Bath’s assessor has reached a property tax agreement with Bath Iron Works, resolving two property tax abatements filed by BIW with respect to the 2019 and 2020 tax years.

“My top priority has been to negotiate a resolution that is reasonable, fair and reflective of the yard’s just value, as required by Maine law,” Assessor Brenda Cummings said in a news release from the city.

The shipyard’s valuation in tax year 2020 will be reduced from $640 million to approximately $509 million, to reflect the shipyard’s just value, according to the release.

“The city team worked hard during negotiations with Bath Iron Works to implement the appropriate value adjustment in ways that minimize the impact on other taxpayers,” City Manager Peter Owen said.

In an example cited by the city, under the settlement agreement, abatement will be granted only for 2020 and BIW has agreed to withdraw its prior abatement request for 2019, which the city stated: “greatly minimizes the potential effect on all taxpayers.”

The change in BIW’s valuation reduces Bath’s total taxable valuation by just under 3%. With approval of a three-year, interest-free payment plan, and the negotiated application of the valuation adjustments, the impact on all taxpayers in 2021 should be limited to less than $60 per $100,000 of valuation.

“The actual tax implications on Bath property owners may be much less, once the citywide valuations are updated for the year,” Cummings said.

The final tax rate for 2021 will be calculated at the end of August when valuations are finalized and tax bills are prepared.

With City Council authorization on June 16, 2021, the city will pay the 2020 abatement over three years beginning in 2023.

This interest-free delay in the city’s payment obligation is timed to coincide with the conclusion of the 1997 Credit Enhancement Agreement with BIW.

Each of the three annual payments will be approximately $307,300.The alternative would have been immediate repayment of the $921,800 abatement balance owed for 2020, which would likely have required a special assessment of approximately $1 per $1,000 of valuation, or $200 for a home valued at $200,000.

“The council’s action protects Bath taxpayers from the burden of a special assessment,” Cummings said.

Without a settlement agreement, the city’s valuation dispute with BIW would have taken many years to appeal “at significant cost,” according to the release, and added great unpredictability to municipal finances.

“The appeal process would have left the city with a great deal of uncertainty with our largest and most significant taxpayer,” Owen said. “If the decision were placed in the hands of a third party, we would have been unable to negotiate with BIW over the methods of applying an abatement or how best to reduce the burden to other taxpayers.”

“Given that BIW is completely unique to Maine property, settlement of the abatement at a fair valuation is the wisest possible choice, and the only way for the City to be able to control the outcome of this matter,” Cummings said.

Comments are not available on this story.