SCARBOROUGH – Under a settlement agreement with Marc Terfloth, the town of Scarborough has agreed to reduce the total property taxes owed on his Prouts Neck property by nearly $18,000 for 2011 and 2012 combined.

In addition, the town has agreed to reduce his tax bill by $6,771 for the 2013 fiscal year, as well as reduce the assessed value of his land for the 2014, 2015 and 2016 tax years by a total of $431,200, which results in a new assessed value of just under $3.1 million.

The Town Council gave unanimous approval to the settlement agreement at its meeting on July 16.

In an opinion issued in early April by the Maine Supreme Court, the justices agreed with Terfloth that Scarborough had unjustly overvalued a home he purchased on the corner of Sanctuary Lane and Black Point Road in 2009.

According to the court, Terfloth purchased a house on .65 acres of land for $2.4 million in 2009, but the former tax assessor never changed the value of about $3.5 million he had assigned to the property in 2005, despite the market downturn in 2008.

In 2010, Terfloth paid a property tax bill totaling $44,252 on his property, but also requested an abatement. In his application, Terfloth argued that the price he paid for his home was the true measure of its value, not the assessment assigned by the town.

However, his request for an abatement was denied and the town called its assessment of Terfloth’s property “fair and equitable” even though it was about $1 million more than Terfloth had paid for the home, the Maine Supreme Court said in its opinion.

In upholding Terfloth’s appeal of the town’s valuation of his property, the Law Court said he had proved that the assessment was “manifestly wrong” because Scarborough “substantially overvalued” his land.

While the town has settled its dispute with Terfloth, it is still facing a lawsuit filed earlier this year by 34 homeowners in Pine Point and Higgins Beach, all of whom say that former assessor Paul Lesperance unfairly overvalued their property.

In that lawsuit attorney John Shumadine, who is representing many of the disgruntled homeowners, said the values assigned to their properties are “arbitrary, capricious, legally erroneous and wholly unsupported by the evidence.”

– Kate Irish Collins