Senate Energy Bill to Require Home Energy Audits & Labeling

Tomorrow the Senate will be voting on its version of an energy bill that passed the House in early June. The bill includes a new requirement that single family homes, multifamily properties with less than 5 units, and condominiums must undergo an energy audit prior to the property being listed for sale. The results of the audit would need to be disclosed when the property is listed. The bill also requires the Department of Energy Resources (DOER) to establish a home energy rating and labeling system, which would be based on, but not limited to, a property’s energy consumption, energy costs, and greenhouse gas emissions. The property’s energy rating and label would also need to be disclosed. In addition, DOER would track and publicly report the number of home energy audits conducted and energy ratings and labels issued.

NAIOP has serious concerns with the impact this could have on the housing market, particularly in low-income communities where homeowners may not have the means to make upgrades and properties would be potentially devalued with a low score/label. NAIOP supports the Mass Save program and believes that incentives, not penalties, will do more to address energy efficiency in the Commonwealth.

A number of concerning amendments to the bill have also been filed. Amendment #8 is the climate change legislation that was passed by the Senate earlier this year. NAIOP is strongly opposed to this language due to the confusing and vague language it contains and the substantial adverse impact it would have on development. It would require all “commonwealth certificates, licenses, permits, authorizations, grants, financial obligations, projects, plans, actions, and approvals for any proposed projects, uses, or activities in and by the commonwealth” to be consistent “to the maximum extent practicable “with a yet to be developed climate plan. Clearly, this language could delay and potentially halt countless public and private projects.

Amendment #68 would mandate electric vehicle charging stations. NAIOP does not believe the building code is the right place to advance the growth of specific technologies or sectors of the economy.

Following the Senate’s vote, the bill will go to conference committee where members will have to agree to compromise language. That version of the bill would then need to go back to the House and Senate for a vote before the end of the session on July 31.

ViewPoint: A new stretch energy code is not justified

This OpEd appeared in the Boston Business Journal on June 3, 2016.

In March 2015, Governor Charlie Baker signed Executive Order 562, initiating a comprehensive review process for all regulations. Only those regulations which are mandated by law or essential to the health, safety, environment, or welfare of the Commonwealth’s residents would be retained or modified, making Massachusetts a more efficient and competitive place to live and work.

Agencies must demonstrate, in their review, that there is a clearly identified need for governmental intervention; the costs do not exceed the benefits; a regulation does not exceed federal requirements; less restrictive and intrusive alternatives have been considered and found less desirable; and the regulation does not unduly and adversely affect the competitive environment in Massachusetts.

Based on these specific criteria, the business community is concerned that the Board of Building Regulations and Standards (BBRS) is currently considering a new Stretch Energy Code as it develops the 9th edition of the statewide building code. Besides the fact that this Stretch Code undermines the statutory requirement that there be a uniform State Building/Energy Code, there is no good reason for it. This proposed energy code is unnecessary and fails the regulatory review standards, and the Baker Administration and the BBRS should not advance it.

The Stretch Energy Code was originally adopted in May 2009, despite strong opposition from the business community.  The code required commercial and residential construction in those communities that voted to adopt it to be approximately 20% more energy efficient than the statewide code. The new stretch energy code would require a 15% increase in energy efficiency over the current code. The Stretch Code has caused confusion among local building inspectors and developers.  Due to this and several other reasons, a new version of the Stretch Energy Code has never been adopted, even when the statewide code changed.  In fact, at the close of the Patrick Administration, the BBRS voted not to advance a new draft of the Stretch Energy Code.  However, in April 2015, this decision was reversed.

Massachusetts is already the most energy efficient state in the nation, with the most aggressive energy efficiency targets.  Furthermore, Massachusetts will be one of only a handful of states in the nation to adopt the 2015 International Energy Conservation Code (IECC) statewide.  Since the Green Communities Act requires the adoption of the latest IECC (every three years), the Commonwealth’s position as a national leader in energy efficiency will be ensured even without a Stretch Code.  Anything beyond that is overly burdensome and creates a significant competitive disadvantage for Massachusetts.

It is important to note that there is no statutory requirement to adopt or update a Stretch Energy Code.  There is no mention of it in any statute, and it is only the Department of Energy Resources’ (DOER) policy that encourages the creation of this code.

According to DOER, the changes to the Stretch Code would take effect automatically in stretch code communities without any local vote.  Many municipalities had no idea they would be subject to an automatic upgrade.

The business community continues to support a uniform statewide building and energy code.  We believe a new Stretch Energy Code is unnecessary, will hinder economic development, and would impose an unfair and difficult burden on local building officials and the construction industry.  We urge the Baker Administration and the BBRS to eliminate the Stretch Energy Code, once and for all, and acknowledge the latest version of the IECC as the only energy code in Massachusetts.

David Begelfer is the CEO of NAIOP Massachusetts, the Commercial Real Estate Development Association.

Federal “Tenant Star” Report Promotes Energy Efficiency in “Next Gen” Commercial Leased Spaces

The U.S. Department of Energy (DOE) just published its Energy Efficiency in Tenant Leased Spaces feasibility study that highlights both opportunities and barriers to implementing energy efficient technologies in multi-tenant commercial spaces.

The study was required by Congress as a part of the Energy Efficiency “Tenant Star” legislation that was passed into law last April. The hope is that this voluntary program will encourage higher energy performance in leased spaces in commercial buildings. Market driven branding incentives have worked well with building owners through the voluntary Energy Star program. Now, this program will attempt to motivate building tenants to increase their energy efficiencies and reduce their energy consumption.

The DOE study finds that “American businesses can occupy more energy-efficient spaces that help improve their bottom line, attract and retain the best workers, and increase their competitiveness.” About half of commercial real estate is occupied by tenants, who could directly benefit from greater energy efficiency. The study further finds that tenant space can be built to save 10-40% energy compared to a typical space.

The study also examined the persistent problem of a lack of energy data. It was determined that a significant increase in sub-metering of tenant spaces would help overcome this barrier. Another persistent problem is the “split-incentive” issue between owners and tenants, with owners paying for the improvements and the tenants benefitting. Accelerated 15-year depreciation of leasehold improvements, can potentially provide real estate owners with greater certainty to undertake property improvements over the typical lease term and economic life of those assets (7-10 years).

Furthermore, the DOE report also encouraged the creation of a federal tenant space recognition system, similar to Energy Star.

The real estate community is supportive of these voluntary, market driven programs that have already shown tremendous results across the country.

Fraunhofer CSE’s Living Lab – The Future of Sustainable & Energy Efficient Building Technology

LIving Lab

NAIOP’s Gavel members recently toured the Fraunhofer Center for Sustainable Energy Systems (CSE) Living Laboratory, a cutting-edge R&D center for the advancement of sustainable energy systems. Born out of a 2013 energy-retrofit of a 100-year-old building in the Channel Center neighborhood in South Boston, the Lab leverages cutting-edge design concepts and historic architecture alongside in-house research facilities, including a pilot solar module fabrication line, dedicated thermal testing laboratory, and extensive characterization/environmental testing resources. Its mission is to foster economic development through the commercialization of clean energy technologies for the benefit of society.

Besides providing clients with services like testing the energy efficiency of exterior wall designs and new photovoltaic panels, the building is an exhibit for new technologies in HVAC systems, lighting, and energy efficient fenestration.

Fraunhofer CSE’s Building Energy Technology Group applies its expertise in four main areas:

  • Working with clients from industry, academia and government to develop new products
  • Field testing of novel building technologies and materials
  • Evaluating product performance through laboratory testing, field deployments, and modeling, simulation, and analysis.
  • Demonstration projects to acquire real-world performance data

NAIOP members may be interested in learning more about the cutting edge research now underway at the Living Lab. Tours are available by appointment.

President Obama Signs Energy Efficiency Improvement Act of 2015

Energy BillPresident Obama recently signed into law the Energy Efficiency Improvement Act of 2015 (S. 535), which creates a new “Tenant Star” to encourage energy efficiency in leased commercial spaces. Tenant energy usage can account for 50 percent or more of a building’s total energy usage. Like its predecessor, “Energy Star”, Tenant Star is a voluntary, market based, cost free program that is expected to encourage optimum energy efficiency in leased commercial spaces, helping the environment by cutting greenhouse gases.

This program has been championed by the real estate industry through the direct efforts of the Real Estate Roundtable. The U.S. Environmental Protection Agency, in consultation with Department of Energy, will start developing standards for the Tenant Star designation within 180 days.

Along with Energy Star (which is aimed at encouraging energy efficiency within the building core), this new designation will encourage office tenants with their landlords to design and construct cost-effective energy investments in the building’s leased spaces.

NAIOP believes that the Tenant Star program can be an effective educational program that leads to voluntary, smart, cost-effective energy efficiency investments.

Good to Great: Realigning Resources at Environmental Agencies

The following is our weekly excerpt from NAIOP’s report, Good to Great: Recommendations for the Baker Polito Administration. Comments are encouraged!

When considering a long-term vision for the Commonwealth’s environmental agencies, NAIOP encourages the Executive Office of Energy & Environmental Affairs (EEA) to start by realigning resources to ensure 1) environmental protection and 2) that resources are appropriately allocated to ensure timely and predictable permitting. In recent years, the regulated community has observed that a larger percentage of staff at the environmental agencies is focused on the development of new policies and regulations instead of the expedient implementation of existing regulations (i.e., permit approvals, compliance assistance, etc.). Prompt and predictable permitting is critical for economic development projects and ensures increased tax revenue for the Commonwealth. Compliance assistance programs provide a preventive and cost effective approach to ensuring environmental protection.

Therefore, NAIOP proposes the following recommendations:

  • Tie Permit Fees to Results: Permit streamlining was brought to MassDEP’s doorstep in the late 1980’s. Facing considerable time delays for the issuance of permits with no timetables, NAIOP was a founding member of the MassDEP Fees and Program Advisory Committee that established a fee program for all permits and a retained revenue account in return for the MassDEP’s agreement to set enforceable timetables for administrative review, technical review, and issuance of permits. General results were positive and fees have been adjusted gradually over the years to reflect cost of living increases. Permitting fees went into a dedicated revenue account, which was intended to supplement the MassDEP budget so that it could continue to provide its other non-permitting services. The original committee included NAIOP, AIM, Mass Municipal Association, MASSPIRG, Environmental League of Massachusetts, and other private and public sector representatives. The enacting statute establishing the agreement and authorizing MassDEP to establish the fee program is M.G.L., c. 21A, §18 and the regulations are at 310 CMR 4.00.As the architects of the Program left state government and Massachusetts faced revenue shortfalls, the original agreement was sacrificed for revenues. Gradually the Legislature began to apply permit monies to the MassDEP operating budget. Rather than decreasing the time for permit issuance based upon the lesser number of permits due to a slow economy, the General Fund percentage decreased for the MassDEP budget. As recently as 2013, the Fees Committee wrote to the Governor and to the Ways and Means Committees requesting that the agreement be honored. Business was hesitant to support the Department’s request for additional funding based upon the legislative track record applying fees for operations. NAIOP urges the Baker Polito Administration to reinstate the original agreement and ensure permitting fees are directed to the dedicated revenue account to ensure adequate resources for permit issuance.
  • Increase Use of General Permits: NAIOP encourages all environmental agencies to consider increasing the use of general permits. General permits are more cost effective and achieve the same goal as individualized permits, but do so faster and more cost-effectively and provide a higher level of certainty in outcome (including reducing the risk of permit appeals). In order for this to work, however, it is critical that agencies be committed to making these general permits effective and not so limited in scope or so overly burdened by contingent conditions that they are no longer useful. EEA should conduct an internal review of all programs to identify those that could move, in whole or in part, from individualized permits to general permits.
  • Move to Permit-by-Rule (aka self-certification): Self-certification needs limited staff resources to administer and oversee and uses enforceable third-party certifications to ensure that rules are met and standards are achieved. MassDEP is already using self-certification for some programs, but there are numerous opportunities for expanding the use of this cost-effective and proven regulatory approach.
  • Increase Permitting Staffing for Waterways Program: Waterways is responsible for issuing Chapter 91 licenses for docks, piers, and other water-dependent structures as well as non-water dependent uses and structures on tidelands and filled tidelands. It is involved in almost every major coastal project, including transportation, energy, infrastructure, commercial buildings and housing. Staff has recently been increased to five persons, still woefully inadequate to ensure timely processing of project permitting demands. The lack of staff is holding back the development of many major public and private projects. Additional resources must be committed and dedicated to new employees that focus solely on Waterways permitting and not policy development.
  • Continue Regulatory Reform Implementation: The Regulatory Reform initiative was originally motivated by a reduced budget affecting staff permitting and oversight, but the effort has also resulted in important regulatory and policy changes. Continually reviewing existing regulations to determine if they are needed or if changes are required, and closely examining the costs and benefits associated with new regulations before they are drafted, should be a top priority for the Baker Polito Administration (and is required under Chapter 238 of the Acts of 2012).
  • Provide MassDEP with Delegated Authority over National Pollutant Discharge Elimination System (NPDES) Programs and the Funding Needed to Adequately Administer the Program: As of June 2013, 46 states had been authorized to administer the federal NPDES permit program. Massachusetts is just one of four states in the nation where the federal government is in charge of the permit issuance, compliance and enforcement for the 2,990 NPDES permit holders in Massachusetts. MassDEP jointly issues NPDES permits with EPA. Having MassDEP as the sole permitting authority with EPA limited to an oversight role could result in a more efficient permitting process. In addition, as the NPDES program continues to evolve in response to increased concerns over issues like nutrient loading and stormwater impacts, MassDEP would have greater control over policy decisions. However, appropriate resources would be needed (estimated at approximately $9.5 million per year) to ensure a carefully coordinated approach to watershed management.
  • Concentrate on Implementing & Enforcing Existing Rules and Regulations: Agencies should concentrate on implementing and enforcing existing rules and regulations before expending resources on new program and policy development. This builds on the Regulatory Reform Initiative and is critical for the proper allocation of resources.

State Adopts New Energy Code

On Tuesday, the Board of Building Regulations & Standards (BBRS) voted to adopt the latest version of the International Energy Conservation Code (IECC), making Massachusetts one of the first states in the nation to have it take effect statewide. This change represents a 20% increase in energy efficiency over the current statewide energy code. Under the Green Communities Act, the Massachusetts state energy code must be updated within one year of any revision to the IECC, so there was a statutory requirement to adopt this code.

The IECC is widely recognized as one of the most energy efficient codes. There is no question there are significant costs and design impacts associated with this code change. The IECC 2012 is approximately equal to the energy efficiency requirements of the stretch energy code, now in place in 131 communities in Massachusetts. Because of the Green Communities Act, Massachusetts will continually be updating its energy code to ensure it has the most energy efficient requirements in the nation.

Yesterday, the Legislature held a hearing on several bills addressing the concept of local option codes. NAIOP strongly opposes such codes, including the stretch energy code. Given that Massachusetts is required to have a very aggressive and energy efficient statewide code, NAIOP does not believe there is a need for a stretch energy code that would go beyond the latest version of the IECC. NAIOP testified in support of legislation that would ensure the IECC would be the energy code for all communities in Massachusetts. It would create one uniform, statewide energy code. By discontinuing the use of two or more energy codes for the state, it eliminates confusion for local building inspectors who are responsible for safely enforcing such codes. The legislation also clarifies that communities could be designated as Green Communities, and eligible for the grants associated with such a designation, by adopting this code. Most importantly, rather than having different requirements in different communities, it puts all communities on a level playing field – helping to ensure the Commonwealth’s competitiveness.

NAIOP will be hosting a special program on the energy code changes later this year and we will continue to push for one, statewide energy code.