Home Green Design Sometimes Green Building Incentives Are Not Such a good Idea

Sometimes Green Building Incentives Are Not Such a good Idea

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Sometimes good, green intentions are not good for the economy. Take Nevada, for example. In 2005 the Nevada Legislature approved a measure that cut property taxes up to 50 percent for 10 years and lowered sales taxes for building supplies to 2 percent for energy-efficient construction that meets Leadership in Energy and Environmental Design (LEED) standards. The tax incentives, the idea of a former state assemblywoman, were approved with little discussion by the Legislature. They never thought developers would actually want to participate in the program—at least to the extent they have.

Original estimates put state abatement costs at just $250,000. Surprise, surprise, the state is now looking at having to shell out $974 million in abatements over the next 10 years. Most of the subsidy, according to The Wall Street Journal (WSJ), will go to casinos in Las Vegas, as well as MGM Mirage’s $7.4 billion CityCenter project.

You can’t blame MGM Mirage for taking advantage of the subsidy. According to the Las Vegas Sun, the company is spending an extra $125 million to $225 million to build its project to LEED standards. Under the current law, however, it would reap more than that in tax breaks. Turning green into gold, as it turns out, can be pretty easy.

Legislature Backs Off Subsidies

Nevada does not have an income tax so losing those extra funds will hurt. Property and sales taxes mostly go to county governments for schools and roads and the state is responsible for any revenue losses from its general fund. The Legislature, obviously ignorant of the benefits of green building—you don’t need incentives to benefit financially from it—is now trying to backtrack on its bill and reduce the level of incentives.

Under the terms of a compromise, according to WSJ, the tax code would be amended to eliminate the sales tax break for future projects, and the property tax break would be retroactively reduced to a maximum of 35 percent. The compromise bill still awaits Nevada Governor Jim Gibbons’ signature but he vetoed a similar measure several weeks ago, concerned about lawsuits from companies that budgeted their projects with the incentives in mind. Stay tuned for more interesting developments.

What happened in Nevada is proof that politicians, like many hotel developers, still have a lot to learn about green building and why it alone makes financial sense—without having to dig into funds better used in the local community.

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Column Feedback

In last week’s column I wrote about food waste in restaurants. In response, Robin Winfree, Fox Hollow Valley B&B, wrote: “What about suggesting to restaurants to donate this type of waste food to local food banks? We have a wonderful organization here in Lane County, Oregon, that organizes pickups of leftovers for its food bank (Food for Lane County).”

Robin, thank you for your good idea.

As always, I can be reached at editor@greenlodgingnews.com.

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