Keeping Tabs on Energy Efficiency – New Benchmarking Requirements for San Francisco
As part of San Francisco’s ongoing energy efficiency push, the Board of Supervisors passed, and the Mayor signed, legislation that expands energy performance disclosure and benchmarking requirements to multifamily residential buildings. This expansion is important for residential property owners and tenants to consider and keep an eye on, as it impacts on-the-ground practices (including leases) and the bottom line.
The new requirements generally follow the state-mandated disclosures under AB 802 (2015), which requires both commercial and multifamily residential buildings above 50,000 square feet gross floor area to perform an energy efficiency audit and file an energy disclosure performance summary annually. AB 802 replaced California’s prior energy use disclosure law (AB 1103), which had only required disclosures at the time of a sale, lease, or finance of the property.
Under the new local legislation, owners of multifamily residential buildings greater than 50,000 square feet in San Francisco must complete and submit an initial Annual Energy Benchmark Summary on or before July 1, 2019, and no later than April 1 each year thereafter. By submitting this summary to the San Francisco Department of Environment through the ENERGY STAR Portfolio Manager, a property owner fulfills the state and local benchmarking requirements (i.e., AB 802 and the new San Francisco requirements).
Prior to approving this new legislation, San Francisco’s Environment Code Chapter 20 only required owners of nonresidential buildings above 10,000 square feet gross floor area to conduct energy efficiency audits of their properties and file annual energy benchmark summaries for their buildings with the San Francisco Department of Environment.
When Environment Code Chapter 20 was enacted in 2011, California utilities required consent from every utility customer prior to providing building owners with energy usage data for benchmarking. This made it infeasible for San Francisco to require multifamily buildings to benchmark energy use. Since then, the state has required utilities to provide energy usage data for benchmarking to owners of both nonresidential and multifamily buildings upon request.
The intent behind the benchmarking and reporting requirements under both local and state law is to encourage efficient use of energy and to make energy performance statistics for both commercial and multifamily residential buildings available to the public. In practice, it means that owners of buildings subject to these disclosure laws should also review their existing leases and determine what changes may need to be incorporated.
For instance, building owners must be able to obtain energy use information from tenants in order to submit energy use information for the entire building. Failure to comply with these benchmarking programs can result in administrative fines and civil penalties in the range of several hundred to several thousand dollars per violation, and there is no exemption for non-responsive tenants.
To protect themselves from tenant non-responsiveness, property owners should add provisions to new leases requiring receipt of energy data from tenants, and ensure that existing leases include pass-through of costs for regulatory compliance and provisions requiring tenants not to create violations of law.