The City of Bath Assessor has reached an agreement with Bath Iron Works Corporation (“BIW”) regarding the just value of real and personal property at BIW’s shipyard in Bath, Maine. The agreement resolves 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.
The shipyard’s valuation in Tax Year (TY) 2020 will be reduced from $640 million to approximately $509 million, to reflect the Shipyard’s just value.
City Manager Peter Owen added, “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.”
For example, under the settlement agreement, an abatement will be granted only for TY 2020; BIW has agreed to withdraw its prior abatement request for TY 2019, which 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 TY 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,” said Assessor Cummings.
The final tax rate for TY 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 TY 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, further reducing the negative impacts to the City’s tax rate. 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,” said Assessor Cummings.
Without a settlement agreement, the City’s valuation dispute with BIW would have taken many years to appeal at significant cost, 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,” said Owen. “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 a 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,” Assessor Cummings noted.
For more information, and to view the settlement document, click here.