|
|
Publications
Energy Benchmarking for Nonresidential Buildings: How Does Your Building Stack Up?
Sedgwick's Real Estate Newsletter
February 2010
By:
Luen Lam
California Public Resources Code Section 25402.10 (energy benchmarking law) will soon require owners and operators of nonresidential buildings in California to disclose the energy use of their properties. The California Legislature has granted owners and operators a temporary reprieve from the original January 1, 2010 implementation deadline, but the next time you sell, finance or enter into a lease of your entire building, you just might have to comply.
What Is Energy Benchmarking?
Energy benchmarking is a system that rates a building's energy efficiency in its use of electricity, natural gas, heating oil, or other products sold by a utility for purposes of providing heat, cooling, lighting, water heating, or powering other end uses. Energy benchmarking will help a prospective purchaser, tenant or lender predict the energy costs of ownership.
Does the Energy Benchmarking Law Affect Your Building?
The energy benchmarking law applies to nonresidential buildings, including offices, retail and wholesale stores, restaurants, theaters, churches, schools, factories and other industrial buildings, hospitals and health care facilities, hotels and motels, and storage facilities.
How Do You Obtain the Rating for Your Building?
The California Energy Commission is developing regulations that will outline the steps required to obtain the rating for a building. The commission's current proposal requires a building owner or authorized operator to take all of the following steps at least 30 days before a required disclosure: (i) open accounts at both the Environmental Protection Agency's Energy Star Portfolio Manager website and the commission's Nonresidential Building Energy Performance website; (ii) supply the portfolio manager with building specifications and owner contact information; (iii) request each utility provider that serves the building to release to the portfolio manager energy consumption data for the most recent 12-month period; (iv) supply the commission with the building's portfolio manager account information; and (v) authorize the commission to access the portfolio manager's records. The portfolio manager and the commission will use the energy consumption data obtained from the utility providers to generate reports that rate the building's energy efficiency. These reports must then be disclosed by the owner or operator to the proposed purchaser, lender or whole-building tenant. The disclosure required by the energy benchmarking law is in addition to, and not in lieu of, any other disclosure you may be required to make about the building in connection with the sale, lease or loan transaction.
When Must the Ratings Be Disclosed?
The commission's draft regulations require an owner or operator to disclose the energy efficiency ratings at the time the owner or operator presents (i) a sales contract for the entire building to a prospective buyer, (ii) a lease for the entire building to a prospective tenant, or (iii) a loan application to finance the entire building to a prospective lender.
When Will the Energy Benchmarking Law Be Implemented?
As originally drafted, the energy benchmarking law required compliance by January 1, 2010. Recognizing the complexities of implementation, the California Legislature eliminated the January 1, 2010 deadline and empowered the commission to establish a schedule for implementation. The commission's draft regulations propose a phased implementation that requires initial implementation for some categories of nonresidential buildings by July 1, 2010 and full implementation by July 1, 2012. According to the commission website, however, the commission is currently revising the draft regulations to further delay initial implementation to January 1, 2011. You may track the progress of the draft regulations at the commission website (www.energy.ca.gov/ab1103/index.html).
How May the Energy Benchmarking Law Affect You?
Energy benchmarking is intended to promote greener buildings, but will inevitably impact a building's marketability and value. Owners of buildings that have been designed and built to be energy efficient will benefit, while owners of energy inefficient buildings will have to make potentially expensive improvements or face the prospect of accepting a lower energy efficiency rating. Regardless of which of these categories an owner's building falls under, all owners and operators now have even greater incentive to operate buildings in the most efficient manner possible.
|
Related People
Related Offices
Related Practices
|