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Commercial building energy use disclosure program: what you need to know

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California, along with an increasing number of other states, has passed legislation mandating disclosure of energy performance for nonresidential buildings. These regulations require that building owners disclose either their building's Energy Star score or a similar metric to inform either another party or the market of its energy performance.

California's Nonresidential Building Energy Use Disclosure Program, which includes Assembly Bill 531 and Assembly Bill 1103, requires building owners to disclose building energy performance not less than 24 hours prior to a "major financial transaction," including sale, lease and/or financing of an entire building, prompting building owners to act before deadlines go into effect starting July 1.

California only requires that building owners share this information with a prospective buyer, prospective tenant (leasing the entire building), or to a prospective lender, while other jurisdictions such as Washington, D.C. and New York City require public disclosure.

The nonresidential building compliance deadlines are:

* buildings >50,000 SF by July 1, 2013;

* buildings >10,000 SF by Jan. 1, 2014; and,

* buildings >5,000 SF by July 1, 2014.

Building energy performance must be calculated using the U.S. EPA's Energy Star Portfolio Manager. This online tool uses energy meter data and building specific information to produce a score that rates buildings' energy performance relative to similar buildings, on a scale from 1 to 100.

Cassidy Turley's interpretation

Although we do not expect that high scores (more efficient) will demand higher rents or an increase in leasing activity, we do expect that the performance of lower scoring (less efficient) buildings will be questioned.

We anticipate that owners of all buildings will request more from their property management companies to improve their energy "grade," and that smart investments may need to be made to improve overall performance.

As the industry continues to recover we expect more state and local governments will learn from the successes and failures of the aforementioned regulations and develop their own strategies and solutions to disclose and improve nonresidential building energy performance.

Cassidy Turley Sustainability Services is equipped to provide building owners with Energy Star benchmarking required by the legislation. For more information, email ENERGYSTAR@cassidyturley.com.

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Written by Evan Tyroler, VP/Principal, Cassidy Turley Sustainability Services, and Paul Klink, Managing Director/Principal, Cassidy Turley Property Management.

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