Alert: Mayor Nutter Signs Landmark Energy and Water Use Benchmarking Bill

Mayor Nutter has signed into law an ordinance that requires owners of commercial buildings in Philadelphia with at least 50,000 square feet of indoor floor space, or of mixed-use buildings with at least 50,000 square feet of indoor floor space devoted to commercial use, to track and disclose energy and water consumption data.

Starting in 2013, owners of covered buildings must enter energy and water consumption data, and certain building information (e.g. year built, uses, gross floor area, operating hours, and use-specific information such as percent of building area heated and air conditioned and units of certain energy-consuming equipment such as computers, refrigerators, and freezers) into a “Benchmarking Application”, which initially will be the United States Environmental Protection Agency’s web-based system known as Energy Star Portfolio Manager. The annual filing is due by June 30 of each year, and is to reflect information for the previous calendar year.  In tenant-occupied, separately metered spaces, owners are obligated to request applicable information from their tenants during February of each year.  Failure of such tenant to report the information does not relieve the owner of the obligation to benchmark, but the owner will not be required to report information the tenant failed or refused to report if it is otherwise no lawfully available to the owner.

The provision of most concern for building owners is the requirement to disclose the building performance data.  Sellers and landlords of covered building are required to provide prospective purchasers and prospective tenants with a copy of the building’s most recent performance report upon request.   In addition, the ordinance contemplates that the data will be made available online in the future to allow the public to view and assess buildings.  Supporters of disclosure argue that it will enable consumers to make informed choices and create a market value for sustainable building practices that will encourage building owners to improve building efficiencies.  Building Owners and Managers Association (“BOMA”) and others are concerned that the disclosure requirement could result in buildings being stigmatized. 

Failure to comply with the benchmarking and reporting requirements subjects an owner to a fine of $300 for the first 30 days following a compliance deadline, and $100 per day thereafter.

The Office of Sustainability is charged with implementing the ordinance and is expected to promulgate regulations in the future.  We anticipate that regulations will be modeled after similar enactments in other cities with benchmarking laws such as New York and Washington D.C. and should provide guidance for questions left open in the ordinance such as how building information will be characterized and defined to ensure realistic comparisons, alternative methods for calculating usage if tenant data is unavailable, and enforcement procedures.  

We welcome your questions concerning the new ordinance, and to discuss new provisions in lease and loan documents to facilitate owner and landlord compliance with it.