Charges of conflict of interest and complaints about the effects of building shopping mall in east Harvard Square have left residents and developers at odds.

At issue is developer Graham Gund's plan's to construct a six-story complex of retail shops and offices at the intersection of Mass. Ave. and Arrow St. While members of Gund's staff have said they are merely trying to construct a structure that will mix well architecturally with the neighborhood, residents have said the complex threatens the character of the neighborhood. And they have charged that the city's Planning Board has no jurisdiction over the the project, called Zero Arrow Street.

Residents have also said that Planning Board Chair Paul Dietrich has a conflict of interest in the case because his architectural firm owns property near the site. That property might increase in value were Gund's project to be built.

City Manager Robert W. Healy ruled last week that the Planning Board chair's involvement is "not so substantial as to be deemed likely to affect the integrity of services which the municpality may expect from Mr. Dietrich."

And a planning board meeting last Tuesday discussed but did not settle the issue of whether the project can continue.

"This area is pivotal to the entire eastern Harvard Square area," said Robert J. La Tremouille, an attorney and Harvard Square resident. He added that Zero Arrow St. would be "constructed in such a manner as to turn the whole area into a mall" and would cause traffic congestion.

Enhancing the Area

But Zero Arrow Street's Project Director Don Self said, "Because the work we do is of high quality, [the project] will enhance the other buildings in the area. I think people will enjoy it."

In order to build the nine-store mall and office building, Gund's firm Gunwyn Company needs a special permit from the Planning Board. Gund's proposal was rejected by the Zoning Board of Appeals in 1986, prompting Gund to seek approval from the Planning Board, said La Tremouille. He said the board has jurisdiction over property fronting on Mass. Ave., but not Arrow St.

La Tremouille and other neighborhood residents have claimed that although Zero Arrow St. would overlook Mass. Ave., it technically would not front Mass. Ave. and therefore cannot not be approved by the board.

"I don't know whether we've got an official reading on that," Dietrich said yesterday, adding that the board will consider Gund's plan at a meeting in two weeks. The board did not reach a decision last week because two members were absent, Dietrich said.

But La Tremouille said that what he termed Dietrich's conflict of interest should invalidate any ruling. Dietrich's architectural firm owns 1050 Mass. Ave., the value of which will rise sharply once Gund's project is developed, La Tremouille said.

Dietrich said that his firm has had "a limited interest" in 1050 Mass. Ave. since 1974, but he added that he did not know whether Zero Arrow Street would affect the property's value.

If Zero Arrow St. were built, it might also bring more commercial tenants to 8-10 Mt. Auburn St., said Nancy E. Kossan, vice-president of Harvard Real Estate (HRE). HRE--which manages Harvard property not owned by the Faculty of Arts and Sciences or the graduate schools--mainly operates 8-10 Mt. Auburn St. as affiliated housing for students, faculty and staff. Kossan said the Zero Arrow project could bring more commercial tenants to 8-10 Mt. Auburn, where "the leasing has gone slowly."

"If there's sort of a core," she said, "it could be beneficial, but that's only speculation."

`Difficult to Accept'

Despite Healy's ruling that there was no conflict of interest, La Tremouille wrote in a letter to the Planning Board that Healy's decision is "difficult to accept by an unbiased person" and should have been made before Dietrich became involved in the case.

Self said he could not comment on the company's dealings with the city because he only oversees the architecture and construction of the building. But he said he thought the retail aspect of the project "is the most volatile issue because of resident opposition."

"When there's controversy, it makes newspaper articles," Self said, "but in the long run, I think it will be good for the area."

Gund is on vacation and could not be reached for comment.