The California Energy Commission (CEC) recently issued updated regulations for its new Nonresidential Building Energy Use Disclosure Program. The updated regulations provide practical guidance to building owners for complying with the Disclosure Program. 

Compliance with the Disclosure Program is required only where the answer to all three of the following questions is affirmative:

1. 1. Is an entire nonresidential building being sold, leased, financed or re-financed?
   2. Is the gross square footage at least 10,000 square feet for transactions occurring on or after January 1, 2014, or at least 5,000 square feet for transactions occurring on or after July 1, 2014?
   3. Does the nonresidential building have one of the following building code types identified on its building occupancy permit: A, B, E, I-1, I-2, R-1, M, S or U (parking garages)?

If compliance with the Disclosure Program is required, then as soon as the building is listed for sale or lease, or the building owner elects to pursue financing or refinancing, we recommend that the owner complete Steps 1 through 3 below in order to avoid delays. The owner must complete Steps 4 through 6 at least 30 days before executing the agreement for the sale, lease, financing or refinancing. The owner must complete Steps 7 and 8 within 24 hours of executing the agreement.

• • Step 1:  Create an account at the ENERGY STAR® Portfolio Manager website. One account can serve multiple buildings.
  • Step 2:  Identify all sources of energy (electricity, natural gas, propane, or other) for the building.
  • Step 3:  Contact each utility to confirm their procedure for providing energy use data for the building (including tenant spaces).
  • Step 4:  Ask the utilities to release energy use data for the entire building for the most recent 12 months.
    
    Note that while the CEC has mandated that utilities release energy data use for an entire building upon request by the building owner, some utilities may still require individual data release authorizations from tenants. If a building owner has made reasonable efforts to receive data but some or all the actual energy use data is unavailable (i.e., due to partial vacancies, missing data, lack of tenant cooperation, etc.), then in order to avoid transaction delays, the CEC has provided Missing Data Protocols enabling a building owner to provide approximate energy use data as a substitute. 
    
    
  • Step 5:  Within 30 days of a building owner’s request, utilities must provide the entire building’s energy use data for the most recent 12 months. Larger utilities will upload the data into the building owner’s account. Smaller utilities will provide a spreadsheet with data that the building owner must then input manually.
  • Step 6:  Using the energy use data provided by the utilities and other building matrices, the building owner must generate a Data Verification Checklist. This checklist, which expires 30 days after it is generated, indicates (among other items) the building’s ENERGY STAR® score.
  • Step 7:  The Data Verification Checklist is the actual disclosure that must be handed over to a prospective buyer, lessee, or lender at least 24 hours before the relevant agreement is executed.
  • Step 8:  The Data Verification Checklist must be submitted to the CEC via email.

For shopping centers comprised of multiple buildings, the building owner may, at its option, either benchmark each building individually or combine the square footages into one Data Verification Checklist.

Please contact counsel with any questions regarding the program.

Read about this and other legal developments in Perkins Coie's California Land Use & Development Law Report.

© 2013 Perkins Coie LLP