July 9, 2010 - Presidents Corner

CCTA:  Here is some info on the Duke Energy issue. Lee

 

Faxed on 7-8-10

FROM: Tom Dix

TO: Lee Cornett

Lee, please send this letter out to the County Association’s down line.  Tell everyone to be patient.  

Tom

 

Alan:

It was good chatting with you yesterday.  After our phone conversation, I got in touch with John Molfi, Administrator, Public Utility Section, Ohio Department of Taxation (614-466-8613)  Molif’s comments were very revealing.  Essentially, there is absolutely nothing that we can or should do before the Tax Commissioner  renders his determination on the Duke appeal.  If his ruling is favorable to our interests., OK.  If not, any and all appeals must go through our County Auditor.  If Duke’s request is rejected and it goes to the Tax Court of Appeals, we could then file an Amicus Brief with the Appeals Court.  Unless you have any other ideas in this regard, I guess we should just wait for the Commissioner’s determination. 

Tom Dix

PS. As an aside, Molfi did indicate that the valuation approach being offered by Duke has never been in favor in Ohio.  This is a “Cost Less Depreciation” valuation state!   

 

To all,

 

I want to notify everyone of a significant event that is occurring in August and the financial impact that this event will have on all current and future budgets. By now many of you have attended meetings with Duke Energy regarding their second half Personal Property Public Utility tax payment. Duke Energy filed an appeal with Tax Commissioner seeking a significant reduction in taxable value. As a result of this appeal the taxpayer is only required to pay the tax on the undisputed value identified on the appeal as the reduced assessed value. The company has requested a reduction of the assessed value in the amount of 40%. This means that they are only required to pay 60% of the tax bill.  No one was affected by this for the first half settlement in February due to the fact that the company paid the full amount of the bill. Duke Energy is now informing everyone of their intention to tender pay the second half bill. This means that they will be paying 60% of the bill for the second half. To put this in financial terms Duke Energy pays approximately $7,784,000 each half which is distributed to each political entity. The anticipated payment in August will be approximately $4.670,000. This is a reduction of approximately $3,100,000.

 

I have attached a spreadsheet showing all the financial impact of this transaction. The first column shows what would have been distributed with a full payment, the second column shows what is anticipated to be distributed if a payment at 60 % is made and the third column is the project loss of revenue from this transaction.

 

Please keep in mind that this information only reflects the second half payment. Discussions with Duke Energy indicates that their intent is to tender pay for future years. Therefore the revenue loss would have to be doubled for the year.

 

The appeal was for tax year 2009 therefore if they are successful in their appeal they would be entitled to a refund for the overpayment from the first half settlement. If they are unsuccessful in the appeal of value they would owe the back taxes (40%) plus interest. They of course would be able to appeal any decision by the Tax Commissioner.

 

I understand that this information may be confusing as well a disappointing. It may be necessary to make adjustments to your estimated resources in August. If you have any questions concerning the information presented or the process in general do not hesitate to contact me.

 

Charles F. Tilbury Jr.

Chief Deputy Auditor

513-732-8107