Ahead of the recent economic downturn, commercial casinos collected at least $30 billion in revenues every 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 arrived at a screeching halt and casino operators are now actually focused on existing facility cost reduction.
The Nature of Casino Properties
Commercial casinos often encompass hotel resorts, which provide attractive packages of services for his or her corporate and family customers. Casinos are particularly suitable for EPAct due to their large gaming floors, hotel occupancy rooms, meeting halls, and parking garages. All these features typically consumes large square footage and the EPAct benefit includes a potential for approximately 60 cents per square foot for all the three measures described above. Some of the smallest commercial casinos are about 50,000 square feet some American casinos are usually over 100,000 square feet. Among the largest ones, MGM Grand on the Las Vegas strip is practically 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’s 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, there are 12 states with commercial casinos in the United States, one 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 these commitments to energy reduction. Reporting casinos include Boyd Gaming Corporation, Harrah’s Entertainment, Inc., and MGM Mirage. They have 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.
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 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 maximum EPAct tax deduction.
For most other building categories, the Section 179D tax provisions require compliance with the bi-level switching requirement. The comparison is always predicated on wired rather than plug-in lighting. Casino hotel occupancy rooms have a significant advantage in which they often use plug-in lighting, and because these rooms be hotel and motel spaces, they’re specifically excluded from the tax bi-level switching requirement. Since occupant rooms usually are one of the larger spaces in hotel casinos, casinos are usually able to use energy efficient lighting to generate large EPAct tax deductions for the facility.
Back of the House Spaces
Casinos often have large kitchen, storage, and laundry (so called back of the house) spaces that have historically used T-12 fluorescent lighting. This lighting is so energy inefficient in comparison to today’s lighting products so it is going to be illegal to manufacture in the United States after July 1, 2010.4 Once manufacturing of the 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 both energy and lamp replacement costs. The EPAct lighting tax incentive may be used to deal with the opportunities related to these legally mandated product changes
Ball Rooms, Banquet Rooms and Restaurants
These areas of casinos have historically used designer type lighting that’s energy inefficient and often very costly to maintain and replace. Specifically, replacing bulbs and lamps in high ceilings is too costly since expensive mobile hydraulic platform equipment must be rented or purchased to deal with the replacements. New lighting products and, particularly, light emitting diode (LED) products, work with a fraction of the power and have a considerably longer useful life and are now substituted. The mixture of large energy cost reduction, operating cost reductions, utility rebates and EPAct tax deductions can greatly enhance 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. Keluaran HK In Notice 2008-40 issued March 7th, 2008, the IRS announced that parking garages are a property class that’s specifically eligible for use the EPAct tax deductions. Also, parking garages are excluded from the tax bi-level switching requirement. Please start to see the September, 2008 International Parking Institute article specialized in parking garages EPAct lighting deduction tax opportunities.5
Slot Machines and Gaming Floors
Among the biggest energy users on hotel gaming floors is slot machines. Although we were holding early adapters of fluorescent technology, even these energy efficient bulbs normally need to be changed 3 times a year because of 24/7 operating hours. Because of the high labor maintenance costs, casino owners are now actually transitioning to LED technology inside 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.
Casinos due to their typical 24 hour occupancy can achieve significant energy cost savings from energy efficient HVAC systems. Specifically, Nevada’s hot climate further makes energy efficient HVAC an extremely worthwhile investment. Fortunately. Nevada with the greatest revenues from casinos has America’s second highest convenience of 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 be prepared to 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 find that certain kinds of frequent travelers are very thinking about staying in facilities that have clearly demonstrated they’re focused on the environment and sustainable design. To become LEED certified, a casino must have a building energy simulation model created by a qualified engineer. Modeling can also be necessary for the EPAct, HVAC and Building Envelope tax deductions. Qualified tax experts that know steps to make the adjustments to convert LEED computer models to EPAct tax deduction models can evaluate LEED models and determine whether large tax deductions are probable. As an example, a 500,000 square foot LEED casino that qualifies for the maximum EPAct tax deduction will receive an instantaneous tax deduction of $900,000 =(500,000*$1.80). Casino owners who understand the magnitude of the benefits can use the tax savings to help justify the expenses related to achieving LEED status.