JAY - Assessors voted unanimously Monday to give the former owners of a natural gas-fired power plant a $386,792.89 tax abatement and to reduce the 2005 valuation of the cogeneration center from $117.7 million to $90 million.

The decision saved taxpayers from potentially paying back $3.3 million in taxes for 2004 and 2005, if the decision had gone to court and the company won. That would have required a nearly 20 percent property tax increase, which would have been potentially crippling to Jay homeowners, Town Manager Ruth Marden said in a statement released to the news media.

The money to repay the company will come out of the town's general fund, Marden said during Monday's meeting.

The board's decision settles a multi-year legal dispute over the value of the plant that was built to supplant the use of heavy oil to run the boilers at the former International Paper Androscoggin paper mill. The power plant went fully online in early 2000. Former owners idled it in November 2004 and filed for Chapter 11 bankruptcy protection.

Androscoggin Energy's figures presented to the town in 2004 valued the plant at $114.68 million, and in 2005, valued it at $117.17 million. Jay assessed the company nearly $1.9 million in taxes in fiscal year 2004-05 and $1.81 million in taxes in fiscal year 2005-06.

The company filed a lawsuit in early 2006 against the town in bankruptcy court claiming the town overvalued the power plant in those two years.

Androscoggin Energy said the plant should have been valued at $10 million for both those tax years..

Voters appropriated up to $150,000 in November to defend the town in the valuation dispute but has spent less than $75,000 on the case, Marden said.

On Monday, town attorney Michael Gentile, who helped negotiate the deal, explained how the recommendation is favorable to the town and that it came after months of negotiations.

Technically, the town has a pretty good case if it was heard in court and wouldn't have to pay anything, Gentile said.

The company agreed to drop its abatement request for 2004, he said, and had initially wanted the valuation of the plant to be reduced to $82,000 in value for 2005. Town representatives counter-offered, reducing the value to $90 million, he said.

An assessment of the plant's value in 2006 was $57 million, which included $5 million in tax-exempt pollution control equipment, Marden said.

If the town continued on with the case, it could have spent $40,000 to $50,000 more over the next four or five months, Gentile said.

So instead of a $3.3 million case, you have a $400,000 case, she said.

Both Marden and selectmen's Chairman Bill Harlow spent many hours in court during the discussions on the issue before the recommendation was reached.

"Once we go to court, we don't know" what the outcome will be, Harlow said.

"I think you ought to take the money and run," resident Mary Howes said.

Resident Tom Goding agreed.

"Take the money and run," he said.