Harvard purchased the 30-acre site two months ago for $160 million from O'Neill Properties, which had developed the historic US army base into a business complex in 1998. Harvard Business School Publishing leases 112,000 sf on the site and in its contract, the university was given first rights of refusal on the property.

According to Mark Boyle, director of community development and planning for the town, tax revenues on the Arsenal site--which was only 50% completed--was $2.7 million. Expected tax revenues on the completed site would jump to $4.8 million next year. If Harvard maintained the commercial leases on the site it would be obligated to pay taxes but the university is slowly replacing the commercial leases as they expire with university space.

In lieu of property taxes and despite it nonprofit status, Harvard has agreed to a payment of $2.7 million the first year of its ownership with that figure going up one and a half percent every year for 10 years. From the eleventh year to the twentieth year of ownership that figure would be reduced annually by 10% until the last year when it would no longer make any payments.