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October 24, 2014

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Sandoval’s energy office seeks to expand green building tax rebate program

The state’s office of energy wants Nevada lawmakers to expand a property tax rebate program for green buildings, allowing rehabilitation projects of older buildings to qualify for the tax break.

The program currently costs the state about $5.58 million a year in tax credits for 29 approved projects, which pay about $44.48 million in taxes.

Under a law passed in 2011, only new buildings — except for some manufacturing buildings — can qualify for “green building” tax abatements. The rebate for existing buildings ended in 2011 amid concern that some rehabilitation projects received a disproportionate tax abatement.

Assembly Bill 33 would allow renovations to existing buildings to once again qualify for tax incentives, said Stacey Crowley, director of the Nevada State Office of Energy and the governor’s energy adviser. She said the new bill would correct some inequities in the prior formula that led to large tax breaks for companies making small investments.

“The idea is to stimulate existing buildings to retrofit, by offering them a small tax incentive,” she said.

But local government representatives opposed the plan to expand the program during an Assembly Commerce and Labor Committee hearing Monday.

“This will further the erosion of tax revenues to counties,” said Jeff Fontaine, executive director of the Nevada Association of Counties.

The Nevada League of Cities and Clark County representative also spoke against the bill.

“Clark County would definitely be negatively impacted by this bill,” said Yolanda King, Clark County’s budget director. Property taxes, she noted, make up about a third of Clark County’s taxes.

Green building tax breaks have been a contentious issue in Nevada since 2005, when lawmakers, in an effort to promote sustainable building, passed a bill that they later worried would be a potential windfall for casinos and large developers.

A compromise was later worked out in 2007.

The current property tax rebate ranges from 25 to 35 percent per year, depending on the level of environmental friendliness, as determined by a third-party consultant.

Since the revised green building law was passed in 2007, 29 projects have been approved, including 14 commercial projects and nine resorts, according to a presentation by Crowley.

Of that, only about $121,537 comes from renovated buildings. That includes $28,665 to the Venetian for a $20 million renovation. It also includes $10,149 a year for a renovation by Pro-Caps that cost the company just $25,000.

That disparity in the formula caused lawmakers to worry about equity. A bill passed in 2011 effectively ended the rebate for existing buildings in 2011. As the old law was about to expire, 47 existing building projects applied for the rebate.

Crowley told a committee on Monday that the bill, as introduced, was still a work in progress as the office calculates how much investment should warrant a rebate.

Assembly Speaker Marilyn Kirkpatrick, D-Las Vegas, who worked in 2007 to fix the 2005 green tax bill, visibly perked up at the discussion.

She said the state was willing to give some abatements, but the projects had to exceed existing standards of building codes.

“I want us to be the best,” she said. “We’re willing to give abatements for it, I think.”

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