Law’s potential tally steep

CARSON CITY -- If all of the Las Vegas-area projects seeking tax breaks for energy-efficient construction under a 2005 measure passed by the Legislature ultimately qualify, Clark County will lose nearly $1 billion in property and sales taxes through 2021, an analysis provided to the Legislature on Friday shows.

Sales tax exemptions for seven projects would total $297 million, which would be earned while the buildings are under construction, according to an analysis by a Las Vegas group called Applied Analysis.

Property tax exemptions for nine projects, according to information produced by the Department of Taxation and the Legislature's Fiscal Analysis Division, which can be worth 50 percent of the tax bill for 10 years, would total $643 million through 2021.

The lost property taxes would occur in different years for different projects, depending on when they qualified for the property tax break.

The total is well over $900 million in property and sales tax breaks if the projects all go forward, and if they qualify for the exemptions.

The seven projects evaluated for the sales tax exemptions are the CityCenter, Fontainebleau, Molasky Corporate Center, Echelon Place, Wynn Encore, Palazzo Resort and the World Jewelry Center.

The separate property tax analysis included two other projects, Montecito Partners and Panorama Towers.

The information was reviewed by a joint meeting of the Assembly and Senate Commerce and Labor committees. The Legislature is examining the effects of the "green" legislation, passed as Assembly Bill 3 in 2005, because of the large number of responses from companies seeking the breaks.

Lawmakers are concerned with the level of lost tax revenue if all the projects are qualified and earn the certification required by using what are called Leadership in Energy and Environmental Design, or LEED, standards.

Senate Commerce Chairman Randolph Townsend, R-Reno, cautioned that the estimates are far from complete.

Because of the budgetary concerns, the Legislature passed an emergency bill earlier this month suspending the tax breaks. That bill was vetoed by Gov. Jim Gibbons, who instead issued an executive order suspending the breaks for all but four projects through June 4.

Three of the projects, the $7.4 billion CityCenter on the Strip, the Fontainebleau project and the Palazzo, being built by the Las Vegas Sands Corp., were exempted in Gibbons' order. A Reno project was also exempted.

After the veto, legislative legal counsel issued an opinion that said Gibbons' executive order is unconstitutional and unenforceable, leaving the entire issue in limbo.

Now the Legislature is trying to decide how to proceed, both in the future to encourage energy conservation construction projects, and retrospectively to the projects that may have already qualified for the tax breaks.

Gibbons vetoed the bill out of a concern some of the companies relied on the provisions of AB3 and so would have a cause of action against the state if they lost the benefits.

Lawmakers have described the processes used to qualify for the breaks through several different state agencies, including the Department of Taxation and the Energy Office, as inconsistent, a "mess" and a "disaster."

"It was very apparent that the rules kept changing from the legislative intent," said Assemblywoman Marilyn Kirkpatrick, D-North Las Vegas, one of several lawmakers working on a solution to the issue.

One of the biggest questions is how several of the projects were able to apply for the sales tax exemption even though their requests came after a deadline had passed. The legislation specified a window to apply from Oct. 1 to Dec. 31 2005.

Lawmakers have criticized state agencies for the way in which they responded to the law, saying legislative intent was not followed.

Assembly Speaker Barbara Buckley, D-Las Vegas, said the legislation was clear that there was to be a three-month sales tax window.

"Then we see regulations, and then the regulations disappear, and we have memorandums of understanding being signed just a couple of weeks ago after we raised a concern about the program," she said.

Friday's hearing was primarily directed to the future, with a discussion of Bill Draft 58-1512 revising the green energy construction law.

The proposed new legislation would protect schools from any revenue losses from the tax abatements. It also eliminates any exemption from the sales tax for construction costs and reduces the property tax abatement from 50 percent to 25 percent for a "silver" level LEED certification, 30 percent for a "gold" certification and 35 percent for a "platinum" certification.

No testimony was taken on the proposed legislation, which will be considered again next week.