"We have been advised that Harvard University is in negotiations with O'Neill Properties," Mark Boyle, director of community development and planning for Watertown, tells GlobeSt.com.
The Arsenal was once part of the US army before O'Neill developed it into a business complex. Harvard Business School Publishing leases 112,000 sf here and in its contract, the university is given first rights of refusal on the property.
The potential sale is a source of concern to local officials here, who are worried that they could lose a significant tax base, depending upon the university's plans for the property. "It all depends on the usage," notes Boyle, who says that while educational and religious organizations are tax-exempt, if the university uses the property for commercial purposes, it would be taxed. Currently, the town gets $1.8 million annually in taxes from the site and that figure is expected to jump to $2.3 million this year.
In response to those concerns, Harvard has indicated that it would agree to a payment in lieu of taxes to protect the town from financial harm. Harvard has negotiated a number of other revenue protection payments with other properties it has acquired in Boston and Cambridge. The amount and the duration of the payment has not been negotiated as of yet, according to Boyle, who adds that the town hopes the payment will be for "as long as possible."
This deal is another in a series of real estate purchases on the part of the university. It recently acquired rail yards and development land in nearby Allston. Harvard officials did not return calls by presstime but they have reportedly said that the university does not plan on converting the office complex, which is close to the university's main campus in Cambridge, into a campus site in the near future.
O'Neill properties has reportedly declined to comment on the asking price, but according to Boyle, the company's initial asking price in the prospectus was listed as $185 million. "That is their target price," he says, "but they invested over $100 million into that property."
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