After months of negotiations, Harvard has finally purchased the Arsenal property in Watertown, marking the University's growing influence in neighboring communities.

The 30-acre property, which sits between North Beacon Street and Arsenal Street in Watertown, was renovated by the town in 1998 in order to attract tax revenue. Harvard purchased the building and land for $162,641,000.

The sale, finalized Tuesday, brings to the forefront numerous issues surrounding the repercussions of Harvard's status as a non-profit, and thus non tax-paying, organization.

Mary H. Power, senior director for community relations at Harvard, said Watertown may be apprehensive, but the University plans to do everything it can to be a "good neighbor."

"There's concern in the [Watertown] community that tax-exempt space means the city will forgo economic growth on the site," Power said. "What's likely to occur, as in Cambridge and Boston, is that Harvard will be a stable employer with large purchasing contracts and a community that supports vitality."

In February, when Harvard first started making negotiations, Watertown Town Manager Michael K. Driscoll said the community was worried that the University would provide less-than-adequate revenues for the site.

Driscoll said the Arsenal site provides for $3.5 of Watertown's $15 million annual budget. Without adequate revenues from Harvard's tax-exempt status, Watertown may be unable to proceed with many capital projects--such as school and library renovations and road repairs.

"This is a big hit for a small community," said John S. Airasian, chair of the civic group that developed the Arsenal from a 200-year-old military base into a corporate campus for high-tech and consulting firms.

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.

"There are many opportunities for Harvard to be not only a good neighbor but a valuable partner in addressing common needs," Power said. "We hope over time Watertown will recognize the mutual benefit of this."

--Staff writer Sarah A. Dolgonos can be reached at dolgonos@fas.harvard.edu.

--Staff writer Marla B. Kaplan can be reached at kaplan@fas.harvard.edu.