SOUTH PORTLAND — The Portland Pipe Line Corp., one of the largest taxpayers in South Portland, has applied for a property tax abatement, seeking a 42 percent reduction in the $44.7 million assessed value of its real estate and personal property across the city.

The pipeline company has asked for discounts on holdings stretching over 210 acres, from its oil tanker pier at Cushing Point on Casco Bay to a vacant 72-acre wooded parcel off Highland Avenue.

The company blames the city’s Clear Skies ordinance, which it is challenging in federal court, saying that the 2014 ban on crude oil exports has “significantly reduced the value” of the pipeline, according to the abatement application.

A Canadian-owned subsidiary of ExxonMobil and Suncor Energy, the company also “suffers from severe economic obsolescence that has not been taken into account in the assessment,” the application states.

Demand has waned for foreign crude that the pipeline has pumped to refineries in Montreal for 75 years, and the Clear Skies ordinance prevents the company from reversing its flow to bring oil from Canada to tankers in South Portland.

The 236-mile pipeline has largely shut down in the past year or so since the refineries started drawing oil from western Canada and North Dakota. The pipeline and its 23 massive tanks, on the waterfront and off Hill Street, received deliveries from only 11 tankers in 2016, according to the Maine Department of Environmental Protection. That’s down from 24 tankers a month less than a decade ago.

If the abatement were granted as requested, the city would lose $331,247 in property tax revenue, adding to the more than $1 million that taxpayers have spent so far defending the Clear Skies ordinance against the pipeline company’s lawsuit.

QUESTIONING VALUATION TECHNIQUES

City Assessor Jim Thomas said he has until the end of March to respond to the company’s application and declined to discuss it further.

Thomas said property assessments haven’t increased since a citywide revaluation in 2006. Then, in response to the real estate slump that came with the subsequent recession, the city reduced all land values by 10 percent in 2009 and an additional 5 percent in 2010. Real estate sales have since rebounded, Thomas said, with market prices surpassing 2006 assessed values.

An analysis of South Portland real estate sales in 2016 by Maine Revenue Services, the state tax agency, showed that the city’s assessments are about 92 percent of market value – in other words, about 8 percent below market value, according to Thomas.

If Thomas agreed to reduce the overall value of pipeline real estate and personal property from $44.7 million to $26 million, the company’s annual tax bill for the fiscal year ending June 30 would fall from $791,447 to $460,200, based on the tax rate of $17.70 per $1,000 of assessed property value.

Such a change would push the pipeline company from the fifth-largest taxpayer in the city, just below Central Maine Power Co., to the seventh-largest, just below Fairchild Semiconductor. The Maine Mall, the city’s largest taxpayer, generates a $4.4 million annual tax bill on $250 million in property, including 73 acres along the Maine Turnpike.

If Thomas refuses to change pipeline property values as requested, the company could appeal his decision to the city’s Board of Assessment Review and proceed to court if the matter isn’t resolved at the municipal level.

In its abatement application, the company claims that its properties are “substantially overvalued” because the assessor “did not use proper valuation techniques.”

Thomas said he is required by law to assess properties according to their just market value. He’s also obligated to ensure the rough equality and uniform apportionment of the overall tax burden across different classes of properties – residential or commercial, single-family Cape or downtown apartment complex, brick storefront or metal industrial warehouse.

When assessing a commercial or industrial property, the income generated by a business can be a factor in determining market value, he said.

REPERCUSSIONS OF ORDINANCE

The pipeline company’s abatement application contained no details about its current operations. When asked via email about the pipeline’s status, a company spokesman declined to provide information about business activity, such as tanker deliveries or staffing levels.

“Portland Pipe Line is looking forward to reaching a mutually agreeable resolution of its property tax matters with the city of South Portland,” wrote Jim Merrill of The Bernstein Shur Group. “The company remains open for business and continuing the safe and excellent operation it has long been known for.”

Merrill declined to comment further because of the ongoing lawsuit over the Clear Skies ordinance.

Approved by the City Council in July 2014, the ordinance banned the loading of crude oil into tankers on the city’s waterfront, effectively blocking the company from reversing the pipeline’s flow to bring oil from Canada to South Portland. The company filed a lawsuit in February 2015 in U.S. District Court in Portland, where it’s being reviewed by Judge John Woodcock Jr.

The company claims the ban is unconstitutional because it interferes with interstate commerce, discriminates against Canadian interests, devalues the pipeline and infringes on areas of regulation best left to the federal government. The city, meanwhile, is acting “to protect the health and welfare of its residents and visitors and traditional land use authority to promote future development consistent with the comprehensive plan,” it said in court papers.

In its abatement application, the company claims that its real estate, currently valued at $42.9 million, is worth $17.9 million less, or $25 million. Its personal property, including business equipment, is worth $749,826 less than its current assessed value of $1.8 million, or about $1 million.

Pipeline properties targeted for value reductions include: 1 Cushing Court, tanker pier with 2 acres, from $4.6 million to $2.6 million; 10-11 Portland St., 7 acres with two oil storage tanks, a small office building and a large industrial dock, from $3.36 million to $1.9 million; 90 Preble St., 20 acres with two storage tanks, from $3.7 million to $2.1 million; 30 Hill St., 102 acres with 19 storage tanks and nine small industrial buildings; $26.8 million to $15.2 million; and 845R Highland Avenue, 72 acres of vacant land, from $2.4 million to $2 million.

The company also wants the assessor to reduce the value of two parcels totaling 5 acres at Cushing Point for which it currently pays no taxes. They are next to the tanker pier and considered part of Bug Light Park. The mostly wooded waterfront parcels are valued at $1.9 million, but the city’s taxpayers cover the $34,676 annual tax bill in exchange for public access to the land.

Kelley Bouchard can be contacted at:

[email protected]