OTIS — Like the mouse that roared, this small Hancock County community has stood up to the Bangor Water District and won a significant victory. Otis voters on Saturday approved an agreement reached in recent days between town officials and the water district.

The compromise agreement, which returns more than 900 acres of district-owned land to the town’s property tax rolls, ends a contentious period between the town of 355 residents and a water district that serves more than 50,000 customers outside of Otis.

Now that both sides have signed the agreement, it is set to go before the Bangor City Council this week. Otis Town Attorney Douglas Chapman said legislation will be introduced in the Legislature today to change the water district’s charter, a necessary step in the agreement.

Chapman said the compromise agreement may affect other municipalities in the state. “This could be the model to change the whole system of how water districts are taxed,” Chapman told the 35 residents convened for town meeting.

Alluding to the description of Otis in its battle with the water district as the `mouse that roared,’ Chapman said the town has “set the example” in the state.

Otis voters on Saturday endorsed the agreement hammered out over the last several months between their own representatives and the district that is the largest landowner in town.

The confrontation between the town and the water district began in earnest more than a year ago, when town officials decided the time had come to talk money. The water district had been in town 35 years, but its landholdings were tax-exempt.

The water district’s legislative charter granted it tax-exempt status in 1958. Over the years, its properties in Otis had increased to about 1,000 acres.

Through the years, the water district managed its resource well, a fact that became apparent when the district was given permission to install a $7 million ozone system to comply with the Safe Drinking Water Act. If the water had not been so clean, the water district would have been required to build a $20 million full-filtration plant.

Since the district’s properties were tax-exempt, the town last year suggested payments in lieu of taxes and said a just amount would be about $20,000. The water district argued its charter would not allow for any payment.

In the midst of the tug of war over money, Otis voters at town meeting last year enacted a moratorium on any building projects over 4,000 square feet. The action occurred as the water district began its construction of the ozone plant.

Although town officials claim the moratorium was not singling out the water company, they now say the move successfully got the district’s attention. Selectman Robert Peasley said Saturday the district “started having respect for us” after the moratorium was imposed.

The water district appealed to the courts last summer for relief from the building moratorium and won a temporary restraining order in U.S. District Court. The judge directed the two parties to take their differences to the bargaining table in an effort to keep the matter from being settled in litigation.

Those efforts have paid off, Otis selectmen said Saturday.

The vital parts of the agreement for the town include the provision that the water company give up its tax-exempt status on more than 900 acres within the town. The company has agreed to put up for sale more than 12 acres of shorefront property it owns on Beech Hill Pond and Springy Pond, thus allowing for future development of that acreage.

The district’s pipes, fixtures, hydrants, conduits, gatehouses, treatment facilities, pumping stations, reservoirs and dams remain tax-exempt, as well as its property that is appropriated for public use.

Most important in that decision, according to Otis Town Administrator Sharon Perry — widely credited with spearheading the town’s assertive stance about its rights in the matter — is that the agreement ensures future public use of the two ponds for recreation.

As part of the agreement, the water district has relinquished its water rights to the two ponds. The district has never used either of the ponds as a public water supply, using the water of Floods Pond instead.

Keeping that public access is essential to the town’s long-term survival, Perry explained. Much of the town’s tax base is derived from properties clustered around Beech Hill Pond. If access to the water were ever curtailed, those property values would drop dramatically, potentially ruining the tax base.

Because most of the water district’s landholdings are held within tree-growth status, the actual amount of annual property taxes the town will receive is only about $3,500, according to Perry. But the town benefits from continued access to the ponds and the potential for increased property taxes from the shorefront properties the water district will soon put on the market.

Important on the water district’s side is the town’s amendment of its building moratorium, agreeing the moratorium does not apply to the water district’s construction of the ozone plant. Further, the town has agreed that its hazardous-waste ordinance does not apply to the water district’s operation.

Implicit within the agreement, on both sides, is future cooperation. Both sides to the agreement have said they will consult with each other whenever either side is considering an action that could affect the other. The agreement calls for written notice, a comment period, and an invitation for each side to attend the other’s meetings when conditions warrant.

“This gives communication between the groups,” Perry said, “and it recognizes the town as an interested party.”

While both sides have compromised, Perry added, both sides have gained a better working relationship.

And for the mouse that roared, the agreement is victory, according to Peasley. “Hey, we did it … we got the district to change.”