the turn of the century, has been used for offices for 40 years. But neighbors say that allowing the Taiwanese to move in would set a precedent for other foreign missions..

Quin said he decided "to sidestep" a brewing dispute between the city and the State Department over future locations of chanceries.

The National Capital Planning Commission has already approved specific locations where chanceries may locate under the District's comprehensive plan; the D.C. planning department has proposed a similar map that will affect zoning laws if it is approved by the city Zoning Commission next month. The State Department has criticized the District for trying to enforce the maps too rigidly.

In both maps, however, the proposed Taiwan location is not included in the diplomatic zones; opponents of the application contend that it should be denied for that reason.

While pursuing approval for general-office use, Quin has not withdrawn his original chancery application, leaving open the possibility that the BZA could approve the request as an office or chancery.

The State Department has supported both of Quin's positions. Ronald Mlotek, chief counsel for the agency's Office of Foreign Missions, said that, while Taiwan cannot legally be called a chancery, "We take the position that CCNAA is entitled to elect whichever treatment it wants."

He denied that the agency has reversed its earlier position. He claimed instead that the agency in the past has only said Taiwan could be "treated" as a chancery, not that it is a chancery.

"This distinction is subtle, but it is an important one," Mlotek wrote in a letter to the BZA.

Mlotek said that after discussions among the State Department, the District and the Taiwanese, "it became clear that a potential way out of the dilemma that was facing CCNAA in trying to obtain the approval for use of this lot would be to have the case proceed outside of the Foreign Missions Act procedures."

The Foreign Missions Act was designed, in part, to give governments more latitude in choosing District sites for chancery locations.

Mlotek said an office-use application "would be easier all the way around, and more acceptable and less controversial to all the parties to do it that way."

Not all of the parties agree, however.

Harriet Hubbard, who testifed before the BZA on behalf of the Dupont Circle area's Residential Action Coalition, said: "We have really been deceived and confused in the presentation of this case. This is a chancery application. That's what it says on the application, and now Mr. Quin wants to call it something else. You can't make up the laws as you go along."

Two other neighborhood groups, including the local Advisory Neighborhood Commission, also oppose the application because they fear it would clear the way for a foreign mission to locate at any site, which would endanger residential areas.

They contend that the application conflicts with the city's comprehensive plan, which calls for more housing north of Massachusetts Avenue.

Some residents said they are angry at the city's planning department, which opposed the chancery application, but not the move to call the request "office use."

Planning Director Fred Greene said he was confused that the State Department recommended that, while the Taiwan facility is not a chancery, it could elect to be treated as one.

"It's either a chancery or it's not a chancery," he said. "If they're talking out of both sides of their mouth, then it just confuses things."

Nonetheless, Greene said the planning department favors the office application, with certain guarantees.

The conditions include: turning the current Taiwan building at 2224 R St. NW back to residential property; requiring six Taiwan employes to live at the 18th Street location; and maintaining the existing facade and other features of the building.

Residents, however, charge that promises made by the Taiwanese would not be enforceable because of certain immunities, such as the ability to deny building inspections.

Quin and Mlotek denied that the Taiwanese could back out of any agreements.

"Our use will not adversely affect the neighborhood," said Col. Lung Hsia, deputy director for CCNAA's defense procurement division.

He called the building "an ideal location," partly because many of the division's employes live in the Dupont area and could continue walking to work.

The BZA must decide whether the application is for a chancery or offices before considering whether to grant approval, said BZA Chairman Carrie Thornhill.

She said that in her three years on the board, "trying to define the user has never been as complicated as this one."

A decision is expected Feb. 12.