Private Casinos Vigor Scheme Respond Overtax Ability.On October 26, 2022 by guWiz16T
The Casino Environment
Before the recent economic downturn, commercial casinos collected at the very least $30 billion in revenues annually from 2005 through 2008.1 During this period, US casino owners built new facilities and expanded the size of their existing facilities. As a result of the economic downturn, new US commercial casino construction has come to a screeching halt and casino operators are now actually dedicated to existing facility cost reduction.
The Section 179(D) Tax Provisions
Increasingly, casino operators are benefiting from the EPAct IRC section 179(D) commercial building energy efficiency tax provisions, which were extended through 2013. EPAct tax deductions can be found for qualifying energy reductions in lighting, HVAC(heating, ventilation, and air conditioning), and building envelope. (Building envelope consists of the building’s foundation, walls, roof, windows, and doors, which control the flow of energy between the interior and exterior of the building.)
The Nature of Casino Properties
Commercial casinos often encompass hotel resorts, which offer attractive packages of services for his or her corporate and family customers. Casinos are particularly suited to EPAct due to their large gaming floors, hotel occupancy rooms, meeting halls, and parking garages. Each one of these features typically consumes large square footage and the EPAct benefit has a potential for 60 cents per square foot for each of the three measures described above. Some of the smallest commercial casinos are about 50,000 square feet many American casinos are normally over 100,000 square feet. One of many largest ones, MGM Grand on the Las Vegas strip is almost 2 million square feet. Hotels themselves are probably the most favored of Section 179 building category. (See “Hotels and Motels Most Favored Energy Policy Act Tax Properties”)
It is common to think about commercial casinos as situated in two states Nevada and New Jersey. While it is true that these two states have the biggest commercial casino revenues, you can find 12 states with commercial casinos in the United States, the other commercial casino states are: Colorado, Illinois, Indiana, Iowa, Louisiana, Michigan, Mississippi, Missouri, Pennsylvania, and South Dakota. Members of the American Gaming Association have publicized some of the commitments to energy reduction. Reporting casinos include Boyd Gaming Corporation, Harrah’s Entertainment, Inc., and MGM Mirage. They’ve projects including significant energy savings via cogeneration, ERV(energy recovery ventilation), better HVAC units, replacing incandescent lights with energy efficient lightings, windows with energy efficient day lighting systems, solar thermal storage and numerous other energy saving initiatives.kingcobratoto
The underlying rule set to qualify for the Section 179D lighting tax deduction makes casinos and particularly casino hotels probably the most favored property category for the tax incentive. The rule set requires at the very least a 25% watts-per-square foot reduction as set alongside the 2001 ASHRAE (American Society of Heating Refrigeration and Air Conditioning Engineers) building energy code standard. Full tax deduction is achieved with a 40% watts-per-square foot reduction set alongside the ASHRAE 2001 standard. The ASHRAE 2004 hotel/motel building code standard requires 40% wattage reduction, which means that any hotel or motel lighting installation that meets that building code requirement will automatically qualify for the utmost EPAct tax deduction.
For almost every other building categories, the Section 179D tax provisions require compliance with the bi-level switching requirement. The comparison is definitely centered on wired rather than plug-in lighting. Casino hotel occupancy rooms have an important advantage in that they often use plug-in lighting, and since these rooms work as hotel and motel spaces, they are specifically excluded from the tax bi-level switching requirement. Since occupant rooms are usually one of the larger spaces in hotel casinos, casinos are normally able to utilize energy efficient lighting to generate large EPAct tax deductions for the facility.
Back of the House Spaces
Casinos frequently have large kitchen, storage, and laundry (so called back of the house) spaces which have historically used T-12 fluorescent lighting. This lighting is indeed energy inefficient in comparison to today’s lighting products so it will undoubtedly be illegal to manufacture in the United States after July 1, 2010.4 Once manufacturing of those prior generation lighting products ceases, the expense of replacing these inefficient bulbs will increase. Simply stated, casinos should consider acting now to displace these lighting fixtures to save lots of both energy and lamp replacement costs. The EPAct lighting tax incentive can be used to deal with the opportunities linked to these legally mandated product changes
Ball Rooms, Banquet Rooms and Restaurants
These aspects of casinos have historically used designer type lighting that is energy inefficient and often very expensive to steadfastly keep up and replace. Particularly, replacing bulbs and lamps in high ceilings is very expensive since expensive mobile hydraulic platform equipment must certanly be rented or purchased to take care of the replacements. New lighting products and, in particular, light emitting diode (LED) products, make use of a fraction of the power and have a considerably longer useful life and are now substituted. The combination of large energy cost reduction, operating cost reductions, utility rebates and EPAct tax deductions can greatly improve the economic payback from these more costly lighting upgrades.
Many casinos have large adjoining parking garages that can save substantial energy costs and generate large tax deductions by upgrading to energy efficient fixtures. In Notice 2008-40 issued March 7th, 2008, the IRS announced that parking garages are home class that is specifically eligible for utilize the EPAct tax deductions. Also, parking garages are excluded from the tax bi-level switching requirement. Please see the September, 2008 International Parking Institute article devoted to parking garages EPAct lighting deduction tax opportunities.5
Slot Machines and Gaming Floors
One of many biggest energy users on hotel gaming floors is slot machines. Although these were early adapters of fluorescent technology, even these energy efficient bulbs normally need to be changed 3 times per year due to 24/7 operating hours. Due to the high labor maintenance costs, casino owners are now actually transitioning to LED technology in their slot machines. LED’s, while they’ve higher up front costs, have high energy efficiency and considerably longer life cycle, offering significant savings in labor and maintenance costs.
Casinos due to their typical 24 hour occupancy can achieve significant energy cost savings from energy efficient HVAC systems. Particularly, Nevada’s hot climate further makes energy efficient HVAC an extremely worthwhile investment. Fortunately. Nevada with the best revenues from casinos has America’s second highest capacity for energy efficiency through renewable geothermal energy.6 Certain kinds of very efficient HVAC investments will often qualify for the HVAC EPAct tax incentive including geothermal and thermal storage.
We expect you’ll see more casinos obtain LEED status. (See LEED Building Tax Opportunities Article7). In 2008, The Palazzo, Las Vegas Casino became the biggest LEED certified building and one of the first certified LEED casinos in the US.8 Casinos and hotels see that certain kinds of frequent travelers are extremely enthusiastic about remaining in facilities which have clearly demonstrated they are dedicated to the environmental surroundings and sustainable design. To become LEED certified, a casino will need to have a building energy simulation model created by a qualified engineer. Modeling is also required for the EPAct, HVAC and Building Envelope tax deductions. Qualified tax experts that know making the adjustments to convert LEED computer models to EPAct tax deduction models can evaluate LEED models and determine whether large tax deductions are probable. Like, a 500,000 square foot LEED casino that qualifies for the utmost EPAct tax deduction will receive an immediate tax deduction of $900,000 =(500,000*$1.80). Casino owners who understand the magnitude of those benefits can utilize the tax savings to simply help justify the expenses linked to achieving LEED status.
Casinos due to their large subspaces are a favored building category underneath the EPAct commercial building tax deduction legislation. Property owners who understand these opportunities can act during the existing economic downturn to improve their facilities, reduce operating costs and potentially become LEED certified facilities.