Thursday, May 3, 2007 | 7:21 a.m.
Carson City
Faced with an unforeseen loss of revenue, the state Senate voted to suspend a law hastily passed two years ago that gave businesses tax breaks for constructing environmentally friendly buildings.
The suspension means that everything connected to the tax abatements is halted until lawmakers have a better idea of how much the state will lose in revenue if hosts of businesses decide to take advantage of the law.
The Sun reported Wednesday that over the next 10 years, the Clark County School District estimates the law could cost the state $700 million to $900 million.
Legislators said they had not foreseen the losses. They say they passed the abatements without fully analyzing their potential effect on the treasury.
So-called green buildings include duct work that prevents the accumulation of dust and pollen, reflective rooftops to conserve energy, more windows, parking lots with permeable spaces to allow water to seep into the ground and native gardens on the property.
Nevada is one of a few states that offer property tax breaks for green construction. Maryland gives counties discretion on how much of a property tax break to grant green-rated buildings. Oregon offers a tax credit equal to 35 percent of the extra costs needed to build green. New York capped its tax incentive program at $25 million.
Sen. Randolph Townsend, R-Reno, a major player in energy policy and big supporter of the tax breaks, took the unusual move of holding an emergency meeting of the Senate's Commerce and Labor Committee on Wednesday, in the back of the Senate chamber.
Standing on a stairway of the chamber with reporters, senators, lobbyists and mystified visitors around him, Townsend asked for support to suspend the law until "we can review a number of its various components."
Although Sen. Mike Schneider, D-Las Vegas, voted for Townsend's suspension, he wanted it "on the record" that any change in the law would constitute a tax increase for businesses.
"I want to continue with these tax breaks down the road, because I sure want Nevada to be a leader in the United States and the world" in energy conservation, he said. "This is extremely important for our economy and our environment."
Schneider added that he didn't think enacting the law in 2005 was a mistake.
"I don't think we screwed anything up, I just think our whole tax system is screwed up."
After approval at Townsend's impromptu committee meeting, the full Senate passed it 19-2, with Sens. Bob Coffin and Terry Care, both Las Vegas Democrats, voting no.
Coffin said the state had expected to lose an undetermined amount of money from enacting the law. What's changed is that the state now faces fiscal difficulties. He thought lawmakers should have more courage of their convictions.
"There are economic consequences with every vote we take," he said. "A vote like this does more to undo economic development than anything else we could do."
Assemblywoman Marilyn Kirkpatrick, D-North Las Vegas, another major supporter of the law, shook her head at Coffin's analysis. After the vote, she vowed that by the end of this legislative session, "we will have this worked out."
The vote came after lawmakers learned on Tuesday that revenue over the next three years is expected to fall $110 million below projections made in November. A percentage of that shortfall - although no one knows for sure how much - is due to a 2005 law giving businesses 35 percent to 50 percent property tax abatements for up to 10 years.
At least two megaresort projects, the MGM Mirage 's $7.4 billion CityCenter and the $4 billion Echelon Place, have applied for the tax breaks. Many other businesses have also applied, according to officials with the Nevada Commission on Economic Development.
Unclear Wednesday is which businesses will be affected by changing the law and by how much. The prospect concerns resort developers , most notably MGM Mirage, which said it has committed green design features worth upward of $1 billion for CityCenter.
"I wonder if this is backtracking," MGM Mirage spokesman Alan Feldman said. "The Legislature made a very wise and forward-thinking decision when it created Assembly Bill 3 in the first place unfortunately we live in a state that thinks hand to mouth, budget to budget."
At more than 18 million square feet, CityCenter would be the largest project to ever seek a green certification from the U.S. Green Building Council, a premier coalition of engineers, designers and architects that has created environmental design standards for commercial buildings.
Unlike other casino developers that aren't far along in their plans, MGM Mirage entered into an agreement with the state that entitles the company to hundreds of millions of dollars in property tax savings if certain design criteria are met.
The company hopes that any moratorium will be used to clarify the admittedly complex application procedure rather than roll back the abatements entirely, Feldman said.
Without the tax credits, CityCenter would still have environmentally friendly features but might not have been as ambitious, he added.
Pamela Vilkin, president of the Green Building Council's Las Vegas chapter, said the bill can be refined and a compromise reached, without tossing it entirely.
Vilkin, a contractor and green design consultant, said other states have created incentives based on square footage of green buildings or have capped the amount of tax savings .
"This is not the end of the world," she said. "It's an opportunity to bring the stakeholders together and have a better discussion about what works best for everyone."
One senator said MGM Mirage and other businesses that applied for the tax abatements and have begun construction have no worries.
"When you spend money executing your side of this contract, if you will, that's based on our representation, you can get what you spent back from the state."
As for those that have planned for the tax breaks, but haven't started building?
"They might have a problem," he said.
Schoenmann reported from Carson City and Benston from Las Vegas.
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