Commercial Casinos Energy Policy Act Tax Opportunity
The Casino Environment Before the recent economic downturn commercial casinos raked in more than $30 billion in revenue each year between 2005 and 2008.1 The time period was when US casino owners constructed new casinos as well as expanded facilities they already had. facilities. Because of the recession, new US casinos constructed commercially is coming to a grinding halt and casino operators are now focused on cost reductions for existing facilities. The Section 179(D) Tax Dispositions Increasingly, casino operators are using casinos are taking advantage of EPAct IRC Section 179(D) commercial taxes on energy efficiency of buildings that have been extended through 2013. EPAct tax deductions are provided for qualified energy reductions on lighting and HVAC(heating, ventilation, and air conditioning) and the building envelope. (Building envelope comprises the building's foundation, walls, roof, windows and doors. All of these determine the flow of energy between the outside and the inside that the construction.) The Nature of Casino Properties Commercial casinos usually include hotel pusatgame resorts, which offer attractive packages of services for their customers from the family to corporate. Casinos are especially well-suited to EPAct due to their vast gaming floors and hotel occupancy rooms. They also have meetings halls, and parking garages. Each of these features typically take up large areas and the EPAct benefit has potential to pay up to 60 cents per square foot in all three measures that are mentioned in the previous paragraphs. The tiniest of commercial casinos are around 50,000 square feet while most American casinos span over 100,000 sq. feet. One of the largest ones, MGM Grand on the Las Vegas strip is almost 2 million square feet. Hotels themselves are the most favored of Section 179 building category. (See "Hotels and Motels Most Highly coveted Energy Policy Act Tax Properties") It is common to think of casinos being found in two states Nevada or New Jersey. Although both states enjoy the highest commercial casino revenue There are twelve states with casinos that are commercial within the United States, the other commercial casinos states are: Colorado, Illinois, Indiana, Iowa, Louisiana, Michigan, Mississippi, Missouri, Pennsylvania, and South Dakota. Members of the American Gaming Association have publicized the commitments they have made to energy reduction. These casinos are Boyd Gaming Corporation, Harrah's Entertainment, Inc., and MGM Mirage. They are working on projects that include significant energy savings by cogeneration ERV(energy recuperation ventilation) better HVAC units, replacing incandescent lights with energy efficient lighting systems windows that are energy efficient day lighting systems Solar thermal storage, as well as many more energy saving initiatives. The rule of thumb set to be eligible in the section 179D tax incentive makes casinos, and specifically hotels in casinos the most popular property category for the tax incentive. The rule requires at least 25% watts-per-square foot reduction as in comparison to the 1999 ASHRAE (American Society for Heating Refrigeration and Air Conditioning Engineers) building energy code standard. Full tax deduction is achieved with a 40% watts per square foot reduction in comparison to the ASHRAE standard of. The ASHRAE 2004 hotel/motel building codes require 40% reduction in wattage and each hotel light installation which meets this standard will automatically be eligible to receive the full EPAct tax deduction. Occupancy Rooms For the majority of other categories of buildings the Section 179D tax requirements require conformity with the bi-level switching requirement. The assessment is always based on plug-in instead of wired lighting. Hotel occupancy rooms in casinos have a major advantage in the fact that they generally have plug-in lighting. Additionally, because these rooms function as motel and hotel rooms which are designated as hotel and motel spaces, they are excluded from the tax bilevel switching requirement. Since occupancy rooms are one of the biggest spaces at casinos in hotels, casinos are typically equipped to utilize energy efficient lighting to produce huge EPAct tax deductions for the facility. B ack of the House Spaces Casinos typically have huge kitchen and laundry (so they are also known as"back" of home) areas that have traditionally utilized T-12 fluorescent lighting. The lighting used is so inefficient when compared to modern lighting fixtures that it is now illegal manufacturing in the United States after July 1, 2010.4 Once manufacturing of these prior generation lighting products ends, the cost for replacing these inefficient bulbs will increase. It is imperative that casinos consider acting now to replace the lighting fixtures in order to save both energy and lamp replacement costs. The EPAct lighting tax incentive can be used to explore the opportunities related to these legally mandated product modifications Ball Rooms, Banquet Rooms and Restaurants Casinos in these areas typically have designer lighting that is energy inefficient and is often expensive for maintenance and replacement. Particularly, replacing bulbs and lamps with high ceilings can be extremely costly because expensive hydraulic platforms that are mobile must be purchased or rented to manage the replacements. New lighting equipment, and particularly, light emitting diode (LED) products use less energy and have a much longer useful life and are increasingly being replaced. The combination of massive energy cost reduction as well as reductions in operating costs, utility rebates and EPAct tax deductions can greatly boost the financial return from these expensive lighting upgrades. Garages Garages A lot of casinos have huge parking garages, which can help to save money on energy bills and generate large tax deductions by upgrading to energy efficient fixtures. In Notice 2008-40, which was issued on 7 March 2008, the IRS stated that parking garages are a property class that is specifically eligible to take advantage of EPAct taxes. Parking garages are also excluded from the tax bi-level switch requirement. See the September 2008 International Parking Institute article devoted to parking garages EPAct tax deduction for lighting opportunities.5 Slot Machines and Gaming Floors One of the largest players of energy on hotel gaming floors are the machines. Although these were early adapters of fluorescent technology but even these energy-efficient bulbs usually have to be changed 3 times per year due to continuous operation. Due to the high cost of labor maintenance costs, casino owners are currently switching to LED technology for their machines. LED's, while they have higher up front cost, they also have a high energy efficiency and a longer life cycle, resulting in substantial savings in both the cost of maintenance and labor.

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