Groton ― The town and Pfizer Inc., its largest taxpayer, have settled two tax appeals that the pharmaceutical company filed several years ago over the values of its research and development and manufacturing properties on Eastern Point Road.

The settlement, reached last month, requires Groton to reduce the company’s taxes by a total of $4.1 million over the next five years. The overall town tax reduction is $3,254,713 and the city tax reduction is $845,287, for the company’s research and development headquarters, and what remains of its manufacturing site, according to Groton Tax Assessor Mary Gardner.

The properties, located in the city, are subject to both city and town taxes.

Gardner said Groton and Pfizer disagreed on the appraised value of the properties. She said every time her office conducts a revaluation, as it did in 2011, special appraisers are hired to appraise both the Pfizer and Electric Boat properties. However, Pfizer hired its own appraiser, who determined a lower value for the properties, kicking off a tax appeal. The appeals covered the tax years of 2013, 2014, and 2015.

Gardner said, as is the case sometimes with tax appeals, both sides agreed to negotiate instead of going through an expensive trial. With a trial approaching, the town reached out to Pfizer to ask if the company would like to consider a settlement. She said both sides are as comfortable as they can be with the appraisals.

Rather than having the town and city directly reimburse the company, the company is allowing them to reduce its taxes by $820,000 each year for the next five years, Gardner explained.

“Pfizer has reached a positive agreement with the Town of Groton regarding taxes tied to market value of land on site,” Pfizer said in a statement. “The agreement was based on independent assessment of our properties. We are proud and productive members of the Groton Community and we’re thankful a fair resolution was reached.”

Additional appeals from Pfizer of valuations related to the Oct. 1, 2016 and Oct. 1, 2021 revaluations are pending, Gardner said. She said every time the town does a revaluation, the cost tables are frozen for the next five years.

The company said in court documents that the value of its properties were less than what the town determined because buildings were demolished and sold and land was sold.

The town, in court documents, said town staff and the appraiser for the town toured the campuses as part of the town’s 2011 revaluation, and the company did not “disclose its demolition plans or the alleged functional obsolescence pertaining to Building 118,” which at the time “was actively used as a research and development facility.” The company did not object to the values of its North and West Campuses prior to the certification of the 2011 grand list.

Then town said it could not reduce the valuation of building 118 because the demolition was not certified as complete until 2015.

The town’s assessments of the properties have decreased over the years, according to the documents.

City of Groton Mayor Keith Hedrick said the city is in process of developing its 2023-24 budget and incorporating the loss of revenue into its budget projections.

Based on the value of one mill in the current tax rate, the decrease in revenue would mean approximately a .14-mill tax rate increase in the town and .13-mill in the city.

“This is something that you run into on occasion as part of the taxation process, especially when involving complex properties,” Town Manager John Burt said about the cases. “It’s too early to say how it would affect the tax rate. My hope is that economic growth will more than offset the amount.”

k.drelich@theday.com