Harvard Considers Land Purchase in Watertown

Harvard has expressed strong interest in purchasing a 30-acre business complex in Watertown, but town officials fear that the tax-exempt University could cost them millions of dollars in vital tax revenue.

If Harvard does purchase the massive office space named Arsenal on the Charles, at $185 million, it will be one of the most expensive land purchases in Harvard's recent real estate campaign.

An official statement from Harvard is expected today, but Paul S. Grogan, Harvard's vice president for government, community and public affairs, said yesterday that Harvard is "extremely interested in the property."

Harvard currently leases 112,000 square feet in the complex to house Harvard Business School Publishing. A clause in the lease gives Harvard a chance to purchase the property once it goes on the market, before other parties can make a bid.

The details of a possible deal between Harvard and O'Neill Properties, the Philadelphia-based owner of the site, have not been revealed by either side.

Banker and Tradesman, an industry publication, reported two weeks ago that Harvard was a late entrant into intense corporate bidding for the tree-lined property. The Arsenal's posh office space is currently rented by internet firms and consulting groups.

Because Harvard's non-profit status makes the University tax-exempt, Watertown could potentially lose $2 to $3 million in annual property taxes if Harvard purchaes the site, officials from the Watertown Town Council said yesterday.

Watertown bought the property in the mid 1980's, transforming it from a 200 year-old military base into a office park for stores and businesses with the hopes of generating new tax revenue.

"We worked 12 years to bring this onto the tax roll," said John S. Airasian, chair of the Watertown Arsenal Development Corporation, the civic group responsible for the base's transformation.

"As a small community, we cannot afford to lose that tax revenue," he said.

The Watertown Town Council met two weeks ago to discuss the possibility of Harvard purchasing the property, and passed a resolution calling for Harvard to enter into a payment in lieu of tax agreement (PILOT) with the city to compensate for the lost tax revenue.

Harvard would likely pay the town some amount of money to offset the community's lost tax revenue, but Harvard has not released the details of any potential agreement. Such arrangements are common between Harvard and the several municipalities where it owns land.

"The key thing for the town is the preservation of the tax revenue, either from taxes or a PILOT agreement," said Town Councillor Frederick L. Pugliese.

Pugliese said that the revenue is critical to the town for school renovations, road repairs, and various other community projects.

Regardless of a deal the town strikes with Harvard, Watertown will receive 1.5 percent of the gross sales price of the property, estimated to be a little more than $2 million.

Other councillors said they are concerned about Harvard's presence overwhelming the character of Watertown.

"The only open space we have is the Arsenal, and we've been waiting two-hundred years to develop it," said Councillor Marilyn M. Petitto Devaney.

Devaney said she was worried that Harvard would contribute to overdevelopment and rising prices in Watertown.

"When I first heard Harvard, my heart sank. My first feeling was 'oh no.' It's not a judgment about the institution, just the way things are changing around here," Devaney said. "It's getting very difficult for people to own their homes and pay their taxes. This is going to devastate us, it really is."

Grogan said Harvard is fully aware of the concerns of the community.

"As we get into discussions with the town, we expect be able to allay those fears," he said.

Although some Watertown officials have said that Harvard would need town approval to purchase the Arsenal, Grogan said otherwise.

"We're not going to grant the town a veto over whether Harvard purchases

the property," he said.

As yet, Harvard has revealed no concrete plans for the property, but the Arsenal could prove a valuable asset in Harvard's growing real estate holdings throughout the area.

"There's no plan[for the site], but we just got into this. It's an intruguing possibility," Grogan said.

In 1997, Harvard drew criticism from the community after University officials confirmed that Harvard had secretly acquired 52 acres of land, worth $88 million, in Allston-Brighton.

Harvard picked up another 48 acres in Allston for $151 million last May.