The Casino Environment
Prior to the current economic downturn commercial casinos generated at least $30 billion in revenues each year from 2005 to 2008.1 The time period was when US casino owners constructed new facilities and increased capacity of existing facilities. Due to the recession, new US casinos constructed commercially has come to an abrupt halt and casino operators are now focusing on reducing the cost of existing facilities.
This is the Section 179(D) Tax Dispositions
More and more, casinos are using the EPAct IRC Section 179(D) commercial construction energy efficiency tax provisions that have been extended until 2013. EPAct tax deductions are available to those who qualify for energy savings on lighting and HVAC(heating ventilation and cooling), and building envelope. Bocoran taiwan (Building envelope comprises of the building’s foundation, windows, walls, roof, and doors. All of these are responsible for the flow of power between the exterior and the interior of the building.)
The Nature of Casino Properties
Commercial casinos typically include hotel resortsthat provide appealing packages of services to their customers from the family to corporate. Casinos are especially suited to EPAct because they have large gaming floors as well as hotel occupancy rooms, meeting rooms, and parking garages. Each of these features typically require large areas and the EPAct benefit offers the potential to earn up to 60 % of the square footage for each of the three measures described in the previous paragraphs. The tiniest of commercial casinos are about 50,000 square feet while most American casinos span over 100,000 square feet. One of the largest ones, MGM Grand on the Las Vegas strip is almost 2 million square feet. Hotels themselves are the most sought-after of the Section 179 building category. (See “Hotels and Motels Most Popular in the Energy Policy Act Tax Properties”)
It is normal to think of commercial casinos as located in two states Nevada or New Jersey. While it is true these two states generate the most commercial casino revenues There are twelve 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. The members of the American Gaming Association have publicized their commitments to reduce energy consumption. These casinos are Boyd Gaming Corporation, Harrah’s Entertainment, Inc., and MGM Mirage. There are projects in place that will provide significant energy savings by cogeneration ERV(energy recuperation ventilation) and more efficient HVAC units, replacing incandescent lights with energy efficient lightings, windows that have energy efficient day lighting systems Solar thermal storage, as well as various other initiatives that save energy.
The underlying rule set to allow for the Section 179D lighting tax deduction makes casinos and particularly casinos hotels the most popular property category for the tax incentive. The rule set requires at least a 25 percent reduction in watts-per square foot contrasted to the standard of 2001 ASHRAE (American Society for Heating Refrigeration and Air Conditioning Engineers) building energy code standard. Tax deductions are fully deductible by a 40% watts-per-square foot reduction compared to the ASHRAE 2001 standard. The ASHRAE 2004 hotel and motel building code standard requires 40% wattage reduction, meaning the hotel lighting system which meets this building code standard will automatically qualify for the maximum EPAct tax credit.
In all other categories of construction that fall under Section 179D, tax regulations require conformity with the bi-level switching requirement. The calculation is always based on wired rather than plug-in lighting. The rooms that are used for occupancy at casinos have a major advantage in the fact that they generally employ plug-in lighting. Also, since these rooms are motel and hotel rooms, they are specifically excluded from the tax bi-level switch rule. Since occupancy rooms are one of the larger spaces in hotel casinos and casinos, they are capable of using energy-efficient lighting to generate huge EPAct tax deductions to the facility.
B ack of the House Spaces
Casinos typically have huge kitchen as well as storage and laundry (so known as”back-of-house”) areas that historically utilized T-12 fluorescent lighting. This lighting is so inefficient in comparison to current lighting that it will be unlawful for manufacture within the United States after July 1, 2010.4 Once manufacturing of these prior generation lighting products stops, the cost of replacement of these inefficient bulbs will increase. Simply stated, casinos should look into replacing these fixtures for savings in both energy and lamp replacement costs. The EPAct tax incentive for lighting could be utilized to take advantage of the potentialities arising from these legally mandated product changes
Ball Rooms, Banquet Rooms and Restaurants
These casinos traditionally have used designer lighting that is inefficient and can be costly for maintenance and replacement. In particular, replacing lamps and bulbs in high ceilings is very costly since expensive mobile hydraulic platform equipment must be purchased or rented to replace the lamps. New lighting equipment, and particularly lighting emitting diode (LED) products use just a tiny amount of energy used and have a longer lifespan and are currently being replaced. The combination of a significant energy cost reduction and operating cost savings, utility rebates, and EPAct tax deductions could significantly increase the return on investment from the higher-cost lighting upgrades.
Many casinos have large parking garages with adjoining garages that conserve significant energy and generate large tax deductions by making the switch to energy-efficient fixtures. In Notice 2008-40, issued on 7 March 2008 the IRS announced that parking garages are a class of property that is specifically entitled to receive EPAct tax deductibility. Additionally, parking garages are excluded from the tax bi-level switching obligation. See the September 2008 International Parking Institute article devoted to parking garages’ lighting deduction tax opportunities.5
Slot Machines and Gaming Floors
One of the biggest sources of energy consumption on gaming floors are slot machines. Although they were among the early adopters of fluorescent technology, even these energy-efficient bulbs usually require replacement 3 times per year due to their 24/7 operation. Due to the high cost of labor maintenance costs, casino owners are currently switching to LED technology for their machines. LED’s, even though they come with more upfront costs, offer high energy efficiency and have a much longer cycle, resulting in significant savings in labor and maintenance expenses.
Casinos, due to their 24-hour occupancy can realize significant energy savings through efficient HVAC systems that are energy efficient. Particularly, Nevada’s hot climate further makes energy efficient HVAC a very worthwhile investment. Fortunately. Nevada which has the highest earnings from casinos is America’s second highest capacity for energy efficiency by using renewable geothermal energy.6 Certain types of efficient HVAC investments often qualify in the HVAC EPAct tax incentives, which include geothermal and thermal storage.