Commercial Casinos Energy Policy Act Tax Opportunity

Before the recent economic downturn, commercial casinos collected at least $30 billion in revenues each year from 2005 through ’08. 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 total stand still 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 mega888 original building energy efficiency tax convention, which have been extended through 2013. EPAct tax reductions are available for getting qualification energy discounts in lighting, HVAC(heating, venting, and air conditioning), and building envelope. (Building envelope 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 type of Casino Properties

Commercial casinos often cover hotel resorts, that provide attractive packages of services for their corporate and family customers. Casinos are particularly worthy of EPAct because of the large gaming floors, hotel occupancy rooms, meeting halls, and parking garages. Each of these features typically consumes large sq photos and the EPAct benefit has a potential for about 60 cents per sq foot for each of the 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 Las vegas strip virtually 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”)

Pretty to think about commercial casinos as located in two states Nevada and Nj-new jersey. While it for sure 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, Il, Indiana, Iowa, Louisiana, Mich, Mississippi, Missouri, Pennsylvania, and South Dakota. Members of the American Gaming Association have publicized some of their commitments to energy reduction. Canceling 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), extremely effective HVAC units, replacing incandescent lights with energy efficient lightings, windows with energy efficient day lighting systems, solar winter 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 A / c Engineers) building energy code standard. Full tax deduction is achieved with a 40% watts-per-square foot reduction when compared to 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 highest EPAct tax deduction.

Occupancy Rooms

For most other building categories, the Section 179D tax convention require compliance 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 often use plug-in lighting, and because these rooms be hotel and motel spaces, they are specifically ruled out 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 your home Spaces

Casinos often have large kitchen, storage, and utility room (so called back of the house) spaces that have historically used T-12 fluorescent lighting. This lighting is so energy unproductive 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 last generation lighting products ceases, the cost of replacing these unproductive lamps will increase. Simply stated, casinos should look into acting now to switch these lighting fixtures to save both energy and rug 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 historically used designer type lighting that is energy unproductive 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 rented or purchased to handle the substitutions. New lighting products and, in particular, light emitting diode (LED) products, use a fraction of the energy and have a much longer useful life and are now being substituted. The combination of large energy cost reduction, operating cost discounts, utility rebates and EPAct tax reductions can greatly improve the economic payback from these more costly lighting upgrades.

Parking Garages

Many casinos have large adjacent parking garages that can save substantial energy costs and generate large tax reductions by upgrading to energy efficient appliances. In Notice 2008-40 issued Mar in 7th place, ’08, the IRS announced that parking garages are a property class that is specifically entitled to use the EPAct tax reductions. Also, parking garages are ruled out from the tax bi-level switching requirement. Please see the September, ’08 International Parking Institute article devoted to 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 these were early adapters of fluorescent technology, even these energy efficient lamps normally have to be changed 3 times a year because of 24/7 operating hours. Due to the high labor maintenance costs, casino owners are now transitioning 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.

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