Commercial Casinos Energy Policy Act Tax Opportunity
The Casino Environment Before the recent economic downturn commercial casinos generated around $30 billion in profits each year between 2005 and 2008.1 In that time frame, US casino owners built new casinos and increased the size of their existing ones. In the wake of the recession, new US commercial casino construction is coming to a grinding halt and casino operators are now focusing on reducing the cost of existing facilities. The Section 179(D) Tax Provisions Casino operators are increasingly benefiting from casino operators taking advantage of EPAct IRC section 179(D) commercial building energy efficiency tax provisions, which have been extended until 2013. EPAct tax deductions are offered to those who qualify for energy savings in lighting, HVAC(heating vents, air conditioning, etc.)) and building envelope. (Building envelope consists of the building's foundation, walls and roof, as well as windows and doors. All of these regulate the flow of energy between the interior and exterior and exterior of the structure.) The Nature of Casino Properties Commercial casinos usually include hotel resortsthat UFABET เว็บตรง offer attractive services to their patrons from families and corporate. Casinos are ideally suited for EPAct because of their massive gaming floors hotels, hotel occupancy rooms meeting rooms, and parking garages. Each of these options generally require large areas and EPAct offers the potential of bringing in as much as 60 cents per square foot for each of the three measures that are mentioned above. The smallest commercial casinos are around 500 square feet. The majority of American casinos have more than 100,000 square feet. One of the largest ones, MGM Grand on the Las Vegas strip is almost 2 million square feet. Hotels are by far the most favored of Section 179's building categories. (See "Hotels and Motels Most Favored Energy Policy Act Tax Properties") It is commonplace to think of casinos as located in two states: Nevada and New Jersey. While it is true that these two states have the highest commercial casino revenue There are twelve states with casinos that are commercial in the United States, the other states that have casinos are: Colorado, Illinois, Indiana, Iowa, Louisiana, Michigan, Mississippi, Missouri, Pennsylvania, and South Dakota. The members of the American Gaming Association have publicized the commitments they have made to energy conservation. The casinos that report include Boyd Gaming Corporation, Harrah's Entertainment, Inc., and MGM Mirage. They have plans that include significant energy savings through cogeneration ERV(energy recuperation ventilation), more efficient HVAC components, replacing incandescent light bulbs with energy-efficient lighting, windows with energy efficient day lighting systems, solar thermal storage and several other initiatives for energy efficiency. The fundamental rule that is set to make a property eligible to receive the Section 179D lighting tax incentive makes casinos and particularly casino hotels the most favored property category to receive the tax incentive. The rule requires at minimum a 25 percent reduction in watts-per-square-foot as contrasted to the 1999 ASHRAE (American Society of Heating, Refrigeration and Conditioning Engineers) building energy code standard. Tax deductions are fully deductible with a 40% watts-per-square foot reduction in comparison to the ASHRAE 2001 norm. The ASHRAE 2004 hotel and motel building code standards require 40% reduction in power, which means that hotels and motels with lighting system that meets that requirements for building codes will automatically qualify for the maximum EPAct tax-deductible. Occupancy Rooms For all other types of building that fall under Section 179D, tax requirements require compliance with the bi-level switching requirement. The comparison is always made using wired instead of plug-in lighting. The rooms that are used for occupancy at casinos benefit from the fact that they usually have plug-in lighting. Additionally, because they function as motel and hotel rooms, they are specifically excluded from the tax bi-level switching obligation. Because occupant rooms are typically larger than the other areas in hotels, casinos are typically in a position to use energy efficient lighting to produce huge EPAct tax deductions to the facility. B ack of the House Spaces Casinos often have large kitchen, storage, and laundry (so they are also known as"back of house") spaces that historically used T-12 fluorescent lighting. This lighting is so energy inefficient in comparison to current lighting solutions that it will be illegal manufacturing in the United States after July 1, 2010.4 Once manufacturing of these lighting fixtures from the past ends, the cost for replacement of these inefficient bulbs will increase. Simply stated, casinos should consider acting now to replace these fixtures for savings in both energy and lamp replacement costs. The EPAct lighting tax incentive could be used to help address the opportunities associated with these legally mandated product modifications Ball Rooms, Banquet Rooms and Restaurants Casinos are typically equipped with designer lighting, which is inefficient and is often expensive to replace and maintain. In particular, replacing bulbs and lighting fixtures in high ceilings is very expensive because costly hydraulic platforms for mobile use must be rented or purchased in order to manage the replacements. Lighting products that are new, and in particular, light emitting diode (LED) devices, consume only a small amount of energy used and have a longer useful life and are increasingly being substituted. The combination of large energy savings as well as reductions in operating costs, utility rebates and EPAct tax deductions could significantly improve the economic payback from these higher-cost lighting enhancements. Parking Garages Many casinos have large parking garages with adjoining parking spaces that could conserve significant energy and provide tax deductions of significant amounts by converting to energy-efficient fixtures. In Notice 2008-40, issued on the 7th of March, 2008 the IRS stated that parking garages are a property class which is specifically eligible to take advantage of the EPAct taxes. Also, parking garages are excluded from the tax bi-level switching obligation. You can read the September 2008 International Parking Institute article devoted to parking garages' electric lighting deduction tax opportunities.5 Slot Machines and Gaming Floors One of the biggest sources of energy consumption on gaming floors is the slot machine. Although they were early adopters using fluorescent technologies, even these energy efficient bulbs normally have to be changed three times per year due to the necessity of the 24/7 operating hours. Due to the high labor costs for maintenance, casinos are now transitioning to LED technology for their slot machines. LED's, while they have more upfront costs, offer high energy efficiency and a longer life cycle, offering significant savings in both labor and maintenance costs. HVAC Casinos with their usual continuous operation can benefit from significant savings on energy costs from energy efficient HVAC systems. In particular, Nevada's warm climate further means that energy efficient HVAC an investment that is very beneficial. Fortunately. Nevada with the highest revenue from casinos is America's second highest capacity for energy efficiency via energy from renewable sources like geothermal energy.6 Certain categories of very efficient HVAC investments are often eligible for the HVAC EPAct tax incentives, which include thermal storage and geothermal. LEED Casinos We are expecting to see more casinos receive LEED status. (See LEED Building Tax Opportunities Article7). The year 2008 saw The Palazzo, Las Vegas Casino became the largest LEED certified structure and one of the first certified LEED casinos within the US.8 Hotels and casinos discover that certain categories of frequent travelers are very attracted by facilities that clearly demonstrate they care about the environment and sustainable design. To be LEED certified the casino must possess an energy simulation model of the building created by a qualified engineer. Modeling is also required for EPAct, HVAC and Building Envelope tax deductions. Qualified tax experts that are aware of the adjustments necessary to transform LEED computer models to EPAct tax deductibility models can evaluate LEED models to determine if huge tax deductions are possible. For instance, a 500,000 square foot LEED casino that is eligible to receive the highest EPAct tax deduction could get an immediate tax deduction in the amount of $900,000. =(500,000*$1.80). Casino owners who are aware of the importance of these benefits could use the tax savings to justify the expenses that are associated with attaining LEED status. Conclusion Casinos because of their large sub-spaces, are a preferred construction category in the EPAct commercial building tax deduction law. Property owners who know about the potential of these spaces can take advantage of the current recession to enhance their facilities, lower operating costs , and even become LEED certified facilities

Leave a Reply

Your email address will not be published.