The D.C. Court of Appeals has reversed a 1985 ruling by a District zoning panel that allowed a developer to turn a Capitol Hill carriage house into an apartment, making it unlikely that 300 to 400 other carriage houses on the Hill can be similarly converted.

The recent decision in the case, which had been closely watched by neighborhood activists and real estate developers, was praised by Capitol Hill residential leaders as a victory in the battle to control the neighborhood's population density. They claim that Capitol Hill is already too congested with people and cars, a situation they contend would only be worsened by a wholesale conversion of carriage houses into expensive residences.

Conversely, Robert Hummer, the developer of the converted carriage house in an alley behind 642 East Capitol St. NE, as well as local real estate agents and some city officials, said the appeals court ruling will damage attempts to alleviate the District's chronic housing shortage.

"I'm disappointed," said Carrie Thornhill, chairman of the D.C. Board of Zoning Adjustment, the panel that approved the Capitol Hill carriage house proposal in 1985. Thornhill said she and other zoning board members envisioned carriage house conversions "as a tool" to increase the city's housing stock.

The court's decision will apparently force Charles Scott, the tenant in the carriage house in dispute, to move from the home he has rented since last June.

Scott said he "probably wouldn't have rented the house" had he known about the court appeal or the neighborhood opposition. "I haven't heard word one about any of this. All I was told was not to park in the alley."

Carriage houses can be seen in neighborhood alleys scattered throughout the city, butparticularly on Capitol Hill. Built around the turn of the century, the modest one- or two-story structures were used as shelters for carriages and horses. The second stories were usually haylofts.

In more modern times, the houses have been used as garages and storage and office space for residents of adjacent town houses. On Capitol Hill, an undetermined number of carriage houses have already been illegally converted to housing by owners who skirt the city's zoning laws, according to several neighborhood leaders and real estate officials. With the court's recent anticonversion ruling, some observers said that the number of illegal conversions could increase.

Opponents of the practice of converting carriage houses into dwellings say the argument that the structures can reduce the city's housing problem is misleading. They say carriage house conversions only supplement the District's already ample supply of upscale housing, while doing nothing to provide more housing for low- and moderate-income families. In the East Capitol Street case, rent for the converted one-bedroom carriage house is more than $900 a month, according to Hummer.

Neighborhood leaders who fought the conversion said the court's ruling will send a message to developers and city zoning officials that the District's zoning laws must be followed.

"You have zoning controls for a reason," said Larry Monaco, a board member of the Capitol Hill Restoration Society who represented the neighborhood groups in the court challenge. He said it was "clear" that the zoning board "was just so blatantly wrong to begin with. The carriage house {as a residence} is incompatible with the neighborhood."

The carriage house proposal was opposed in 1985 by the city's planning office, City Council member John Ray (D-At-Large), and many Capitol Hill preservation and neighborhood groups.

In its decision last month, the three-member appeals court panel said the D.C. zoning board erred when it granted a variance to Historic Real Estate Investments Inc., a Woodbridge development company headed by Hummer, to develop the carriage house. The court said the zoning board was wrong in its interpretation that the carriage house was "unique," a key criterion that must be met for a variance to be granted.

Because the zoning board was wrong in its claim that the site was unique, the court said it would not consider additional claims by the neighborhood groups that the zoning panel "acted arbitrarily and capriciously" and "abused its discretion" in granting the conversion.

"To say I'm bitter is an understatement," said Hummer, who renovated the carriage house and the adjacent town house on East Capitol Street. He characterized the neighborhood opposition to the residential use of the carriage house as "a personal vendetta against any developer who wants to come in and change the status quo."

Hummer said he proceeded with the $85,000 refurbishing of the carriage house despite the court appeal brought by the neighborhood's citizen groups "because we were confident."

With the court ruling, however, it is likely Hummer will be forced to convert the carriage house back to nonresidential use. "I'm still waiting to hear my attorney's advice," he said.

Thornhill said that despite the appearance that a precedent is being set against future carriage house conversions, the zoning board will still decide such proposals "on a case-by-case basis."

But local developers and real estate investors, some of whom had their eyes on the remaining 300 to 400 Capitol Hill carriage houses, said the ruling will have a chilling effect on future conversions.

Hummer said the decision "is going to devastate" plans by others to convert carriage houses into residences, which gets little sympathy from neighborhood leaders.

"I think it clearly means people will not be able to use carriage houses for conversions to {residences}," said Lee Wakefield, a Capitol Hill real estate agent who handled the sale of the East Capitol Street carriage house to Hummer's development company.

Wakefield said occupied carriage houses, or "alley dwellings" as she calls them, decrease crime because they can bring activity to a neighborhood's alley. She said opposition to carriage house conversions was being led by activists who oppose changes in a neighborhood.

"To some degree it's, 'I've got mine and let's keep everyone else out,'" Wakefield said. "I think people are frightened unnecessarily about {changes to} the quality of life."

But some community residents contend that carriage house conversions do not belong in a neighborhood deemed an historic district by the National Register of Historic Places.

"Capitol Hill is already too dense," said Bradford Snell, a leader in the fight against the carriage house conversion whose town house overlooks the disputed East Capitol Street structure.

Snell criticized the zoning board for linking the city's housing shortage with zoning matters when it approved the carriage house proposal. "That's not a decision for the {zoning board}, but for the City Council," he said.