Commercial Casinos Energy Policy Act Tax Opportunity
Commercial Casinos Energy Policy Act Tax Opportunity
The Casino Environment Before the recent economic downturn commercial casinos earned at least $30 billion in profits each in 2005 and 2008.1 The time period was when US casino owners constructed new facilities and increased in size their current facilities. As a result of the economic recession, US casinos constructed commercially is coming to a grinding slow halt, and operators of casinos are now focusing on the reduction of costs for existing facilities. The Section 179(D) Tax Provisions Casino operators are increasingly taking advantage of casino operators taking advantage of EPAct IRC Section 179(D) commercial taxes on energy efficiency of buildings, which have been extended through 2013. EPAct tax deductions are offered for qualifying energy reductions that are related to lighting HVAC(heating the air, venting and heating) as well as the building envelope. (Building envelope consists of the foundation of the building, its walls and roof, windows and doors. All of them determine the flow of energy between the interior and exterior that the construction.) The Nature of Casino Properties Commercial casinos typically include hotels that provide appealing packages of services to their patrons from families and corporate. Casinos are the best candidates for EPAct due to their vast gaming floors hotels, hotel occupancy rooms conference halls, as well as parking garages. Each of these amenities generally consumes large amounts of space and the EPAct benefits have สมัครusun a potential for up to sixty cents for each square foot of space each of the three criteria mentioned in the previous paragraphs. A few of the smallest commercial casinos are about 500 square feet. The majority of American casinos typically exceed 100,000 sq. feet. One of the biggest, MGM Grand on the Las Vegas strip is almost 2 million square feet. Hotels are among the most popular of the Section 179 building category. (See "Hotels and Motels Most Favored Energy Policy Act Tax Properties") It is common to think of casinos as being situated in two states: Nevada in Nevada and New Jersey. While it's true that these two states generate the largest commercial casino revenues There are twelve states that have commercial casinos in the United States, the other states with casinos that are commercial are: Colorado, Illinois, Indiana, Iowa, Louisiana, Michigan, Mississippi, Missouri, Pennsylvania, and South Dakota. Members of the American Gaming Association have publicized some of their commitments to reducing energy usage. Reporting casinos include Boyd Gaming Corporation, Harrah's Entertainment, Inc., and MGM Mirage. They are working on projects that include significant energy savings via cogeneration ERV(energy Recovery Ventilation), more efficient HVAC units, replacing incandescent lighting with energy efficient lighting windows with high-efficiency day lighting solar thermal storage, and various other initiatives that save energy. The underlying rule set to be eligible for the Section 179D lighting tax deduction makes casinos and particularly casinos the most sought-after property type for tax incentive. The rule requires at least a 25 percent reduction in the watts per square foot as in comparison to the 2000 ASHRAE (American Society of Heating Refrigeration and Air 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 standard. The ASHRAE 2004 hotel/motel building code requires 40% reduction in power, which means that any hotel or motel light installation that is in compliance with the requirements for building codes will automatically qualify as the highest EPAct tax credit. Occupancy Rooms For the majority of other categories of buildings, the Section 179D tax requirements require conformity to the bi-level switching requirement. The comparison is always made on wired rather than plug-in lighting. Rooms in hotel casinos with occupancy are a distinct advantage in that they typically have plug-in lighting. Additionally, since they are motel and hotel rooms in particular, they are exempt from the tax bi-level switch condition. Because occupant rooms are typically among the largest rooms in casinos casino rooms, they're capable of using energy-efficient lighting to generate significant EPAct tax deductions for the establishment. B ack of the House Spaces Casinos are often equipped with large kitchens, storage, and laundry (so they are also known as"back-of-house") spaces that have historically employed fluorescent T-12 lighting. This lighting is so energy inefficient when compared to modern lighting that it is now illegal production in the United States after July 1, 2010.4 Once manufacturing of these earlier generation lighting products stops, the cost of replacing these bulbs with inefficient ones will increase. Simply put, casinos should take action now to replace these fixtures for savings in both the expense of energy and lamp replacement. The EPAct tax incentive for lighting can be utilized to take advantage of the potential issues associated with these legally mandated product changes Ball Rooms, Banquet Rooms and Restaurants These casinos have historically used designer type lighting that is inefficient and is often expensive to replace and maintain. Particularly, the replacement of bulbs and lamps with high ceilings can be expensive as expensive mobile hydraulic platforms must be rented or purchased in order to manage the replacements. Modern lighting devices, and in particular the light emitting diode (LED) productsconsume a fraction of the energy and have a much longer service life, and are now being substituted. The combination of large reduction in energy costs as well as operating cost reductions along with utility rebates, and EPAct tax deductions will greatly improve the economic payback from these more costly lighting upgrades. Parking Garages Many casinos have large garages with parking spaces that save substantial energy costs and also earn tax deductions through the upgrade of energy efficient fixtures. In Notice 2008-40 that was issued on March 7th 8th, 2008, IRS announced that parking garages are an asset class that is specifically entitled to benefit from the EPAct tax deductibility. Furthermore, parking garages have been exempt from the tax-bi-level switch requirement. See the September 2008 International Parking Institute article devoted to parking garages' electric lighting deduction tax opportunities.5

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