Prior to the recent economic downturn, commercial casinos collected at the very least $30 billion in revenues each year from 2005 through 2008.1 In 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 offer attractive packages of services for his or her corporate and family customers. Casinos are particularly suitable for EPAct because of their large gaming floors, hotel occupancy rooms, meeting halls, and parking garages. Each 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. A few of the smallest commercial casinos are about 50,000 square feet many American casinos are generally over 100,000 square feet. One of the largest ones, MGM Grand on the Las Vegas strip is nearly 2 million square feet. Hotels themselves are 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 located in two states Nevada and New Jersey. Whilst it is true that these two states have the greatest commercial casino revenues, there are 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), 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 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, meaning that any hotel or motel lighting installation that meets that building code requirement will automatically qualify for the most 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 as opposed to plug-in lighting. Casino hotel occupancy rooms have a major advantage in 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 often one of the larger spaces in hotel casinos, casinos are generally able to use 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 that have historically used T-12 fluorescent lighting. This lighting is really energy inefficient compared to today’s lighting products so it will 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 should consider acting now to replace these lighting fixtures to save lots of both energy and lamp replacement costs. The EPAct lighting tax incentive can be utilized 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’s energy inefficient and often very costly to steadfastly keep up and replace. In particular, replacing bulbs and lamps in high ceilings is too costly since expensive mobile hydraulic platform equipment must be rented or purchased to take care of the replacements. New lighting products and, specifically, light emitting diode (LED) products, work with a fraction of the power and have a considerably longer useful life and are increasingly being substituted Pengeluaran HK . The combination of large energy cost reduction, operating cost reductions, utility rebates and EPAct tax deductions can greatly increase the economic payback from these more expensive lighting upgrades.
Many casinos have large adjoining parking garages that could 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’s specifically eligible to utilize 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 dedicated 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 we were holding early adapters of fluorescent technology, even these energy efficient bulbs normally have to be changed 3 times annually due to 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’ve higher up front costs, have high energy efficiency and a lot longer life cycle, offering significant savings in labor and maintenance costs.
Casinos because of their typical 24 hour occupancy can perform significant energy cost savings from energy efficient HVAC systems. In particular, Nevada’s hot climate further makes energy efficient HVAC an extremely worthwhile investment. Fortunately. Nevada with the highest revenues from casinos has America’s second highest capacity for energy efficiency through renewable geothermal energy.6 Certain types of very efficient HVAC investments will often qualify for the HVAC EPAct tax incentive including geothermal and thermal storage.
We expect to see more casinos obtain LEED status. (See LEED Building Tax Opportunities Article7). In 2008, The Palazzo, Las Vegas Casino became the greatest LEED certified building and one of the first certified LEED casinos in the US.8 Casinos and hotels discover that certain types of frequent travelers are extremely thinking about staying in facilities that have clearly demonstrated they are focused on the surroundings and sustainable design. To become LEED certified, a casino will need to have a building energy simulation model developed by a qualified engineer. Modeling can also be required 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. For example, a 500,000 square foot LEED casino that qualifies for the most 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 expense related to achieving LEED status.