WATERTOWN, MA-This town has rejected Harvard University’s payment offer in lieu of property taxes. The Cambridge-based University recently purchased the Arsenal on the Charles here, a 30-acre commercial office center, for $160 million from O’Neill Properties. Local officials protested the sale because once the university takes over the site, it’s non-profit status will take it off the town’s tax payroll.

“We’re happy to meet again to continue to discuss the potential agreement,” Mary Power, director of community affairs for the university, tells GlobeSt.com. According to Power, Harvard offered Watertown a payment plan based on the tax revenue of the Arsenal. “Over the course of a 20-year window we are proposing a payment roughly equivalent to taxes,” says Power.

The town has estimated that the Arsenal would generate approximately $4.8 million in taxes once it is fully leased. But Power disputes that figure noting that the property is only assessed for $118 million. “The valuation would have to be over $200 million for the taxes to be that high,” she points out.

It is unclear exactly how much Harvard would be paying the town through this offer. Power says that is because each of the building’s leases expires at different times, but the university has not provided the town with exact figures. Power emphasizes that Harvard’s offer extends for 20 years for each tenant. “If a property is converted to an educational institution 19 years from now, we will pay the tax-equivalent payment for 20 years after that,” she says.

By agreeing to abide by certain conditions, including Harvard’s right to develop the property, Watertown could renew the payments for an additional ten years. Otherwise the payments would decrease over nine years and zero out by the 30th year. Watertown officials did not return calls by presstime but they are quoted as saying that the offer is a step backward. “I think they’re looking for a guarantee for taxes in perpetuity,” says Power.

Harvard’s purchase of the property, that the town spent millions of dollars cleaning up in the hope of eventually making money on the property taxes, so angered local officials that Watertown’s representatives filed a bill in the state Legislature calling for nonprofit organizations to pay taxes when they buy large properties and take them off a municipality’s tax rolls. The bill is still in committee.

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