Last week, the Legislature passed an emergency bill suspending tax breaks for commercial projects that promote water and energy conservation. Gov. Jim Gibbons said Tuesday he plans to request an opinion from the attorney general's office on the state's liability if the tax breaks are taken away.

Gibbons, who will have until next week to decide if he wants to veto the legislation, said he's concerned that it would strip away some of the tax breaks already approved. A law passed in 2005 granted businesses a sales tax break for materials bought by the end of 2005 and property tax breaks of 35 percent to 50 percent over 10 years.

The tax breaks for green projects came under the spotlight last week when calculations showed that the state's income was $110 million below expectations.

A warning flag about the program's long-term cost was raised in December by officials with the Nevada State Office of Energy and Tim Rubald, executive director of the Nevada Commission on Economic Development. In an interview with In Business Las Vegas about expanding tax breaks to home builders, Rubald said a proposed tax break for home builders wouldn't be affordable because the commercial tax breaks could run up to hundreds of millions of dollars over 10 years - much higher than anyone anticipated.

The Nevada Tax Department has ruled that the Palazzo, Echelon Place, Fontainebleau and Project CityCenter are entitled to deduct part of the sales tax on building materials for their green projects. Clark County has received notice of at least 11 projects that intend to go green.

One high-visibility commercial project that could get caught up in the program's suspension is the Molasky Corporate Center in downtown Las Vegas. It has received sales tax breaks for its office tower and was scheduled to receive about $1.6 million in property tax breaks over 10 years and more than $1 million in sales tax benefits.

The developer said it invested an additional $7 million on top of its $100 million to build an office building that promotes water and energy conservation. It will be used by the Nevada Water Authority and other firms that are tenants when it opens in August.

Richard Worthington, president of the Molasky Group, said it appears that that in lawmaker's zealousness to approve green buildings, that they did so without fully understanding the cost. He said he sympathizes with their challenges of balancing the budget and said it would be appropriate to stop the breaks for future development. But he said those in the pipeline like the Molasky Corporate Center and CityCenter shouldn't be penalized, he said.

"I think that would be most unfortunate if that would happen," Worthington said. "We relied on rebates for pricing of our rental space. I think it would send a terrible message to the development community and set back green development for a long time. To change the rules of the game after we incurred a $100 million investment is grossly unfair."

The Molaksy Group used the tax breaks as a basis for financing the project, he said.

Rubald said he's aware of at least 14 companies that have registered for tax breaks so far. Given the interest in developers in pursuing green buildings, it was obvious the state treasury could not afford tax breaks for billions of dollars in construction, he said. He doesn't rule out, however, some tax breaks in the future.

"I thought something would have to give, but I was not sure what it would be," Rubald said. "I think you could do some type of property tax abatement that is not as generous."

Nevada is one of only a few states to offer property tax breaks for green buildings. Maryland gives counties discretion on how much of a property tax break to grant green-rated buildings. Oregon offers a tax credit equal to 35 percent of the extra costs needed to build green.

The costs of the commercial tax breaks have ended any chances of giving one to the housing industry. Proposed legislation would have given property tax breaks to home buyers if they purchased environmentally designed homes. Builders would also have received sales tax breaks.

Monica Caruso, spokeswoman of the Southern Nevada Home Builders Association, said home builders understand the state's financial woes and that nobody should be get a tax break when state government needs revenue to provide vital services for schools, infrastructure and other needs.

Caruso said her group never asked for tax breaks in the first place, and it was unfair to give tax breaks to commercial developers and not extend the same advantages to home builders.

"We believe in fair treatment and a level playing field," Caruso said. "With the downturn in home building by 40 percent-plus, it is not a time for anybody to get a tax break."

In December, Sen. Randolph Townsend, R-Reno, who proposed the tax break for home builders, wasn't concerned by the cost of any tax breaks for commercial and residential development. In an interview with In Business Las Vegas, he said any cost to the state treasury for extending tax breaks to homes would be worth what it saves in energy consumption and costs.

Even without tax breaks, Caruso said there is a demand from consumers for green homes as the Las Vegas housing market improves.

Last year, the Southern Nevada Home Builders Association announced a program to guide home builders who want to construct more environmentally sensitive housing. The voluntary program attempts to reduce the quantity of materials and waste, use recycled materials, and improve energy efficiency and water conservation.