Harvard has acquired The Arsenal on the Charles property from Charles River Business Center Associates LLC, which conveyed the property to the University on May 15, for approximately $162,641,000. The property is located between North Beacon Street and Arsenal Street in Watertown. As a part of the sale, more than $2,451,000 was paid directly to the town of Watertown. Also as part of Harvard’s purchase, the town will have the rent-free use of an art center/theatre space in the complex.
The 29-acre site was a former environmental Superfund site and required extensive cleanup, which has been completed. The Arsenal property generated no tax revenue for the town prior to 1998 and, after redevelopment, had no tenants until Harvard Business School Publishing Corp. leased space at the property.
Harvard Business School Publishing Corp., an affiliate of Harvard University, was the initial tenant of the development and had a right of first offer to purchase the property; it occupies approximately 18 percent of the complex’s approximately 750,000 rentable square feet of space.
Even though the Arsenal property has now been purchased by Harvard University, it is not automatically exempt from real estate taxes. Only space occupied by tax-exempt uses can be exempted. Currently over 80 percent of the space is occupied by commercial users, who have leases extending up to 20 years. Harvard does not have the right to terminate those leases. So even though Harvard is the landlord, much of the Arsenal property will remain taxable for a long time.
Harvard is engaged in active negotiations with Watertown about the University making voluntary payments to the town in lieu of taxes, as it does in both Cambridge and Boston. By providing voluntary payments in lieu of taxes, Harvard hopes to reinforce Watertown’s financial ability to address its capital and borrowing needs. The University recognizes the unique importance of this property as a large portion of the town’s economic base.
Harvard is optimistic that a mutually beneficial agreement regarding voluntary payments can be reached and that through cooperation Harvard will be an enormously positive part of the Watertown community as an employer, and as a neighbor.