Residents of one of the District's largest apartment complexes are leading a fight against a proposed 20 percent rent increase in a move that is forcing some politicians to reconsider a key provision of the city's rent control law.

The Berkshire, located at 4201 Massachusetts Ave. NW, is undergoing asbestos removal and major renovations. Some tenants at the building charge that the so-called capital-improvement provision of the city's 1985 rent control law -- under which landlords can improve a property and pass on the cost to tenants -- provides landlords with a gaping loophole that increases profits at the expense of renters.

Both tenant and landlord groups in the city are carefully monitoring the outcome of the capital-improvement dispute at the Berkshire, where the more than $6 million worth of work is likely to cost the estimated 1,000 residents up to $107 per apartment each month in additional rent. Current rents range from $260 to $800 a month.

Berkshire tenant activists claim much of the work is unnecessary and burdensome and that costs of the work are going to be unfairly passed on to them if the contested rent-increase petition is eventually approved by a District rental agency.

Representatives of the owners acknowledged there have been some snags in the renovation work, but said matters are improving. They also disputed residents' claims that the work is merely a way to bypass the city's rent control.

The capital-improvement clause of the city's rent control law permits landlords to pass on the costs of certain work to tenants in increased rents, which can be no higher than 20 percent for each unit.

But when the city council enacted the District's rent control law in 1985, it did not set a timetable for paying back the capital-improvement costs.

As a result, rents never have to be rolled back to their precapital-improvement level once renovation work has been paid for through higher rents. This has given hundreds of District landlords a profitable incentive to take on capital-improvement projects -- often over the objections of tenants who say the work is expensive, unneeded and unwanted.

Consequently, since the 1985 rent control law was enacted, the number of capital-improvement requests made by landlords in the District has skyrocketed.

Between 1981 and 1984, during a period covered by the previous, more restrictive rent control law, 69 capital-improvement requests were filed, according to Howard Lewis, the rent administrator of the D.C. Rental Accommodations and Conversions Division. In the past 21 months, however, that number has jumped to 237.

Tenant groups are also skeptical of the provision because landlords often succeed with the city in their bids for capital-improvement rent increases. requests decided this year by the D.C. rental agency, 50 have been approved, Lewis said.

Further fueling the debate is disagreement over exactly what type of renovation should be considered capital improvement. Proponents of the existing rule say the work landlords perform not only increases the value of properties, but also helps tenants.

Tenants, though, claim they should not have to pay for repairs that are needed after a landlord neglects normal maintenance. They also charge that some of the kinds of work going on at the Berkshire -- asbestos removal and installation of appliances to replace ones that already work -- are not capital improvements and so should not be paid for by tenants.

"The culprit is the 1985 law," said Forrest Dick, president of the Berkshire Tenant's Association. "The whole regulation and the way it's being handled by the District government is just wrong."

When the current District rent control law was being drafted in early 1985, most politicians and lobbying groups paid little attention to the capital-improvement clause. But with the number of capital-improvement cases rising, tenant and landlord groups have begun butting heads in recent months. Tenant activists are hoping that if they don't get the law amended soon, the matter will at least surface as an issue in next year's City Council elections.

Meanwhile, landlords are pushing to protect the capital-improvement clause, and are charging that changing it will further threaten the District's stock of rental housing.

"Landlords have found a loophole," responded Idus P. Holmes, president of the Tenant Organization Political Action Committee, a tenant activist group that has begun planning to make rent control a major issue in next year's elections.

So far, tenants, particularly those at the Berkshire, have gotten the ear of at least one City Council member.

Last month, D.C. Council Member Jim Nathanson (D-Ward 3) introduced a controversial bill that would restrict the length of time in which a landlord could reap the financial benefits from a capital-improvement petition. Under the bill, landlords would have to roll back rents to where they were prior to a building's renovation once the capital-improvement costs are paid off by the tenants.

"Capital improvement is just a gimmick to put in a permanent rent increase," Nathanson said.

He added that he also hopes to look at what types of work should be considered capital improvement. "There are a lot {of capital improvements} that are really repairs and not improvements," Nathanson said.

Landlord groups are battling the Nathanson bill.

Donald R. Slatton, executive vice president of the Apartment and Office Building Association of Metropolitan Washington, said Nathanson's bill, if approved, would have "a chilling effect. Nobody in their right mind would do a capital improvement."

He said, "Now some tenant groups might say, 'That's great,' but I wonder how great it'll be when they look around and see their housing deteriorating around them."

Slatton said capital improvements look more attractive to landlords because the District's rent control law restricts annual rent increases for most units to the area's consumer price index. This year, landlords were allowed to increase monthly rents by 1.5 percent.

Slatton added that enforcing a rent rollback after capital improvements are paid for would mean that landlords could not cover additional capital-improvement costs not provided for in the current law, such as interest on construction loans. Those added costs now can eventually be recouped through the permanent rent increases, he said.

But Nathanson, who said he is considering covering such added costs in his bill, said Slatton's claim that no new capital improvements would be made if the bill passes is a scare tactic. "We hear that kind of nonsense all the time," he said.

Dick of the Berkshire tenant's group said his building's fight has drawn attention to what is quickly emerging as a citywide dispute. "We have done the civic thing by being the guinea pig for going through this," he said.

At the Berkshire, where renovation work began Aug. 24, tenants have complained bitterly that the city improperly granted the capital-improvement petition. The monthly rent increase attributable to the capital improvement, which will be up to $107 per apartment, has been put on hold while a District hearing examiner considers appeals brought by tenants and the landlord.

The major thrust of the tenants' argument is that they are having to pay for new kitchen appliances and cabinets they don't need.

In addition, the replacement of pipes throughout the building has uncovered asbestos, a known cancer-causing fiber. The removal of the dangerous substance, at a cost of more than $1 million, should be paid for by the building's owners, not the residents, the tenant group claims.

For the Berkshire tenants, nearly a third of whom are elderly, the renovation has been a major headache, many tenants said this week.

During the renovation, expected to last more than a year, the Berkshire looks more like a construction site than a 779-unit residential building. with 150 laborers hammering and drilling throughout the halls and apartments each day.

At any time, the crews are working on about 60 units. Tenants must leave their apartments from 7 a.m. to 5 p.m. For the 10 to 20 days it has taken individual apartments to be renovated, residents must pack their belongings and either place them under tarpaulins in the the apartments or move them out.

At night, residents whose units are being worked on must either pull their beds out from under the tarps and sleep in the disheveled apartments or stay elsewhere. The landlord has provided six apartments for some residents to stay in during the work, but demand for those units has been greater than the supply.

Tenants who have stayed in their apartments during the work said they have dealt with daily power and water interruptions. Several tenants have also reported lost, stolen and damaged belongings. The area has little on-street parking, and construction vehicles have taken about a quarter of tenant parking spaces.

"What management wasn't expecting was that the tenants could come together," said David Conn, a member of the tenants' board that is now negotiating with the building's owners to phase in the rent increases over three years, instead of the one-time 20 percent increase the city gave preliminary approval to last month.