COVID Property Tax Planning

During times of business decline, such as our COVID-related recession, there have been winners and losers with some companies particularly impacted through declining revenue, utilization, occupancy, and rising costs of doing business.  State and local government has also seen rising costs in many areas that are likely to be passed on to business property taxpayers in the form of tax levy increases and rising tax rates that will impact heavy capital dependent businesses the most starting with next year’s taxes.

COVID Property Tax Relief for Manufacturers

About 80% of manufacturers expect that the COVID pandemic will have a financial impact on their business, according to a recent survey of the National Association of Manufacturers (NAM). The majority of those in the manufacturing sector (53%) expect COVID-19 to impact their operations, the NAM survey reported.

Some major industrial companies have closed facilities and are mulling the extent of layoffs to help curb the spread of the Coronavirus, as well as for economic reasons. Clearly, the manufacturing sector, which employs some 13 million workers in the US, is poised to be hit hard during this outbreak, primarily for two reasons: First, many manufacturing jobs are on-site and cannot be carried out remotely. Second, slowed economic activity has reduced demand for industrial products in the US and globally.

Manufacturers are facing continued downward pressure on demand, production and revenues as the COVID-19 pandemic intensifies. Additionally, many are facing cash-flow liquidity challenges and difficulties in managing debt obligations. Therefore, the industry may see some manufacturers struggle to recover — and even declare bankruptcy — depending on how robust and effective any government intervention and support may be, and how long the COVID-19 crisis lasts.

Additionally, manufacturers should be prepared for major global supply chain disruptions. This will affect not only the OEMs, but will also likely ripple throughout the supply chain, affecting suppliers by driving reduced demand for materials and components. Supply chain partners may experience their own challenges and may not be able to fulfill orders on time — or at all — during the crisis.

 How to Qualify Manufacturers for COVID Property Tax Relief

COVID Property Tax Relief for Hotels

The coronavirus (COVID-19) pandemic is causing the hotel industry across the globe to take a hit. In the United States, the impact to the travel industry is nine times worse that the 9/11 crisis.  This can be seen through a year-over-year decrease in the most important key performance indicators in the industry: occupancy, revenue per available room (RevPAR), and average daily rate (ADR). In the week ending October 17, U.S. hotels had an occupancy of 50.1 percent, showing a year-over-year decrease of 30.7 percent. Meanwhile, ADR dropped to 97.69 U.S. dollars, reflecting a decrease of 28.3 percent on the previous year. Lastly, a RevPAR of 48.91 U.S. dollars showed a year-on-year drop of 50.3 percent.

A new study conducted by the American Hotel & Lodging Association (AHLA) sheds additional light on the extent of the coronavirus pandemic‘s impact on the hospitality industry.

Nearly nine in 10 hotels have been forced to lay off or furlough employees due to the ongoing impact of the COVID-19 crisis, according to the July 23-27 survey of more than 1,200 AHLA members. Less than one-quarter (24 percent) of respondents are back to a minimum of 60 percent of their pre-COVID staffing levels and almost one-third (29 percent) are still at or below 20 percent staffing.  Finally, more than half of the 600 hotel owners that responded indicated that they are now in danger of losing their property to foreclosure by commercial real estate lenders.

How to Qualify Hotels for COVID Property Tax Relief

COVID Property Tax Relief for Senior Care Operators

Since the COVID-19 pandemic first surfaced in the United States, the number of cases and deaths in long-term care (LTC) facilities has been rising. According to The Atlantic, as of October 22, 2020, over 528,000 total cases with 87,000 COVID-19 related resident and staff deaths have been reported in nursing homes and other long-term care facilities, which is a conservative estimate because not all states publish these data. The increase in deaths among long-term care facility residents and staff has become an urgent concern for federal and state policymakers, the long-term care industry, family members of residents, residents themselves, and the general public.

The impact of COVID-19 on the senior living industry could be $40 billion to $50 billion over the next year. Senior living providers are doing everything they can to protect their residents during the pandemic. The cost of maintaining high quality care and high quality of life for senior living communities has increased dramatically due to COVID. Labor costs have also substantially increased due to COVID.

According to the Senior Housing News, as the Covid-19 pandemic stretches on, senior living operators are turning more to agency staff and are also offering more rent concessions.  And many communities are not accepting new residents so they have no new revenues to help offset the additional expenses associated with the virus.

As further perspective, according to the NIC September 2020 Intra-Quarterly Snapshot, occupancy rates for assisted living properties was down 6.1 % from the March 2020 reporting period when the pandemic began to influence the senior housing sector.  Independent living properties occupancies rates were also down 5.5% for the same period.  These declining vacancy rates, declining revenues through rent concessions, and rising operating costs have created a perfect storm for senior care operators.

How to Qualify Senior Care Operators for COVID Property Tax Relief