Lawmakers pushing for another economic stimulus bill appear focused on the big picture, including conservation and clean renewable energy bonds, to provide the funding needed by those businesses attempting to “Go Green.” Provisions extending the renewable energy production credit and creating new research and development tax credits are another approach that lawmakers reportedly favor. However, our federal tax laws already contain a variety of tax savings for every ski resort.

Tax incentive programs offered by the federal government, as well as those offered by local and state governments, combined with programs offered by utility companies, have long helped businesses overcome the relatively high front-end costs of achieving energy efficiency or savings. Today, tax incentives not only reduce the cost of installing energy efficient products, but they significantly reduce day-to-day costs.


Commercial Buildings
A ski resort can get tax deductions for new or renovated buildings that save 50 percent or more of projected annual energy costs for heating, cooling and lighting compared to model national standards, and partial deductions for efficiency improvements to lighting, HVAC and water heating, or envelope systems.

The tax deduction amount is up to $1.80 per square foot and is available to owners or tenants of new or existing commercial buildings that are constructed or reconstructed to save at least 50 percent of the heating, cooling, ventilation, water heating and interior lighting energy costs.

Only buildings, such as the one housing the resort, rental equipment operation or retail shop and covered by the scope of the American Society of Heating, Refrigeration and Air Conditioning Engineers’ (ASHRAE) Standard 90-1-2001 are eligible. A partial deduction of $0.60 per square foot can be taken for improvements made to one of three building systems—the building envelope, lighting or heating, and cooling system.

The partial building improvement must reduce total heating, cooling, ventilation, water heating and interior lighting energy use by 16 2/3 percent (16 2/3 percent is the 50 percent goal spread equally over the three systems).


New Life for Old Tax Breaks
Last year, as part of the Emergency Economic Stabilization Act of 2008 (EESA), several energy-related tax credits had their lives extended. Solar landed an eight-year extension for an existing 30 percent tax credit for residential and commercial solar installations, while a $2,000 cap for deducting the cost of installing these systems was removed.

With the extension of these solar tax credits, the U.S. is now poised to become the largest solar market in the world. Additionally, the wind energy industry received a one-year extension of the production tax credit.

Every ski resort is eligible for tax credits for qualified solar water heating and photovoltaic systems and for certain solar lighting systems. Qualifying equipment will either use solar energy to generate electricity, to heat/cool or provide hot water to a structure, or will use solar energy to illuminate the inside of a building by means of fiber-optic distributed sunlight (tube systems and passive solar are not eligible). The credits are available for systems “placed in service” between January 1, 2006 and December 31, 2016.

Small wind systems: In October 2008, EESA was enacted into law. The law included a new federal-level investment tax credit to help defray the cost of small wind turbines for business use. The credit will be available for equipment installed through December 31, 2016. Owners of small wind systems with 100 kilowatts of capacity and less can receive a credit for 30 percent of the total installed cost of the system, not to exceed $4,000.

Geothermal heat pumps: As part of EESA, an incentive was added for the cost of installing geothermal heat pump systems. The incentive for businesses is available from October 3, 2008 through December 31, 2016. The incentive covers 30 percent of the expenditures in the year the incentive is taken, up to a cap of $2,000. Qualified geothermal heat pump property refers to any equipment that uses the ground or ground water as a thermal energy source of heat, or as a thermal energy sink for cooling purposes. The unit must meet the requirements of the Energy Star program that are in effect when the heat pump is purchased.

Commercial vehicles: Buyers of heavy-duty hybrid vehicles can receive credits based on the weight class of the vehicle, its fuel economy relative to a comparable conventional vehicle and the incremental cost. The vehicle must also meet a threshold value of “maximum available power,” a measure of the percentage or total value power available from the rechargeable energy storage system of the vehicle. Credits are available for heavy-duty vehicles placed in service from 1/1/2006 through 12/31/2009.

The plug-in electric drive motor vehicle credit: Those ski areas wishing to use alternative fueled vehicles in their operations will find a new credit for new, qualified plug-in electric drive motor vehicles. The amount of the credit is $2,500, plus $417 for each kilowatt-hour of traction battery capacity in excess of four kilowatt-hours.

Another EESA provision extends the life of the “Alternative Fuel Vehicle Refueling Property Credit” to those ski operations building or re-configuring a fleet refueling station that employs alternative fuels. Even better, the alternative vehicle refueling property credit has been extended through 12/31/2010, and now the definition of a clean-burning fuel has been modified to include electricity.

The new law also included a fringe benefit employers can offer workers who commute to work using a bicycle. The amount employees can be reimbursed is only $20 per month, but that amount is tax-free to the biking worker and deductible by his or her employer.

Reuse and recycling: What to do with trash has always been a question usually answered at considerable expense. Thanks to EESA however, a 50 percent additional depreciation allowance may be claimed on the adjusted basis of qualified reuse and recycling property acquired and placed in service after 8/1/08.

That means new machinery and equipment (not including buildings, real estate, rolling stock or equipment used to transport reuse and recyclable materials) that is used exclusively to collect, distribute or recycle qualified materials qualifies for the new bonus depreciation write-off. Machinery and equipment includes appurtenances such as software necessary to operate the equipment.


Other Energy Incentives
There are also a number of state, utility company and local programs available. States often lead the way in adopting progressive policies that promote efficiency.

For example, the American Council for an Energy-Efficient Economy (http://acee.org/energy/state), offers the State Energy Efficiency Policy database. The database is searchable by either state or policy area.

Another database, funded by the U.S. Department of Energy, is the Database of State Incentives for Renewables & Efficiency (http://www.dsireusa.org). This a project of the North Carolina Solar Center and the Interstate Renewable Energy Council (IREC) that provides detailed information on state energy policies.

While our lawmakers ponder the big picture of energy conservation, it is our tax laws that are already helping resorts reduce their up-front expenditures.