A dispute at the Harvard-owned Craigie Arms apartment building, which began last fall when tenants charged the University with violations of city codes totaling $3 million in fines, may nearly be over, officials said yesterday.

For the past five months, tenants and representatives of Harvard Real Estate which manages the University's properties, have been negotiating a private settlement to their case at the Cambridge Rent Control Board.

Harvard had been seeking city permission to remove the apartments at the 122 Mt. Auburn St. building from the rent control market in order to rehabilitate the aging structure at a cost of $2.5 million.

According to current plans, most of the apartments would be renovated into luxury housing. But the developer Harvard has chosen to rehabilitate and late acquire ownership of Craigie Arms has agreed to reserve 25 percent of the building for low and moderate income housing.

In return for that guarantee, tenants would drop their rent board complaint against Harvard for converting some of the apartments to non-residential use, a violation of the city's strict rent control removal ordinances.

"We're very close to ending the negotiations," said Jacqueline O'Neill, assistant to the vice-president for government and community affairs.

She said tenants had asked recently "if some, of the details (of Harvard's last offer) could be changed. The answer was that it was the last, best offer and I think they were inclined to accept it."

A spokesman for tenants, Meredith Scammell, was unavailable for comment yesterday, and the tenants attorney. Lee Goldstein, could not be reached.

O'Neill said that the final stumbling blocks to a settlement centered on the amount and from of compensation that tenants would be given to voluntarily move out of their building.

The tenants had originally been offered about $1500 apiece by Harvard to move out, but the University's developer. Housing Associates of Cambridge, has reportedly increased that amount.

In January Housing Associates President Robert H. Kuchne Jr. had said that the issue of monetary compensation "is fairly well squared away."

At the same time, tenants said that their main remaining concerns focused on the future of the building for low and moderate income tenants, and on their desire for a statement from the University admitting past violations at Craigie Arms and promising better treatment of tenants in the future.

O'Neill said yesterday that tenants were looking for an official apology" for the Craigie dispute. "An official statement was written and presented to tenants and they accepted it." O'Neill said, She added that the last round of negotiations centered on benefits, and not matters of housing policy other than Housing Associate's plan for low and moderate income residents at the refurbished Craigie Arms.