Cathleen Allison/Nevada Appeal Assemblywoman Marilyn Kirkpatrick, D-Las Vegas, testifies Friday at the Legislature. Lawmakers have proposed a revision of the state's "green building" tax incentives law that could cost almost $1 billion if it stands as is.
Members of the Senate and Assembly Commerce and Labor committees made it clear Friday they intend to put much tighter controls on who qualifies for "green building" tax breaks.
The 2005 law gives business owners who agree to build energy-efficient buildings an exemption from all but the voter-approved 2 percent Nevada sales tax and up to 50 percent off property taxes for up to 10 years. That is for buildings that qualify for the Leadership in Energy and Environmental Design (LEED) standards.
According to fiscal experts, the nine Clark County projects, which have filed for those tax breaks so far, would cost local government, the school district and state more than $974 million over the next 15 years.
Under the proposed legislation presented Friday, the sales tax portion of the breaks would disappear altogether and the property tax breaks would be scaled back to protect schools completely and ease the hit on local government.
Assemblywoman Debbie Smith, D-Sparks, said the plan completely eliminates the sales tax break. Local governments and school districts each receive 2.25 percent of Nevada's 6.5 percent base statewide sales tax.
"We believe that was clearly intended to be a jump start for the program," she said.
In addition, Smith said future property tax breaks under the proposal would not apply to the portion of property taxes that go to support school districts. Statewide, that is 75 cents of the average $3 per $100 of assessed valuation imposed annually by counties on property across the state.
In addition, she said the maximum 50 percent property tax break was reduced to a sliding scale: 25 percent for buildings which meet LEED Silver Standard, 30 percent for Gold Standard buildings and 35 percent for Platinum.
She and Assemblywoman Marilyn Kirkpatrick, D-Las Vegas, said the biggest changes in the bill are to clamp down on the process for granting the tax breaks. Kirkpatrick said all projects must work through the governor's Energy Office. They must meet specific benchmarks show progress within 36 months or lose the tax breaks.
She said the problem with the existing rules is there really aren't any. The Tax Commission actually removed its requirement projects present a signed contract before getting the sales tax breaks despite the strong request by Director Dino Dicianno.
"In going through the process, it was very apparent the rules kept changing from legislative intent," she said.
Sen. Randolph Townsend, R-Reno, who worked with the two Assembly members on the proposed legislation, said the commission was required to develop regulations: "It wasn't done."
Speaker Barbara Buckley, D-Las Vegas, said she wants the process very clearly laid out and tightly controlled.
"We want to make sure the rules can't change in the middle of the game to the detriment of schools and the state."
Kirkpatrick said that is the major thrust of the legislation.
Townsend's committee will hold a hearing on the bill Tuesday morning.
The proposed changes, however, are for future projects that apply for LEED "green building" tax breaks.
That does not address the projects that have already received letters granting them the breaks, or even those which are part way through the process.
Gov. Jim Gibbons has already said his concern is the state could get sued if it tries to eliminate the tax cuts for those four projects with letters granting them the breaks. And the attorney general's office will have to determine where the line is drawn between those which qualify and those that don't.
• Contact reporter Geoff Dornan at gdornan@nevadaappeal.com or 687-8750.