But, he said, "Harvard is not about to create a fiscal emergency for Watertown."

Commercial tenants currently occupy 80 percent of the Arsenal under long-term lease, he said, and will continue to pay taxes to the town.

Grogan also offered to enter into a Revenue Protection Agreement with the city which "would have as its goal a long-term protection for tax revenues from the Arsenal, even if Harvard eventually chooses to place more of the property in tax-exempt use."

Harvard already has similar agreements with Cambridge and Boston, though these agreements only partially reimburse the cities for lost tax revenues.

Harvard has no legal obligation to reimburse the town, Grogan said in the letter.

Town officials said they appreciate the letter's intent, but are still cautious about Harvard's prospective purchase.

"The letter clearly hasn't quieted any issues," Driscoll said. "With all due respect, the community's concerns are long term, and long-term isn't until fiscal year 2003."