With Harvard Help, Arsenal Site Thrives

WATERTOWN, MASS.—Just three miles west of Harvard Square on the banks of the Charles River lies the Watertown Arsenal, a former military installation that tested and built the nation’s most complex weaponry systems for nearly two centuries. At one point it was also one of the most contaminated sites in Massachusetts.

And since 2001, it has belonged to Harvard.

Before Harvard’s purchase of the Arsenal property, the Environmental Protection Agency (EPA) and the town collaborated on an extensive cleanup effort as part of the process of closing the military complex.

After the environmental hurdles were cleared, the site again became a point of contention after Harvard’s purchase, since Watertown residents feared the loss of tax revenue that would result. But in late 2002, the University negotiated a lucrative deal with the town, paying millions each year to compensate for taking commercial property off the tax rolls.

Today, the once-contaminated site, renamed the Arsenal on the Charles, has a thriving mix of educational and commercial uses, including an arts center, a restaurant, and several health clubs.

As Harvard planners look to the future, much of their focus is on the campus that will span the Cambridge and Allston sides of the Charles River. While the University’s property in its third host city of Watertown may be small in comparison, it provides both another potential location for expansion and a model for successful community collaboration.

Watertown leaders say that the cleanup and the subsequent commercial growth under Harvard’s ownership represents one of the most successful revitalization efforts of any industrial facility in the country.

“I think this has been a really positive redevelopment,” says Susan Falkoff, a Watertown city councilor who played a leading role in the cleanup effort. “There was a real commitment at all levels to getting this job done right, and that’s certainly not something you have everywhere.”

CLEANING UP THE MESS

Opened in 1816, the Watertown Arsenal was the first major military laboratory in the U.S., employing over 10,000 people at its height during World War II. After the war, the U.S. Army Research and Materials Laboratory used the Arsenal to test the nation’s most cutting-edge artillery systems, transforming it into an advanced research and development facility.

By 1988, however, the Arsenal had become outdated. The U.S. Base Realignment and Closure Commission recommended that it be closed, and the Department of Defense began a systematic reduction in the Arsenal’s activities. The challenge for Watertown, however, had just begun.

The military’s operations over the previous decades had left the Arsenal heavily contaminated with pollutants. At the time of the closure recommendation, the work to be done at the complex included cleaning the facilities and soil, decommissioning the remnants of a research reactor, and reclaiming portions of the Charles River.

“Many things about this site were on the cutting edge and were the first of their kind in the nation,” Falkoff says. “The remediation was unusually complex, both technically and bureaucratically.”

Though the Arsenal was once as large as 130 acres, the Pentagon had reduced the site significantly. In 1968, it sold 55 acres to Watertown, which the town redeveloped into the Arsenal Mall and neighboring park. Due to the complexity of the cleanup effort, the EPA split what remained of the site in 1988 into three parts, one of which was the Arsenal buildings that Harvard now owns.

According to the EPA, the soil on the Arsenal’s premises and the nearby park were laden with “pesticides, PCBs, heavy metals, volatile organic compounds, and ‘poly-aromatic hydrocarbons’” like benzene and other carcinogens.

Further complicating the situation was the fact that the Army’s first research reactor had been built at the Arsenal in 1960. Though operations ceased a decade later, the Nuclear Regulatory Commission (NRC) did not formally shut down the reactor until 1992.

Since the NRC has exclusive jurisdiction over nuclear issues, the EPA and the NRC were each responsible for different sections of the site.

“It’s very unusual for a site to require both radiological and toxic remediation,” Falkoff says. “This made it even more complicated.”

In all, the cleanup took nearly 10 years and $100 million from the federal government. According to a Watertown Arsenal Development Corporation (WADC) report, this represented “one of the most expensive projects of its kind.”

As the cleanup approached its final stages, Watertown created the WADC in January 1997 to spearhead the redevelopment of the complex. After an extensive selection process, the corporation sold the Arsenal to O’Neill Properties, a developer based in King of Prussia, Pa. Because the site still needed a great deal of work, O’Neill paid only $24 million for the complex, making four separate $1 million contributions to Watertown charitable causes in addition to the $20 million purchase price.

The developer then spent the next few years renovating the property, investing $110 million to make the buildings—which were little more than “empty shells”—suitable for commercial use.

In 2001, O’Neill sold the property to Harvard for $168 million.

THE ARSENAL ON THE CHARLES

Though Harvard was not a newcomer to Watertown—it had leased 110,000 square feet of space there since 1998—not everyone was initially thrilled with the University’s purchase.

As a nonprofit educational institution, the University is exempt from property taxes. Because Harvard’s acquisition of the Arsenal would remove the land from the tax rolls, Watertown faced the prospect of losing a substantial amount of revenue—one-third of its entire commercial tax base—from a site that it had spent a decade redeveloping.

In order to address the concerns of the community, Harvard entered into negotiations regarding a “payment in lieu of taxes” (PILOT), an annual sum given to the town to compensate for the lost tax revenue, similar to the arrangement that Harvard has with Cambridge and Boston.

In September 2002, Harvard and Watertown entered into a deal for 52 years under which the University would pay a $3.8 million annual PILOT, an amount that would increase at a 3 percent annual rate. Watertown officials calculated that the PILOT would provide $480 million in revenue over the life of the agreement. In addition, Harvard agreed to make a one-time contribution of $500,000 to the Watertown schools and a $100,000 annual contribution to a special community enrichment fund.

“[The deal] with Harvard University is one of the best PILOT agreements ever negotiated between a community and a non-profit institution,” the WADC wrote in its close-out report, adding that the deal “provides revenue stability for the next fifty years that would likely exceed tax revenues from a private development.”

Currently the only Harvard-affiliated occupants of the Arsenal are the Harvard Business School Publishing Division and the Harvard Film Archive.

Though there has been talk in the past about moving other sections of the University to Watertown, the administration says that no such plans are currently on the table.

“The Arsenal on the Charles contains 757,244 square feet and the University currently occupies 15.2% of the space,” Mary H. Power, senior director of community relations, writes in an e-mail to The Crimson. “The Arsenal is effectively fully leased [to commercial clients] and the University does not have any immediate or near term plans to locate other University departments [at the site].”

But now that Harvard and Watertown have reached an agreement concerning the lost tax revenue, community leaders are less concerned about Harvard’s future plans for the site. Instead, they emphasize that after 17 years of hard work, the massive environmental cleanup is finished, the redevelopment of the property has been paid for, and several new charities and cultural centers have been endowed in the process.

“Overall, this is a victory for the town,” Falkoff says. “For these sorts of cleanups, you have to take the long view—nothing is ever quick. But I think we’re all satisfied with the work that people at all levels did to get this job done right.”