Dot-coms, rivals face off as S.F. argues growth limit.

A pitched baffle that could define the future of the Internet industry, in San Francisco is coming to a head as the city prepares to decide Whether to free dot-coms from a looming limit on office development.

Internet firms and their supporters believe applying a 14-year-old building cap known as Proposition M to multimedia projects will hamstring growth in the city and, drive it elsewhere.

But backers of Prop M say such projects should be included because of the strain they place on housing, parking and transit.

Adding urgency is the fact that the city is about to bump against the Prop M development limits for the first time in a decade. The "bank" of building approvals it can issue for most of 2000 likely will be reached in three or four months, planning officials say, based on projects now in the city pipeline.

And the city's list of pending projects doesn't include millions of square feet planned at Mission Bay, the Port of San Francisco, the Presidio and other federal projects -- all of which would count against the Prop M cap.

For example, Mission Bay already is approved for 5 million square feet. It has precedence over all other city projects -- one reason Catellus Development Corp.'s first commercial office project was given the green light by planners in February even in light of Prop M worries. It totals 280,000 square feet.

Plus, demand for …