Despite demands from some Cambridge residents that the University substantially increase its voluntary payments to the city, Harvard's annual contributions for the fiscal year rose only a slight amount from the previous year.

Harvard paid the final installment on its $969,170 in-lieu-of-tax payment on June 13, in accordance with the terns of a 20-year old agreement that expired last year. Harvard and Cambridge are currently negotiating a new agreement for the voluntary payments, which compensate the city for Harvard's tax-free academic facilities.

This year's payment represents a 5.77 percent increase over Harvard's fiscal year 1988 contribution of $916,301.

Harvard officials have said that the University considers the current in-lieu-of-tax agreement fair and that it is willing to extend it. However, many city residents have complained that Harvard does not do enough for the city to justify the tax breaks it receives.

City Council candidate Jonathan S. Myers, for example, estimates that Harvard's annual payments, based on the value of its tax-exempt land, should be closer to $6 million.

But University officials claim that Harvard is paying its fair share of the tax burden. Director of Planning Kathy Spiegelman said that Harvard decided to make the payment as a show of good faith to city, despite the agreement's expiration.

"We made the payment to show that we want to work out something that's fair," Spiegelman said.

Kevin McDevitt of the city assessor's office said that the city prefers to maintain its "flexibility" when negotiating with Harvard, rather than pressing for a stricter agreement.

"As long as [Harvard] continues to move payments up, that's okay," he said.

Spiegelman, a former head of the city's Community Development Department, said that both Harvard and the city were willing to compromise on a new agreement.

She added that the negotiations have been complicated by the city's financial difficulties.

"It's a difficult issue right now," said Spiegelman. "The city has financial problems and the University has a lot of property. We are willing to help. But I think we are an inappropriate target to bail out the city. We want to be a player, but not in isolation to solve the issue."

But Myers said he is skeptical of Harvard's willingness to support the city.

"There are pressures that the city could bring to bear on the University," Myers said.