Thu, Jun 4, 2020

Managing Property Tax Pollution Control Certification Efforts During COVID-19

Managing Property Tax Pollution Control Certification Efforts During COVID-19

Duff & Phelps' Property Tax Services team has been navigating the uncertainty and delays due to COVID-19 around the review and certification of pollution control exemption/special tax treatment applications with state environmental reviewing authorities across the U.S. Through our ongoing communication with these reviewers, we have found that, like us, most reviewers have been forced to work remotely. This has severely hampered their review and approval processes for eligible pollution control property certification applications, as most reviews are still done with all-paper filings. Below we discuss three state examples from recent experience.

Illinois Environmental Protection Agency (EPA)

In 2019, Duff & Phelps filed numerous Illinois applications for Certification (Property Tax Treatment) Pollution Control Facility (Form APC-151) for salvage value treatment for clients working in the energy and manufacturing sectors in Illinois. The applications filed were for pollution control facilities previously certified by state reviewers. To date, working with all-paper files, our clients’ applications have received engineering approval but are still awaiting final legal approval from the Illinois EPA legal team due to remote working conditions. Final certification will be processed by the Illinois Pollution Control Board later this year, but will only occur once legal signoffs are complete.

Ohio EPA

Duff & Phelps filed Ohio applications for Air, Noise or Water Exempt Facility (Form-PCF) for property tax exemption for a power generation client in Q1 2020. The application was templated from a previous filing made for a separate client in 2019. Again, working only with paper files, the state’s reviewers have indicated that application processing will experience lengthy delays to an already drawn-out process due to new employee polices while they are working from home.

Texas Commission of Environmental Quality (TCEQ)

Duff & Phelps has a long, successful working relationship with the TCEQ Proposition 2 responsible for reviewing TCEQ use determination applications for the certification of pollution control property in Texas. Under current pandemic conditions, the TCEQ is expecting to work remotely for the foreseeable future and anticipates some delays in their review of 2021 use determination application filings later this year. Further, the TCEQ indicated that they have a substantial backlog of 2020 use determination applications to be reviewed and certified.

Due to the ongoing impacts from COVID-19, applicants can expect delays for specific pollution control certifications for tax year 2020. For tax year 2021, Duff & Phelps recommends that our combined team begin the process of identifying, quantifying and certifying pollution control property for clients’ facilities as soon as Q3 2020 so we can provide the regulatory reviewers adequate time to process applications. This process will ensure our clients receive the property tax benefits from certifications in time for 2021 value negotiations.

Duff & Phelps Property Tax Exemptions Team Experience

Duff & Phelps' property tax pollution control specialists have over 25 years of experience in certifying pollution control equipment for exemptions and special value treatment in 27 different states. Due to the unforeseen economic impact of COVID-19, companies who are looking to decrease their overall operating expenses could benefit from pollution control exemption/special value treatment by decreasing their property value and lessening the facility’s tax burden.

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