Building Owners and Managers Association

Improving the Performance of the Commercial Real Estate Industry
Benchmarking Law Reform Update
AB 802
Monday, November 30, 2015
by: BOMA

Section: Association Business

Benchmarking Law Reform Update: AB 802

The Energy Commission has held its first regulatory hearing on AB 802, the bill that repealed AB 1103 re-calibrates the regulatory process and addresses a number of complaints our industry had about AB 1103 since it was in the Legislature.

The commercial real estate industry supported AB 802 because it fixed many operational complaints we had about the program over the years, primarily that it forced a benchmark in the middle of a real estate transaction and focused on actively managed buildings only.

The regulations on this are on the fast-track because the Commission has already invested too much time and effort on AB 1103, many stakeholders, commission staff, and commissioners are all on the same page moving forward.

In discussions at the workshop and follow-up with stakeholders and experts, so far our members think the new law and the regulations are “on the right track.”

AB 802 Workshop presentation

Here is what has changed moving from the now repealed AB 1103 regulations:
  • AB 1103 mandated ALL buildings must be benchmarked regardless of size or use; AB 802 states that buildings 50K s.f. and above must be benchmarked and allows the Energy Commission some discretion to exempt certain building types and situations (i.e. the CEC could decide that long-term empty buildings or buildings scheduled for razing need not be benchmarked).
  • AB 1103 was a transaction based program – benchmarking was triggered by a sale/lease of whole building/refinance. The transaction based approach had many unintended consequences such as requiring actively managed building to be benchmarked more often than buildings that are not; put an unnecessary technical process in the middle of a real estate transaction; and required benchmarking be provided to parties that were not making management decisions (i.e. lenders); AB 802 allows the CEC to determine the best trigger for benchmarking – that could be transaction based or time certain (i.e. once every two years).
  • Under AB 1103 many building owners were unable to get tenant energy information from local utilities; AB 802 clarifies that utilities are required to provide information; in an aggregated format if there are privacy concerns in multi-tenant buildings.
  • AB 1103 treated income producing properties separately by only focusing on commercial; AB 802 – with the support of the Apartment industry - includes certain multi-family housing properties.
  • AB 1103 provisions will be suspended as of the end of this year (until otherwise notified we recommend you comply with the current provisions of AB 1103 until then). AB 802 provisions will become operative on January 1, 2017 – the CEC will write regs to implement in 2016.
There will be no statewide energy use disclosure requirement in 2016. During this time, Energy Commission staff will engage in a public process to develop regulations and establish the reporting infrastructure for the new program. However, we recommend that you continue to benchmark buildings on a regular basis as it makes good business sense.

So far, our members have answered the call to be involved in this process and we appreciate the Energy Commission’s willingness to listen to engage with our experts and consider recommendations from real estate professionals. 
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