Las Vegas Business Press :: News : New bill dampens the future of green building

New bill dampens the future of green building

Supporters say green construction will survive tax policy flip-flop

BY TONY ILLIA

Green building has seen greener days. State lawmakers recently slashed tax incentives for LEED (Leadership in Energy and Environmental Design) projects amid fears of a projected budget shortfall.

In an ironic twist, the move comes as the Las Vegas Springs Preserve opens. The new $250 million, 180-acre complex at 333 Valley View Blvd. is a sustainable demonstration showcase meant to encourage more green building in Southern Nevada.

"The Springs Preserve is going to educate and entertain people on water and energy conservation and the benefits of embracing a sustainable lifestyle," said Jesse Davis, a project spokesman. "It's a living, interactive experience, promoting a better understanding of environmental practices for homeowners, commercial builders and educators."

TONY ILLIA | BUSINESS PRESS
The $107 million, 852,000-square-foot Molasky Corporate Center II downtown is one of six green projects "grandfathered" under Assembly Bill 621. It's still eligible to still receive property tax breaks for being a LEED-certified building.

POLICY CHANGES

Over the last couple of years, Assembly Bill 3, which was signed into law in 2005, seemed to be a great boost to environmentally sensitive construction. It gave as much as a 50 percent, decade-long tax break for private commercial projects achieving a Silver LEED rating or higher.

LEED is a seven-year-old rating system created by the U.S. Green Building Council that grades project sustainability. Points are awarded for, among other things, water conservation, energy efficiency and environmental quality. The more points awarded, the higher the rating. It goes from basic certification up to Silver, Gold, and Platinum.

Nevada, at the time, had only about a dozen projects applying for a LEED certificate. As everyone but the Legislature anticipated, that number more than doubled after the tax breaks were approved.

Today, there is roughly 63 million square feet of developments applying for LEED certification. Lawmakers, though, faced with a tight budget and a commitment from Gov. Jim Gibbons to veto any new taxes, grew frantic over the possibility of losing $900 million in revenue.

The state Legislators, in response, passed Assembly Bill 621, eliminating incentives for all but six developments that had qualified by a Feb. 1 deadline. Grandfathered exceptions consist of major Strip resorts including MGM Mirage's CityCenter, Fontainebleau , the Venetian's Lido/Palazzo resorts, Boyd Gaming's Echelon and Panorama Towers, plus the Molasky Corporate Center downtown. Excluded projects, of course, may now sue the state for its uneven decision making on which developments qualified for tax breaks and which were cut out of the deal.

SAVINGS STILL

Regardless, green construction can still significantly help lower heating and cooling bills over a building's lifespan. Operating costs account for 35 to 50 percent of office rents, yet energy bills can vary up to $1-per-square-foot among similar buildings just a few feet apart.

"Turning green can cut energy costs by 40 percent or more," says B. Alan Whitson, a building design and management consultant. "Upgrading a building's lighting can add $6 per square foot to its value."

And while AB 3 created new momentum for green construction in Southern Nevada , its future now appears far less robust.

"I think it will impact green building with people who counted on it as part of their financial set-up," said Bret Davis, a LEED accredited real estate broker with CB Richard Ellis. "Green buildings are hitting a tipping point."

Few public LEED certified buildings exist in Southern Nevada but the Animal Foundation campus at 655 N. Mohave Road is one example. Designed by Tate Snyder Kimsey Architects, it features solar panels that double as shade awnings, a wind ventilation system and a "living machine" that recycles water.

"The tax incentives really got some developers interested in green building, but many others are still moving forward with green building regardless," said Mike Purtill, a Tate Snyder Kimsey LEED accredited architect. "While this may be hiccup, green building is here to stay for the long haul."

tonyillia@aol.com | 303-5699

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