D.C. LOSES APPEAL ON SPENDING CASE

District officials acted illegally in 1984 when they spent nearly $7,000 to oppose Initiative 17, which required the city to provide adequate overnight shelter to the homeless, a federal appeals court ruled yesterday.

Voters approved the initiative by a substantial margin despite the opposition of Mayor Marion Barry and other city officials. The city distributed pamphlets, fliers and posters on Election Day urging residents to vote "no" on the initiative.

The three-judge panel of the U.S. Court of Appeals for the D.C. Circuit yesterday sided with the D.C. chapter of Common Cause, the public interest organization, which sued to stop the city from any future spending to influence the outcome of an intiative.

Judge James L. Buckley pointed out in his opinion that the city's spending on the initiative, drawn from federal funds, violated the congressional appropriations statute for the District. That law bars the city from spending federal funds for "publicity or propaganda purposes."

The decision "sets an important precedent in D.C.," said Andrea C. Ferster, the lawyer who argued the case for Common Cause. "The D.C. government is clearly prohibited from spending public funds to try to oppose or support or take sides at all in initiative elections."

The opinion upheld an earlier ruling by U.S. District Judge George H. Revercomb.

Revercomb had agreed that the city violated the First Amendment when it took sides in the initiative, risking an unfair imbalance in the vote. The appeals court did not deal with the First Amendment issue yesterday, but based its decision solely on the congressional law governing the city's spending of federal money.

Buckley was joined in his opinion by U.S. District Judge Thomas F. Hogan, sitting on the appeals court by special designation to fill a vacancy created by Robert H. Bork's resignation. A concurring opinion was filed by Circuit Judge Stephen J. Williams.

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