Development Magazine Spring 2016

Development - Ownership

Energy Consumption Disclosure Requirements

A number of states and municipalities now mandate energy performance disclosure for some commercial buildings.

BUILDING OWNERS are increasingly expected to disclose information on their properties’ energy consumption to prospective tenants, buyers and government agencies. While the expectation of disclosure is voluntary or market driven throughout most of the U.S., 14 local jurisdictions, two states and the District of Columbia have passed laws that make such disclosure mandatory.

Chicago, Atlanta, Boston and Minneapolis recently joined the ranks of jurisdictions that require some form of energy disclosure. Those that have done so for over three years include New York City, the District of Columbia, Philadelphia, Seattle and San Francisco, among others. The two tables (above and left) include an overview of the requirements by jurisdiction.

headshot of a man

Stuart Brodsky

In the first years of a disclosure law, the requirements often apply only to larger commercial buildings, typically 50,000 square feet and up. As programs mature, it’s not unusual for jurisdictions to expand their laws to cover smaller buildings (as small as 10,000 square feet) and a broader range of property types, including multifamily buildings. Some laws also require disclosure of water consumption.

Twelve of the 14 municipal laws (see the table below) require the display of a building’s total energy consumption and efficiency ratings on public websites. Annual updates are a central feature of many of the laws. The other two local jurisdictions, Austin, Texas, and Berkeley, California, as well as the states of California and Washington — the only states that currently mandate energy disclosure — require owners to share their data with either tenants or prospective tenants, prospective buyers and/or financing sources. (See the second table below.)

table with project stats

Neither California nor Washington has an established enforcement process. Most of the municipalities, on the other hand, do have enforcement mechanisms, including efforts to identify buildings that have not complied, issuance of violations and levying of fines. Fines range from $500 to $2,000. In some jurisdictions, failure to comply after receiving an initial violation notice can result in additional fines applied on a quarterly basis.

EPA’s Energy Star Portfolio Manager is frequently cited as the preferred platform for delivering information to government agencies. Use of the EPA online tool is free. Since a wide variety of green building programs already use Portfolio Manager, many property owners are familiar with it. In addition, Portfolio Manager can, with the approval of a building’s owner, transmit appropriate data to the state and local agencies that administer the disclosure mandates.

Because building energy and water consumption in buildings are increasingly understood to be the leading issues in sustainable real estate development and operations, owners can only expect demand for data disclosure to continue to grow, whether that demand is market driven or required by law.

table with project stats
 

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