New Energy Reporting Requirements Likely For San Francisco Commercial Buildings

Mayor Gavin Newsom and Supervisor Bevan Dufty recently proposed an energy efficiency ordinance which would impact “nonresidential” buildings in San Francisco. While the City has already established high environmental performance standards for new construction, it has yet to do the same for existing buildings. According to the ordinance, building energy use accounts for 63% of the City’s carbon dioxide emissions. The ordinance purports to reduce citywide carbon dioxide emissions by more than 70,800 tons within the first five years after its adoption while also providing the private sector with a net present value exceeding $600 million dollars. Most significantly, the proposed ordinance would require nonresidential building owners to: (1) Prepare energy efficiency audits once every five years, and (2) Measure and disclose their buildings’ energy performance each year.

Energy Efficiency Audit

The energy efficiency audit would require owners of nonresidential buildings with gross areas of 5,000 square feet or greater to conduct a comprehensive energy efficiency audit for each building once every five years. These audits would be performed by, or under the supervision of, an energy professional, which is defined under the ordinance and includes some building engineers. Building owners would then file a confirmation of the energy efficiency audits with the San Francisco Department of the Environment (the “Department”). Building owners would also be required to submit a summary of which measures they have implemented and the sum of estimated energy costs and savings. The Department would make this information available to the public. Buildings constructed within the last five years, buildings that have received the US Energy Protection Agency’s Energy Star Label, and Leadership in Energy and Environmental Design (“LEED”) certified buildings are exempted from this requirement. The specific compliance dates will be specified by the Department of the Environment on a rolling basis over five years.

Annual Reporting of Energy Use

The annual reporting provision would mandate that owners of nonresidential buildings with a gross area of 5,000 square feet or greater use the U.S. Energy Protection Agency’s Energy Star Portfolio Manager to track the building’s total energy use for each 12 month period and obtain an Energy Star Portfolio Manager Energy Performance Rating (“Annual Energy Benchmark Summary”). This Annual Energy Benchmark Summary must be provided to all tenants occupying buildings affected by the ordinance. Depending on the square footage of a building, with the larger buildings prioritized, the initial submission date of the Annual Energy Benchmark Summary to the Department would be on April 1 of either 2011, 2012 or 2013, and then submitted annually every year thereafter. For example, buildings with a gross square footage of over 50,000 square feet would be required to initially submit an Annual Energy Benchmark Summary by April 1, 2011.

Extensions of up to one year for filing the Annual Energy Benchmark Summary could be granted depending on whether the building is financially distressed, or if a building owner owns three or more buildings with due dates that fall within the same 12 month period.

Confidentiality Protection

When building owners inform the Department in writing at the time of submission that the information submitted is the confidential business information of the building owner, the Department will keep confidential any submitted information based on the existing legal definitions of “trade secrets”. Moreover, lists of cost-effective energy efficiency measures and estimated costs and benefits for individual buildings shall be presumed confidential.


In the event a building owner fails to file the required information for 30 or more days after the deadline, the Director of the Department (the “Director”) would indicate that building’s non-compliance status on line. If 45 days passes after the issuance of a written warning from the Director for a violation of any provision of the ordinance, the Director may impose administrative fines of up to $500 for each violation.

In addition to the proposed ordinance, Assembly Bill 1103, signed by Governor Schwarzenegger in 2007, also imposes energy tracking and disclosure requirements on nonresidential buildings at the state level. The bill requires electric and gas utilities to maintain records of energy consumption of nonresidential buildings as of January 1, 2009, and once they have received the affected building owner’s approval, to upload such findings to the U.S. Environmental Protection Agency’s Energy Star Portfolio Manager. In addition, nonresidential building owners or operators must disclose their building’s Energy Star Portfolio Manager benchmarking data and ratings for the most recent 12 month period to any prospective buyer, tenant, or lender. However, a recent Assembly Bill passed in 2009, AB 531, delayed the initial start date for these disclosure obligations (which was January 1, 2010) until the California Energy Commission has the opportunity to develop an implementation schedule.

Although well intended, the proposed San Francisco ordinance would impose greater tracking and reporting responsibilities on building owners, which would further increase the cost of doing business in San Francisco. Building owners should prepare themselves for these new requirements.

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