The New York State Department of Environmental Conservation (DEC) has
on their website a page entitled, “Saving Water Makes Good Sense.” It
points out a number of water conservation measures that can decrease the
average per person usage of 50 gallons of water a day.

One of DEC’s recommendations is to, “Wash cars less frequently. If your
car desperately needs a bath, take it to a carwash that recycles water.”
Although this recommendation doesn’t help business, it does constitute a
positive recognition by DEC of the benefits of a professional carwash in
terms of water conservation.

Clearly, carwash reclamation systems result in water conservation and
reduced discharge. Use of recycled water in the carwash lowers water use
which benefits the carwash owner because of lower water bills. The amount
of water saved is also a net benefit to other water customers from the
avoided costs to the water system.

Another positive from the use of a reclamation system is that there is less
discharge into the municipal sewer system. There is also a reduction in the
amount of grit and road film washed off the cars in the wastewater system
because of its collection in reclaim tanks and filters. because of its collection in

reclaim tanks and filters.

There is no argument that the introduction of a reclamation system to a
carwash is an environmental plus. However, as with most environmental
technology, there are significant capital costs to retrofit a carwash with a
reclamation system or to install this technology in the construction of a new
carwash. The costs of retrofitting or installation include design, permits, the
reclaim equipment, electrical, plumbing, and contractor and construction
costs. In addition, the carwash owner would be assuming ongoing
operational costs associated with maintenance of a reclaim system.
Additionally, a necessary predicate to introduction of a reclamation system is
sufficient space to accommodate the system. There is a different cost/benefit
analysis for each individual carwash location. The only constant is that a
significant capital investment is required to retrofit or install a reclamation
system.

State government has adopted state tax credits to encourage businesses to
make green investments; for example: green building tax credit, fuel cell
electric generating expenditure credit, alternative fuels credit and biofuel
production credit. The use of a tax credit as an incentive to install green
technology is not a new legislative path in New York State.

DEC has apparently made water conservation by use of a carwash that
recycles water a public policy goal. A tax credit to encourage and enable
carwash facilities to use reclamation systems would be a potential addition
to the 2008 legislative program. to the 2008 legislative program.

The New York State Division of the Budget has recently revised the
projected budget gap for the 2008-09 fiscal year from $3.6 to $4.3 billion.
This increase reflects the weakness in the financial services and real estate
sectors which will result in lower revenues. These projections are indicative
of a tight budget with limited hope for tax decreases of any kind.

Therefore, any new legislative proposal for a tax credit needs to be
balanced against fiscal realities. However, such realities should not prevent a
thorough examination of the economics of a proposal for green carwashes in
New York State. A tax credit or a low interest loan program are options
which should be carefully examined to determine whether either approach
has legislative and industry appeal.

William Y. Crowell, III is a partner with the Albany-based law firm of
Whiteman Osterman & Hanna LLP. He can be contacted at 518/487-7677, or
email me.