City and University officials recently celebrated the first use of a Harvard loan fund to support low-income housing, marking and unusual collaboration between the University, low-income tenants and Cambridge.

Two weeks ago, six tenants of a dilapidated Central Square apartment house became co-owners of the building with the first loan of the University's Harvard Emergency Lending Program (HELP) fund.

City officials, low-income tenants, community development planners and a Harvard Planning Department representative joined the tenants at a ground-breaking ceremony for the beginning of the rehabiliation project.

Created with money from the sale of thecontroversial Craigie Arms apartment building, theHELP fund was established two years ago torenovate run-down apartment buildings in Cambridgethat might otherwise be replaced by developments.

The program unveiled this month will use a$250,000 low-interest loan from HELP to renovate280-286 Western Ave.

The building's current tenants will becomeco-owners of the rehabilitated structure, saidJack Neuwirth, director of Real Estate for theRiverside/ Cambridgeport Community Corporation,which joined city officials in overseeing theproject.

"We certainly do appreciate Harvard's help. Itwould have been very difficult to manageotherwise," he said, adding that the tenants are"a great bunch of people," including a Blackprofessional family, El Salvadorean immigrants,and a single parent. Three of the six familiesreceive federal housing subsidies.

Neuwirth said the plan is one of the few waysto rehabilitate buildings that are "literallyfalling apart," without evicting low-incometenants. He said buildings usually find wealthiertenants after renovations because the improvementsincrease rents.

The HELP fund helped resolve a struggle betweenthe University and city rent control advocatesover a rehabilitation plan like those Neuwirthcriticized for hurting poor Cambridge residents.

In 1981, Harvard Real Estate began attempts toremove the 60 apartments of the Craigie Armsbuilding at 122 Mt. Auburn St. from the rentcontrol rolls.

Despite repeated city rulings against Harvard,the University engaged in a four-year string ofdisputes that made the Craigie Arms a common sitefor tenant groups' picket lines. Finally, in Mayof 1985, the Cambridge Rent Control Board exemptedthe existing apartments from rent controlregulations, allowing Harvard to rehabilitate thebuilding and charge higher rents for the 50 newapartments.

At the same time, Harvard sold the building toHousing Associates--owned by developer RobertKuehn--while retaining the land under it through a50-year lease. Kuehn said yesterday that thebuilding will revert to Harvard when the leaseexpires.

Kuehn also said Harvard used the $550,000 saleprice from the Craigie Arms building to create theHELP fund.

Kathy Speigelman, assistant director of theUniversity's planning department, said yesterdaythere was no legal connection between the HELPfund's creation and the Rent Control Board'sagreement to release the 60 apartments from rentcontrol restrictions.

However, sources familiar with the dispute saidboth of Harvard's actions resulted fromnegotiations with the Cambridge Rent Control andCommunity Development departments.

The HELP fund's project at 280 Western Ave.avoids the large rent hikes imposed in many of theCraigie Arms apartments.

The six families will hold equal shares in thebuilding under a limited equity co-op plan,Neuwirth said. Tenants leaving the building mustsell their shares in the building to theirsuccessors for a fixed amount that Neuwirth saidwould remain "affordable."

The co-op will remove the six units from rentcontrol regulations, but the building will returnto rent control if the tenants break the co-opagreement. Neuwirth said this arrangement is not"a way around rent control" because it continuesto ensure that the price of the six units is keptlow