Officials for both sides have said they expect current tenants with leases will be allowed to remain.

Watertown spent 12 years rebuilding the Arsenal to broaden its tax base, Airasian said.

"Watertown has a lot of its hopes and dreams hung on the revenues from this site," Airasian said.

But Power said the project has several perks for both parties involved. The property is being bought, which will bring an large sum of money to the town immediately. In addition, Harvard agreed, as part of the deal, to devote a portion of the space to a community arts and theater center, which will be open to everyone.

And Watertown will still be getting revenues from other parts of the property that will be rented, said Power.

"We're in active discussion with the town of Watertown to arrive at an agreement regarding Harvard agreeing to pay a sum in lieu of taxes," she said. "The utilization of the site by Harvard will create economic strength for Watertown."

Power said the University, recognizing the value of the site, has committed to making payments for 20 years. And as an entering neighbor, Harvard is looking forward to initiating a positive relationship with Watertown, she added.