A special property tax deal is being hammered out between Halifax and the Irving-owned Halifax Shipyard, negotiations that have been quietly underway for a year.

Mayor Mike Savage says he expects the deal will be formalized shortly and then brought to council. On Friday, the province introduced legislation allowing the city to negotiate a special tax rate.

The shipyard is currently assessed at $39 million. Based on current commercial and area tax rates, CBC estimates Irving pays about $1.3 million in property tax.

But those taxes are set to rise with the $300-million modernization underway to build ships for the Royal Canadian Navy.

Savage defends the special rate, saying it will avoid a costly legal fight with Irving. He says talks have been ongoing to determine what Irving should pay.

Savage says the city will ultimately collect more in taxes when the assessed value rises, but would not say how the new negotiated rate compares to the current rate.

The mayor says Irving argues their large new structure isn't much good for anything but building ships — so the usual method of basing taxes on assessment will not work. The city fears Irving will appeal if it doesn't get a special rate.

“It could be a long protracted legal process that would take a long time to settle. And that would be a disservice to taxpayers,” he said.

But others are calling it a sweetheart deal. Critics point out the province is already loaning Irving $304 million, $260 million of which is forgivable.

“There’s a record here where the loser ends up being the taxpayer and the winner ends up being this company,” said Kevin Lacey, with the Canadian Taxpayers Federation.

But Savage says the city is not rolling over and that Halifax will still bring in more in property taxes from the site.

“We are not giving them anything,” Savage said. “We are getting more money from them, as we should, because it will be an enhanced property. This is a good deal for taxpayers."