Putting aside months of tension, representatives of the University and the city of Cambridge met yesterday to celebrate the purchase of a 65-unit apartment building, funded in part by a Harvard program to expand affordable housing in Cambridge.

Last November, University President Neil L. Rudenstine announced a $20 million initiative to help ease the widespread housing crunch in Boston and Cambridge.

The funding project, known as "20/20/2000," also serves to counter the criticism of local residents and politicians, who say Harvard--the city's largest landholder--ignores residents' concerns when it expands and develops its property.

But yesterday, Rudenstine joined Cambridge Mayor Anthony D. Galluccio, City Manager Robert W. Healy and a host of housing advocates and local politicians to formally announce the purchase of 8-10 Lancaster St., a four-story apartment complex near Porter Square that will be converted to affordable housing--the first purchase made using Harvard funds.

"I'm astounded by what can happen when lots of folks get together and decide to get something done," Rudenstine said at the event. "It demonstrates clearly what can happen when you have the right people at the right time with their eye on the ball."

Dollars and Sense

When Rudenstine announced the 20/20/2000 initiative last year, housing advocates hailed the move as an unprecedented commitment to affordable housing, unmatched by any other private, non-profit institution.

Paul S. Grogan, Harvard's vice president for government, community and public affairs, spearheaded the initiative soon after assuming office in January 1999. He estimated that the $20 million provided by the University could create up to $400 million in housing.

Harvard disbursed its $20 million--split equally between Boston and Cambridge--among three intermediary non-profit organizations, the Cambridge Affordable Housing Trust (CAHT), Boston Community Capital and the Local Initiatives Support Corporation, who will pass the money on to local community development corporations in the form of low-interest, unrestricted loans.

The intermediaries will loan out and collect the money several times over the 20-year life of the loan, increasing its efficacy, and the allocations will spur other organizations, on the federal, state, and local levels, to provide additional funds, Grogan predicted.

In the purchase of the Lancaster Street property, Harvard funds accounted for $1.5 million of the $11.4 million total price tag, with the city of Cambridge, CAHT, the U.S. Department of Housing and Urban Development, and East Cambridge Savings Bank making up the remainder.

The building, formerly subject to rent control, contains 48 one-bedroom apartments and 16 studios, all of which will be set aside for low- and moderate-income residents.

Boston and Cambridge politicians say the lack of affordable housing is the most pressing issue facing the metropolitan area, stemming from the end of rent control in 1994 and the current boom in real estate. Over the past five years, Cambridge has lost about 16,000 price-controlled units and Boston about 7,000.

They say Harvard's initiative is particularly helpful because the loans 20/20/2000 provides are unrestricted, allowing community development corporations to help middle-income families, who often do not qualify for federal or state aid.

"The cooperation and contribution of Harvard University helps protect that group of people that often falls between the cracks," Galluccio says. "Harvard has stepped forward with local banks--this is the type of creative financing we need over the next few decades."

Galluccio says he was particularly proud of the Lancaster Street purchase, as he grew up only blocks away from the stately brick walk-up.