The Bath appraiser has entered into a wealth tax agreement with Bath Iron Works in which two wealth tax rebates submitted by BIW for the 2019 and 2020 tax years are resolved.
"My top priority has been to negotiate a solution that is appropriate, fair and reflects the fair value of the yard, as required by Maine law," Assessor Brenda Cummings said in a city news release.
The shipyard's 2020 tax year valuation will be lowered from $ 640 million to about $ 509 million, according to the press release, to reflect the shipyard's fair value.
"The city team worked hard during the negotiations with Bath Iron Works to implement the appropriate allowance in such a way that the impact on other taxpayers would be minimized," said City Director Peter Owen.
In one example cited by the city, the settlement agreement will only grant a discount for 2020, and BIW has agreed to withdraw its previous 2019 reduction request, which the city said "significantly minimizes the potential impact on all taxpayers".
The change in the BIW rating reduces Bath's total taxable rating by just under 3%. With the approval of a three-year interest-free payment plan and the negotiated application of the valuation adjustments, the impact on all taxpayers should be limited to less than $ 60 per $ 100,000 valuation in 2021.
"The real tax impact on Bath homeowners can be much less once citywide ratings are updated for the year," said Cummings.
The final tax rate for 2021 will be calculated in late August when the valuations are complete and the tax bills are prepared.
With the approval of the city council on June 16, 2021, the city will pay the 2020 discount over three years from 2023.
This interest-free postponement of the city's payment obligation coincides with the conclusion of the 1997 credit enhancement agreement with BIW.
Each of the three annual payments is approximately $ 307,300. The alternative would have been to repay the $ 921,800 owed amount owed immediately for 2020, which would likely have required a special valuation of approximately $ 1 per $ 1,000, or $ 200 for a home valued at $ 200,000 $.
"The council's actions protect Bath taxpayers from the burden of a special audit," said Cummings.
Without a settlement agreement it would have taken many years before the valuation dispute between the city and BIW would have been challenged “with considerable costs”, the communication said, and it would have made municipal finances highly unpredictable.
"The appeal process would have left the city with a lot of uncertainty among our largest and most important taxpayer," said Owen. "If the decision had been placed in the hands of a third party, we would not have been able to negotiate with BIW about the possibilities of crediting or relieving other taxpayers."
"Given that BIW is a unique property in Maine, accounting for the abatement at fair value is the smartest choice and the only way the city can control the outcome of this matter," said Cummings.
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