Commercial Casinos Energy Policy Act Tax Opportunity

Ahead of the recent economic downturn, commercial casinos collected at the very least $30 billion in revenues each year from 2005 through 2008.1 During this period, US casino owners built new facilities and expanded how big is 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 focused on existing facility cost reduction.

The Section 179(D) Tax Provisions

Increasingly, casino operators are taking advantage of 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 includes the building's foundation, walls, roof, windows, and doors, that control the flow of energy between the inner and exterior of the building.)

The Nature of Casino Properties

Commercial casinos often encompass hotel resorts, which offer attractive packages of services for their corporate and family customers. Casinos are particularly suitable for EPAct because of their large gaming floors, hotel occupancy rooms, meeting halls, and parking garages. All these features typically consumes large square footage and the EPAct benefit features a potential for up to 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 while most American casinos are generally 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 the absolute 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 positioned in two states Nevada and New Jersey. Whilst it holds true that both of these states have the biggest commercial casino revenues, you can find 12 states with commercial casinos in the United States, another 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 their commitments to energy reduction. Reporting casinos include Boyd Gaming Corporation, Harrah's Entertainment, Inc., and MGM Mirage. They have projects such as significant energy savings via cogeneration, ERV(energy recovery ventilation), more efficient 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.

The underlying rule set to qualify for the Section 179D lighting tax deduction makes casinos and particularly casino hotels the absolute most favored property category for the tax incentive. The rule set requires at the 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 compared to the ASHRAE 2001 standard. The ASHRAE 2004 hotel/motel building code standard requires 40% wattage reduction, meaning any hotel or motel lighting installation that fits that building code requirement will automatically qualify for the utmost EPAct tax deduction.

Occupancy Rooms

For other building categories, the Section 179D tax provisions require compliance with the bi-level switching requirement. The comparison is always centered on wired as opposed to plug-in lighting. Casino hotel occupancy rooms have an important advantage in they often use plug-in lighting, and since these rooms function as hotel and motel spaces, they're specifically excluded from the tax bi-level switching requirement. Since occupant rooms are often one of many larger spaces in hotel casinos, casinos are generally 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 so energy inefficient compared to today's lighting products so it is likely to be illegal to manufacture in the United States after July 1, 2010.4 Once manufacturing of those prior generation lighting products ceases, the price of replacing these inefficient bulbs will increase. Simply stated, casinos must look into acting now to restore these lighting fixtures to save lots of both energy and lamp replacement costs. The EPAct lighting tax incentive can be utilized to handle the opportunities linked to these legally mandated product changes

Ball Rooms, Banquet Rooms and Restaurants
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These regions of casinos have historically used designer type lighting that's energy inefficient and often extremely expensive to steadfastly keep up and replace. Particularly, replacing bulbs and lamps in high ceilings is too costly since expensive mobile hydraulic platform equipment must be rented or purchased to handle 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 being substituted. The mix of large energy cost reduction, operating cost reductions, utility rebates and EPAct tax deductions can greatly increase the economic payback from these more costly lighting upgrades.

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