BANGOR, Maine — Bangor’s largest property taxpayer and the city found middle ground and settled a year-and-a-half-long dispute over the value of the large gambling facility, hotel and convention space on Main Street.

The city announced the terms of the deal with Hollywood Casino on Thursday morning.

Under the agreement, the assessment of the casino property as of April 1, 2015, has been reduced to $82.5 million, down from $97.4 million. For April 2016 and 2017, the assessment will be “normalized” at $80 million. In return, Hollywood Casino dropped its challenges to the April 2014 assessment.

“The settlement is fair and provides certainty for the city’s finances going forward,” City Assessor Phillip Drew said Thursday morning, adding that he felt negotiations led to a “reasonable, fair and equitable assessment.”

As a result of the 2015 assessment reduction, the city will reimburse $327,000 of the $2.14 million Hollywood Casino paid this year on the properties included under its appeal, Drew said. It’s too early to determine what the reduced revenue would be in 2016 and 2017, as the tax rates haven’t been set.

The dispute over the true value of the Hollywood Casino property has lingered since early 2015, when the casino initially filed an abatement request with the city, alleging Bangor had overvalued Hollywood’s Main Street properties and leases by $36.8 million.

Drew and the city’s board of assessment appeals denied that request.

Under the original assessment reduction sought by Hollywood Casino, Bangor would have had to reimburse $877,000 in taxes that the casino paid in 2014.

Later that year, the casino filed another appeal with the Maine State Board of Property Tax Review, raising the stakes by claiming the city overvalued its Main Street gaming properties and leases by $61.98 million, more than half the venue’s total assessed value. That would have forced the city to reimburse more than $1.3 million in 2014 tax payments

The state board was expected to hold hearings this summer to resolve the dispute, but the city and casino have been working on their own resolution since March or April, according to Drew.

The lower assessment that resulted from those talks stemmed largely from Hollywood Casino’s declining revenue since the opening of its main competitor, Oxford Casino.

Hollywood Casino brought in $53.2 million in net revenue in 2015, a 2 percent decrease from the previous year. That dip came in spite of an overall increase in Maine casino gaming revenue in 2015. It was the second consecutive year the casino saw a slight drop in its net take.

Drew said those income reductions contributed to the city’s willingness to drop the assessment on the property, though not nearly as much as the casino and its parent company, Penn National Gaming, had hoped.

Increased competition from new casinos popping up in other New England states, including a $2 billion resort casino development near Boston, could chip away at Maine’s casino business in future years.

“We are pleased to have reached an amicable agreement with the city of Bangor and look forward to continuing our mutually beneficial relationship for years to come,” Jose Flores, general manager of the casino, said.

Follow Nick McCrea on Twitter at @nmccrea213.