Business Notes GOVERNMENT

About the only taste of life's grittiness that the wealthy residents of Beverly Hills have ever known was the time a bum showed up at the posh home of a local manufacturing executive. And that was just a movie, Down and Out in Beverly Hills. But last week the U.S. Department of Housing and Urban Development stunned everyone on glitzy Rodeo Drive by placing Beverly Hills on a list of 10,000 economically "distressed" cities. As such, the home of the stars, where the average household has an annual income of $41,000 and many residents make a hundred times that amount, technically qualifies for $56 million in special federal grants for downtrodden communities.

How did this bizarre paradox come about? To be included on HUD's down-and- out list, a city must meet three out of six criteria of neediness. Beverly Hills fit the bill because its growth rate from 1970 to 1984 was less than 4.6%, its retail and manufacturing employment increased by less than 3.3% from 1977 to 1982, and at least 20% of its homes were built before 1940.

A HUD spokesman calls the listing a fluke and insists that Beverly Hills will be knocked out of the running for federal funds once income figures are taken into account. Beverly Hills officials, meanwhile, claim that they would never consider applying for grants anyway.