Associate Vice President for Planning and Real Estate KATHY A. SPIEGELMAN shakes hands with Vice Chair SAL CICCARELLI after signing a 'historic agreement' between Watertown and Harvard last night.

WATERTOWN—Nearly a year-and-a-half after Harvard purchased a 30-acre tract in Watertown known as the Arsenal, the town welcomed the University to its neighborhood last night.

To the applause of residents, town and University officials signed a deal last night which guarantees that Harvard will pay Watertown more than $3.8 million annually for the next 52 years, in a combination of taxes and Payments in Lieu of Taxes (PILOT).

While news of Harvard’s May 2001 Arsenal purchase sparked protests by residents, children and politicians—all concerned that the town would lose a third of its tax base to a non-profit, tax-exempt institution—last night’s meeting was marked by two standing ovations and long lists of thank-yous and welcomes.

“I said two years ago, if Harvard would pay their fair taxes, I would welcome them to Watertown,” said town councillor Stephen E. Romanelli. “Harvard, welcome to Watertown.”

The deal allows the University to make full use of the property while guaranteeing the town a minimum payment of $3.8 million per year, the estimated tax value for the property this year, with a 3 percent increase annually per year.

Additionally, Harvard will donate $500,000 over the next three years to Watertown public schools, as well as $100,000 annually to a “Watertown/Harvard Enrichment Fund” for community programs.

Harvard’s purchase of the Arsenal—once covered with toxic waste before $100 million of federal, state and local money was used to clean the property—attracted the attention of a variety of politicians.

The town retained high-profile lawyer John Lynch, who wrote a bill which would limit the amount of land a non-profit organization could take off of a town’s tax rolls to 2.5 percent.

The state legislature’s joint committee on taxation approved the bill in June of 2001, and legislators asked the University to negotiate a deal with the town—a major victory which changed the tone of negotiations, Lynch said.

“That raised the profile of the problem,” Lynch said.

Harvard’s Associate Vice President for Planning and Real Estate Kathy A. Spiegelman, one of the deal’s negotiators, told the crowd that of the numerous meetings she has attended on behalf of the University, “This is one of the most pleasant meetings I’ve ever attended.”

The council’s lone dissenter, Frederick L. Pugliese, said he was concerned that the 52-year agreement will leave Watertown high and dry in 2054.

“I would not want my two-year-old son to look back and say, ‘what were we thinking?,’” Pugliese said.

Initially, Watertown’s negotiators pushed for a deal that would extend forever, while Harvard pushed for a 10 or 20 year deal like its other PILOT agreements, according to Harvard’s negotiator Director of Federal and State Relations Kevin Casey.

Fifty-two years was a compromise, Casey said.

But in his remarks, Town Manager Michael Driscoll—credited with doing much of the day-to-day work on the town’s side—noted that the University has kept up its PILOT payments in Boston and Cambridge.

Manager Driscoll described the negotiations as “arduous and sometimes contentious” and negotiators for both sides said that the details—even after the sides reached agreements in principle—took longer to hammer out than anyone anticipated.

Negotiators for both sides said Sept. 11 changed the deal in unexpected ways, thinking it prudent to come up with arrangements for any eventuality.

But, in the end, the consensus in the room last night was that 17 months was not too long.

“It was worth the wait,” said Town Councillor Mark Sideris.

—Staff writer Lauren R. Dorgan can be reached at dorgan@fas.harvard.edu