Commercial Casinos Energy Policy Act Tax Opportunity

Before the recent economic depression, commercial casinos collected at least $30 thousand in revenues each year from 2005 through 2008. 1 During this time period, US casino owners built new facilities and expanded the size of their existing facilities. As a result of the economic depression, new US commercial casino construction kiss918 apk has come to a screeching halt and casino operators are now focused on existing facility cost reduction.

The Section 179(D) Tax Convention

Increasingly, casino operators are taking advantage of the EPAct IRC section 179(D) commercial building energy efficiency tax convention, which have been extended through 2013. EPAct tax reductions are around for getting qualification energy discounts in lighting, HVAC(heating, ventilation, and air conditioning), and building package. (Building package consists of the building’s foundation, walls, roof, windows, and doors, all of which control the flow of energy between the interior and exterior of the building. )

The nature of Casino Properties

Commercial casinos often cover hotel resorts, which offer attractive packages of services for their corporate and family customers. Casinos are particularly suited to EPAct because of their large gaming floors, hotel occupancy rooms, meeting halls, and parking garages. Each of these features typically needs large sq photographs and the EPAct benefit has a potential for about 60 cents per sq foot for each three measures described above. Some of the smallest commercial casinos are about 50, 000 sq feet while most American casinos are typically over 100, 000 sq feet. One of the largest ones, MGM Grand on the Nevada line is 2 million sq feet. Hotels themselves are the most favored of Section 179 building category. (See “Hotels and Motels Most Favored Energy Policy Act Tax Properties”)

Rather to think of commercial casinos as located in two states Nevada and New jersey. Though it well said that these two states have the largest commercial casino revenues, there are 12 states with commercial casinos in the united states, the other commercial casino states are: Colorado, Illinois, Indianapolis, Iowa, Louisiana, Michigan, Mississippi, Missouri, Philadelphia, and South Dakota. Members of the American Gaming Association have publicized some of their responsibilities to energy reduction. Canceling casinos include Boyd Gaming Corporation, Harrah’s Entertainment, Inc., and MGM Mirage. They have projects which include significant energy savings via cogeneration, ERV(energy recovery ventilation), extremely effective 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 most favored property category for the tax bonus. The rule set requires at least a 25% watts-per-square foot reduction as compared to the 2001 ASHRAE (American Society of Heating Refrigeration and Air conditioner 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, which means that any hotel or lodge lighting installation that meets that building code requirement will automatically qualify for the uppermost level of EPAct tax deduction.

Occupancy Rooms

For most other building categories, the Section 179D tax convention require deference with the bi-level switching requirement. The comparison is always based on wired rather than plug-in lighting. Casino hotel occupancy rooms have a major advantage in that they will use plug-in lighting, and because these rooms function as hotel and lodge 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 typically able to use energy efficient lighting to generate large EPAct tax reductions for the facility.

Back of the house Spaces

Casinos often have large kitchen, storage, and routine laundry (so called back of the house) spaces that have traditionally used T-12 fluorescent lighting. This lighting is so energy inefficient compared to today’s lighting products that it will be illegal to manufacture in the united states after Come early july 1, 2010. 4 Once manufacturing of these former generation lighting products ends, the cost of replacing these inefficient lamps will increase. Simply stated, casinos should look into acting now to switch these lights to save both energy and fixture replacement costs. The EPAct lighting tax bonus can be used to address the opportunities related to these legally mandated product changes

Ball Rooms, Banquet Rooms and Restaurants

These areas of casinos have traditionally used designer type lighting that is energy inefficient and often very expensive to maintain and replace. In particular, replacing lamps and lamps in high ceilings is very costly since expensive mobile hydraulic platform equipment must be hired or purchased to handle the replacements. New lighting products and, in particular, light emitting diode (LED) products, use a fraction of the energy and have a months useful life and are now being tried. The combination of large energy cost reduction, operating cost discounts, utility rebates and EPAct tax reductions can greatly reduce the economic payback from these more costly lighting advancements.

Parking Garages

Many casinos have large adjoining parking garages that can save substantial energy costs and generate large tax reductions by upgrading to energy efficient accesories. In Notice 2008-40 issued Next month 7th, 2008, the IRS announced that parking garages are a property class that is specifically permitted to use the EPAct tax reductions. Also, parking garages are excluded from the tax bi-level switching requirement. Please see the September, 2008 International Parking Institute article specialized in parking garages EPAct lighting deduction tax opportunities. 5

Slot machines and Gaming Floors

One of the biggest energy users on hotel gaming floors is slot machines. Although we were looking at early adapters of fluorescent technology, even these energy efficient lamps normally have to be changed 3 x a year because of 24/7 operating hours. Due to the high labor maintenance costs, casino owners are now moving to LED technology in their slot machines. LED’s, while they have higher up front costs, have high energy efficiency and much longer life cycle, offering significant savings in labor and maintenance costs.