Panel hears bill eliminating tax break

CARSON CITY -- It won't just be Kermit the Frog singing "It's Not Easy Bein' Green" if proposed legislation cutting back on tax breaks for energy efficient green construction wins final approval this session.

The new legislation, eliminating sales tax breaks for most projects and reducing a property tax exemption, was heard Wednesday in the Assembly Commerce and Labor Committee. Final committee action is expected today.

A legislative legal opinion released Wednesday said lawmakers can repeal the existing tax breaks for green building construction without violating anyone's legal rights, although a spokesman for one of the major projects, the $4 billion Echelon Place set to break ground in July, disagreed.

The legal opinion, dated Tuesday, concludes that the existing tax abatements and exemptions enacted by the Legislature in 2005, "do not create any contractual or vested rights with respect to persons who have applied for the existing tax abatements or exemptions or who have been approved to receive the existing tax abatements or exemptions."

The opinion clears the way for the Legislature, concerned about the potential loss of $1 billion in tax revenues to the schools and local governments, to change the green building legislation to a more modest incentive program to promote energy efficiency.

But Robert Crowell, an attorney and lobbyist for the Boyd Gaming Corp., which is building the Echelon project on the site of the former Stardust hotel, said he thinks the gaming company is on strong legal ground to claim the current tax breaks, which include sales and property tax exemptions that the Legislature is proposing to revise and reduce.

Crowell said Boyd Gaming officials are trying to work with lawmakers to resolve the concerns over lost tax revenue to the schools and local governments.

But he cited the issuance of an opinion letter dated Aug. 9, 2006, from the Department of Taxation to Boyd Gaming that said the Echelon project "will qualify for a partial sales tax exemption" under the 2005 legislation.

The 2005 legislation granted both sales tax exemptions and a property tax exemption -- worth up to 50 percent of the property value for up to 10 years -- to projects that qualify under the Leadership in Energy and Environmental Design standards. Projects meeting the silver level of certification are eligible for a 35 percent property tax break under the existing law.

For Echelon, the projected sales tax exemptions under the existing law are worth an estimated $81 million. Property tax breaks would total nearly $165 million through fiscal year 2020-2021 if the project qualified for a silver LEED certification.

But that would change under the latest version of Assembly Bill 621. The new measure would repeal all sales tax breaks for existing projects except for the handful that were qualified and that bought materials during a window from Oct. 1 to Dec. 31, 2005.

The original legislation specified this as the window to apply for the program, but many projects were approved after the deadline.

Assemblywoman Debbie Smith, D-Sparks, said about half a dozen projects, likely including the CityCenter project under construction on the Strip, would be able to claim the sales tax exemption.

Crowell said Echelon would not qualify for an exemption if the proposed language is approved by the Legislature.