Compromise ‘green’ building plan approved
Lawmakers and businessmen have worked out a compromise that will reduce the financial hit to state and local governments from the “green building” tax breaks while continuing the abatements designed to encourage construction of energy efficient buildings.
AB621 was passed unanimously by the Nevada Assembly on Saturday afternoon.
The tax breaks were approved by the 2005 Legislature, but the fiscal impact to state and local government and the schools wasn’t seen until earlier this year. The total loss in tax revenue for just the 10 projects known to have applied by April would have been $974 million over the next 15 years.
With the amendments approved Saturday, that impact will be cut by more than half, according to Assemblywoman Debbie Smith, D-Sparks.
Existing law provides businesses that build to Leadership in Energy and Environmental Design (LEED) standards with an exemption from all but the base 2 percent sales tax on construction materials, furnishings and fittings. It also allows up to a 50 percent break on property taxes for up to 10 years.
The amended law will eliminate the sales tax break for future projects that qualify. In addition, it will reduce the property tax break to a maximum of 35 percent and apply that break only to the portion of the tax on improvements, not to the value of the land itself.
Finally, to protect education funding, that tax break won’t apply to the portion of property taxes – 75 cents – which supports public schools.
Any of the 10 projects that are already in the application process to qualify for the tax breaks will still get the sales tax exemption. But their property tax break will be reduced to 25 percent if they meet LEED silver standards, 30 percent for gold and 35 percent for platinum. And they will not get an exemption on the 2.25 percent of the sales tax which goes to public schools.
In return, however, they will be able to claim the sales tax exemption through the period of construction, even if that takes until 2010 or 2011. Business spokesmen pointed out construction materials purchases are spread over a much longer period than the original law contemplated.
The legislation, AB621, was developed by a subcommittee consisting of Smith, Assemblywoman Marilyn Kirkpatrick, D-Las Vegas and Sen. Randolph Townsend, R-Reno. Townsend said the Senate Commerce and Labor Committee will process the bill Monday morning.
Smith said the goal was to create something “that would provide an incentive without providing a windfall.”
The business representatives who attended the session all indicated they can live with the new rules. And governmental spokesmen said it would cause far less fiscal impact to their budgets.
• Contact reporter Geoff Dornan at firstname.lastname@example.org or 687-8750.
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