NAIOP Testifies on Energy Disclosure Ordinance

On March 28th, I testified on Mayor Menino’s proposed Energy Disclosure Ordinance before Boston City Council’s Committee on Government Operations.  Neither of the two major real estate trade associations were asked to be involved in the development of this ordinance.  After it had been developed, NAIOP submitted detailed comments in October on a draft summary of the ordinance.  Unfortunately, none of our recommendations were incorporated in the final version that went out for public comment in February.

Brian Swett, Boston’s Chief of Environment & Energy, testified at the hearing in support of the ordinance along with representatives from other cities that have energy disclosure programs in place.  They agreed that because of these programs owners were better able to make investment decisions for their properties once they had information about their tenants’ energy use.  Interestingly, no one explained the value (if any) of publicly disclosing this information (as is required under the current draft ordinance).  While some property owners did testify in support of the program, many others expressed serious concerns with what was proposed.

During my testimony, I offered the following four critical changes to the ordinance:

 1.      Utility companies should be required to obtain tenant energy data and the reporting requirements should be delayed until such a system is in place.
In many buildings, owners do not have access to the energy data for separately metered tenants.  NAIOP believes that the utility companies should be responsible for submitting this data to building owners, and the reporting requirements should be postponed until such a system is in place.  Furthermore, utilities should provide such information to building owners no later than 4 months prior to the first reporting deadline to ensure adequate time for compliance.

 2.      Multifamily properties should not be included in the ordinance.
As currently drafted, this program would be very difficult to implement for multifamily property owners, due partly to the fact that the Energy Star Portfolio Manager tool is not designed to adequately measure multifamily properties.  Like many of the other cities that have adopted similar energy disclosure requirements, we believe that Boston should not include multifamily properties in the ordinance.  However, if the City chooses to require them to comply, the reporting dates should be delayed by two years.  Furthermore, owners should not be required to comply until a tested and proven tool for this product type is developed with input from an industry advisory committee.

 3.      Involve landlords & owners in determining the disclosure strategy and allow for changes to the program before publicizing data.
Given the significant impact such a rating could have on individual buildings, property managers and landlords must be involved in determining how such information would be made public.  Several other cities that have required energy disclosure allowed for a one year trial where the energy data was reported, but was not available to the public.

 4.     Involve NAIOP, other industry groups, and property managers & building owners in developing regulations and overseeing the program’s implementation.
Much of this program will be left to interpretation by those developing the regulations.  We urged the City to formally include representatives from multiple industry groups representing retail, residential, lab, and office space, as well as individual property managers and building owners on the regulatory task force.

A vote on the ordinance is required by April 25.  The Chair of the Committee, Councilor Matt O’Malley, has indicated that he will be scheduling a working session in the near future to discuss potential modifications to the ordinance.  NAIOP looks forward to participating in the working session. If the City Council votes favorably on this ordinance, we are hopeful that our comments and those of the vast majority that testified will be included in the final language.

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