Campus & Community

Watertown, University announce agreement

4 min read

Harvard to make annual payments to Watertown

The town of Watertown and Harvard University announced that after a year and a half of extensive negotiations, an agreement has been reached that will provide the town with a guaranteed revenue stream from the Arsenal on the Charles Property.

A combination of taxes from commercial activities and payments in lieu of taxes (PILOT) for tax-exempt uses will assure the town predictable annual revenues from the property. For Harvard, the agreement provides unprecedented long-term certainty that it will be able to utilize the property for its institutional purposes.

Last August, Harvard initiated its commitment to providing guaranteed revenue through the University’s $3.8 million prepayment of fiscal year 2002 estimated real property taxes to the town. Beginning in fiscal year 2003, the $3.8 million base payment will grow at a rate of 3 percent per year through fiscal year 2054. For its part, Harvard receives certainty in knowing that future conversions of the property to academic, research, and support uses ordinarily associated with a university campus will be allowed “as of right.”

President Lawrence H. Summers noted, “One of my first actions as president of Harvard was to adopt a new principle governing University acquisitions and town relations.” That principle provides:

When Harvard is able to utilize newly acquired property to support its mission of education and research, resulting in the withdrawal of the property from the tax rolls, Harvard will make voluntary payments for a substantial interval and at a level that reflects the impact of the acquisition on tax collection.

Watertown Town Manager Michael J. Driscoll remarked, “We are very pleased that the University and the town put in the long hours and hard work to arrive at this historic agreement. As a result, the town can rely on a steady stream of revenue for over 50 years regardless of the state of the economy. In the end, I was pleased that good faith negotiations made this agreement possible.”

In addition to the revenue guarantee, the Watertown-Harvard agreement offers a number of additional direct benefits to Watertown:

  • In a side agreement, Harvard will provide an additional $100,000 of financial support each year for community enrichment activities to be determined by the Watertown Town Council. 
  • Harvard has pledged to make a contribution of $500,000 over three years outside of the PILOT agreement to support education initiatives focusing on technology. 
  • A methodology has been agreed to for similar treatments of any additional purchases Harvard may make in Watertown.Speaking on behalf of the Watertown Town Council, Council President Clyde L. Younger said, “This is an unprecedented agreement that shows that Watertown and Harvard have formed a partnership that will provide lasting benefit and predictability to both.”

    Harvard President Summers added, “Watertown is a vibrant town and we look forward to becoming a member of the community.”

    The major provisions of the Harvard/Watertown Agreement are as follows


  • The agreement will be for 52 years and will be based on the $3.8 million estimated tax payment that Harvard made to Watertown over a year ago. Over the course of the agreement there will be an increase in the “Arsenal Payment” – the combination of PILOT and taxes – to make the $3.8 million grow at a rate of 3 percent per year. 
  • Watertown will permit Harvard the full use “as of right” of the Arsenal property for academic, research, and support uses ordinarily associated with a university campus. 
  • The agreement also has components that provide assurances to the Town in the event that Harvard transfers the Arsenal to another tax-exempt (nongovernmental) entity, or purchases additional properties in the town. 
  • By separate side letter, Harvard commits to provide a payment of $500,000 over three years to collaborate with the Watertown public schools in the areas of technology and learning. Recognizing that the areas of technology and learning encompass a broad range of issues, Harvard representatives will begin conversations with Watertown officials to establish a process for improving technology to benefit Watertown’s students and educators. 
  • By separate side letter Harvard agrees to contribute $100,000 annually to a “Harvard/Watertown Community Enrichment Fund” for the Town of Watertown to support various community programs. The fund will provide grants to various community programs at the direction of the Watertown Town Council. The grants will provide support in such areas as educational enrichment, library enhancement, tutoring, adult education, and other community programs. Each year Harvard and Watertown officials will host a public event where the awards will be made to the grantees.