JOHNSTON — The town has headed off a potential legal battle with two local auto dealers who had hoped to avoid paying property taxes on their Hartford Avenue buildings over the next 10 years.

After filing legal claims last year, the dealerships have agreed to forego the litigation and the town has agreed to permit the tax breaks over a five-year period, a town lawyer said yesterday.

Both Chris S. Hurd, of Hurd Hummer, and Michael Grieco Sr., of Metro Honda, had negotiated 10-year tax treaties with the administration of Mayor William R. Macera and the Town Council.

But shortly before he took office last year, Mayor Joseph M. Polisena and the council agreed to hold off on the tax pacts until a new team of lawyers could examine them and Polisena could sort out the town’s deficit problem.

More recently, William Conley, an assistant solicitor, determined that the town could raise “certain legal objections to the treaties.”

“We felt there were some procedural defects in the process that the prior administration used to bring the tax treaties to the council,” Conley said.

Before it approved the original deals, the Town Council did not have sufficient information on the financial impact of the treaties, Conley said.

The town was prepared to argue that point in court if necessary, he said. Instead both sides have reached a compromise.

When it voted on the matter last week, the Town Council still lacked precise information as to the precise financial effects of honoring the agreements, according to Councilman Ernest F. Pitochelli.

Pitochelli said he can’t recall the ballpark estimate that the council used during a negotiation session behind closed doors.

“All I know is that it’s 50 percent more than what they would have paid,” he said. Conley is working on a more precise financial analysis for the council, he said.

The tax treaties allow the two dealerships to pay taxes on their land only during a five-year period that starts on July 1, according to Conley.

The council has gone back and forth on the treaties several times, approving them in 2004, ratifying them in September 2006 and than voting to reconsider that ratification a few weeks later.

Both Hurd and Grieco assert that the tax treaties were a key factor when they decided to develop their properties, which sit across the road from each other near the junction of Route 255 and Hartford Avenue.

So why didn’t they move against the town in court?

“I think anyone with a brain would ask me why I settled,” Hurd said. “I’m walking away from a lot of money that was guaranteed and promised to me.”

He declined to specify the precise amount of the losses, saying that he, too, was uncertain of the number and he didn’t see much benefit in figuring it out.

Hurd suggested that he had decided to give the town a break.

“Maybe I don’t want to kick a guy when he’s down,” he said. “The town has faced a lot of financial difficulties lately.… I have a lot of respect for the mayor and what he’s trying to do and what the council is up against.”

mreynold@projo.com