Provision is First in Nation to Require Annual Disclosure of Energy Star Scores by Building Owners
Add Energy Star benchmarking to the list of progressive green building measures being adopted in the District of Columbia.
The DC Council on Tuesday unanimously passed The Clean and Affordable Energy Act of 2008, which includes the benchmarking mandate and several other energy efficiency initiatives, in a busy session that also included legislation to end the city's handgun ban after 32 years.
District of Columbia Mayor Adrian Fenty is expected to sign off on the energy bill within the next month, at which time Washington would become the first U.S. city to require annual energy benchmarking in buildings.
Already, the provision is being seen as a victory for green building advocates who have called for greater environmental transparency in the building industry. Beginning in 2010, it would require commercial property owners to generate an Energy Star efficiency "score" for their buildings using free online tools provided by the Energy Star program. That score would be made available to the public by the District Department of the Environment (DDOE).
"It's the old Peter Drucker quote: 'You can't manage what you don't measure,' " said Cliff Majersik, the program director for the Institute for Market Transformation (IMT), a Washington-based energy efficiency and green building advocacy group, who helped craft the benchmarking legislation.
"Most people have no idea whether or not their buildings are energy efficient," he added.
But as sustainability makes deeper inroads into the building industry, owners are at least becoming curious. More than 60,000 buildings representing 8 billion square feet of U.S. property have been measured so far through Energy Star.
"The desire from individuals and organizations that want to fight climate change and global warming is becoming much more," said Jean Lupinacci, director of Energy Star Commercial and Industrial markets. But, she says, that attitude is still far from universal. "Others don't understand how energy efficiency relates to their bottom line. Some just don't know how to get started."
Because of that, the Energy Star provision does not require buildings to earn the actual Energy Star label, the U.S. Environmental Protection Agency's recognition for buildings that not only benchmark, but also demonstrate a high level of energy efficiency (a minimum benchmark score of 75) through management practices and retrofits.
Energy Star scores are calculated based on building size, hours of operation, the number of employees and computers, and 12 consecutive months of utility bills.
The benchmarking provision will also be phased in slowly. In 2010, the first year it takes effect, commercial buildings of 200,000 square feet or more will begin reporting Energy Star scores. The size requirement will drop each year by 50,000 square feet until 2013, when all commercial buildings of at least 50,000 square feet will require benchmarking.
All district-owned buildings of at least 10,000 square feet will begin reporting scores next year.
In the best-case scenario, the phased implementation will create a market-based demand for energy disclosure long before 2013, Majersik said. "We wanted to be conservative -- start with the big, more sophisticated players and build up awareness and knowledge of how easy it is to Energy Star benchmark. Then, by the time the small players have to comply, it should be very much a known commodity," he said.
Of course, in the liberal and often progressive confines of Washington, DC, a market for sustainable buildings and energy disclosure is already taking root.
Holly Davis, a managing director with Jones Lang LaSalle in Washington, said that clients she represents in the district have been implementing green strategies, such as Energy Star or the U.S. Green Building Council's LEED certification, for several years already. "It's a priority for all owners that are renovating or constructing buildings. Everybody saw the writing on the wall," she said.
In 2006, Washington became the first major U.S. city to extend green building development mandates to the private sector, helping touch off similar laws in other cities like Boston, Los Angeles, Dallas and Baltimore.
In some instances, the local market is even driving demand for energy disclosure, said Laurie McMahon, a senior vice president of property and project management at Cassidy & Pinkard Colliers, which is headquartered in the district.
"As property managers, we're already tracking [energy usage] for our clients. It's one more thing tenants want to be educated buyers," McMahon said.
"No sophisticated tenant or sophisticated broker is going to agree to sign a 100,000-square-foot lease without a clear understanding of how the owner has operated that building," Davis added. "Landlords have had pressure to reduce operating expenses."
Washington has been perched at the front of the green real estate trend due in part to the presence of the federal government, which has long-standing green building and efficiency mandates on much of its own space. The effects of those policies, including GSA's 2001 LEED mandate for new buildings and an Energy Star mandate for leased space beginning in 2010, ring especially loud in Washington, where it's hard to walk a block without passing one or more federal buildings.
And there are other reasons. A rise in real estate taxes in the district, which have almost doubled in the past seven years, Davis says, has led local owners to look for cost savings in energy reductions and elsewhere.
This fall, as called for under Washington's Green Building Act of 2006, the DC Council will consider a package of building code revisions that could improve baseline energy efficiency standards (residential and commercial) by nearly 30 percent, and require other measures to improve water efficiency.
And of course, having EPA and the U.S. Green Building Council, perhaps the two most important organizations in the sustainable real estate trend, headquartered in the district hasn't been bad for local awareness either.
But now, with escalating U.S. energy prices and a slumping economy, Washington's benchmarking provision could be a harbinger of a greater national focus on energy efficiency, and a "feather in the Mayor's cap," according to Majersik. "Cities and states around the country are competing to have the greenest buildings. Other jurisdictions want the same accolades," he said.
Outside of the district, a shift toward energy efficiency is already discernible in state and local legislation that in the past concentrated mainly on LEED standards for new commercial development.
New York City is considering standard benchmarking legislation for commercial buildings, which is supported by Mayor Michael Bloomberg, while the state of Minnesota recently set a statewide goal to earn the Energy Star label for 1,000 commercial buildings in the next two years. The state of Ohio, and the city of Denver, have both pledged to benchmark municipal facilities.
And about the same time the Washington provision kicks in, California will require property owners to disclose Energy Star scores to prospective buyers, lessees or lenders prior to a building sale
or other transaction involving their property.
"It's all about transparency and valuing energy appropriately," Lupinacci said. "It affects the value of the building and it affects the environment. And people are becoming very interested in both of those pieces."