Faced with what one councilwoman described as a politically difficult situation, the Eugene City Council delayed action Wednesday on whether to okay a new urban renewal district to help Spectra-Physics pay for creating new wetlands.

Councilwoman Emily Schue urged the council to hold off on formation of an urban renewal district until voters have had their say in the May 15 election on a referendum that asks if city residents approve of a recent update of the 1968 downtown urban renewal.

Although limited in scope, the referendum is being viewed by some city officials and urban renewal opponents as an indicotion of whether city residents will approve of the use of urban renewal in general. Urban renewal provides for the creation of a special tax district and dedicates the money to urban projects rather than putting it in the city's general fund.

In this case, the city is considering giving a portion of the money from another renewal district to assist Spectra-Physics in the replacement of federally regulated wetlands that would be destroyed by a planned company expansion.

Councilman Rob Bennett said the fact that Schue and others were treating urban renewal as "sort of a political hot potato" only reinforces his belief that the city should not be considering urban renewal as a means of paying for city projects.

The new urban renewal district is a bad idea, he said, "I would hope that it goes to sleep."

Councilwoman Debra Ehrman sided with Bennett, but other members of the council said they might be willing to reconsider the Spectra-Physics urban renewal district after the May vote.

City Manager Mike Gleason said he still would like the council to consider the new urban renewal district, perhaps within four months.

In the meantime, the council on Wednesday unanimously reaffirmed its intent to pay $217,000, or one-third, the cost of Spectra-Physics' wetlands replacement project, expected to cost $652,000. The state also has agreed to pay one-third, with the company to pay the remaining portion.

Spectra-Physics, which produces bar-code scanners for use in retail shops, is on the verge of launching a two-phase, $8 million expansion that is being blocked by the presence of federally regulated wetlands on the company's property.

Before federal agencies will issue a fill permit for the expansion, they are requiring the company to build new wetlands, at an estimated cost of $652,000, on a 42-acre site just northwest of the company's current west Eugene location.

Besides new wetlands to replace those lost in the expansion, the mitigation project includes new wetlands to replace those filled when the company built its original plant 10 years ago. The company and city were unaware of wetlands on the property at that time. The company is offering to donate to the city the new wetlands site for use as an environmental park.

With the urban renewal issue unresolved, the council directed Gleason to come up with a way of paying the city's share of the wetlands project that would have as little effect as possible on the city's general fund capital account. That account already is short on cash to pay for construction projects planned for 1990-91, city staff said.

Gleason said he believes that the federal government may be willing to help with the cost as part of a compre-hensive west Eugene wetlands conservation project. Other potential sources are the city's road fund, storm sewer fund and, finally, the general fund capital account, he said.

The urban renewal district drew support from council members interested in combining the wetlands mitigation project with other public works projects needed in that area.

Included are a $750,000 bike path along the Amazon channel, which runs through both the Spectra-Physics site and the proposed mitigation site, and $500,000 in improvements to Terry Street. The street, which runs along the western boundary of Spectra-Physics, is destined one day to become a major north-south arterial in west Eugene.

Urban renewal would allow the city to use tax increment financing to pay for the wetlands, street and bike path projects, if enough money were available.

Under tax increment financing, the value of property within the boundaries of a renewal district are frozen, for general taxing purposes, when the district is created.

Property taxes calculated on the increased value of the property, as a result of either development or inflation, are set aside for use only on street, sewer and other special projects in the district, rather than being added to the city's general fund.