20A — October 26 - November 8, 2012 — Green Buildings — Mid Atlantic Real Estate Journal


G reen B uildinGs F eaturinG s ustainaBle d esiGn & C onstruCtion Hope Hammer, Esq. and Sean litz, Esq., RCCB Philadelphia’s Energy/water Benchmarking Bill: A challenge and opportunity for building owners O nOctober 9, 2012May- or Michael A. Nutter signed Philadelphia’s present opportunities in energy management.” This benchmarking bill re-

Data for calendar year 2012 must be submitted no later than June 30, 2013. The bill follows the spirit of several other cities (including New York City and Washing- ton, D.C.) who have adopted similar legislation aiming to promote transparency of energy and water use in com- mercial real estate. The goals of collecting such data include providing tenants with yet another mechanism for dif- ferentiating between various properties while incentivizing owners of underperforming buildings to compete withmore

energy-efficient spaces. Implementation of the bench- marking bill will present some challenges. In particular, data gathering and collection will require dedicated staff experi- enced with Portfolio Manager and/or the hiring of bench- marking consultants. In New York City, for example, it was reported that 75% of bench- marking data was completed by consultants. Also problematic will be building owner ’s access to the utility data of its tenants. This has been the experience in multi-tenant buildings in

New York City, for example, where individual tenants are separately metered, and ac- cordingly, have individual util- ity bills. The result has been a major compliance obstacle for building owners. To remedy this, utility partnerships have proven to be effective where utilities agree to upload bench- marking information directly to Portfolio Manager. PECO is exploring ways in which to streamline energy data to its building-owner customers. Failure to disclose bench- marking information within 30 days of the June 30, 2013 deadline will result in a $300 fine. Thereafter, building own- ers will be fined $100 a day for each day of noncompliance. At first glance, noncompliance may seem like a less expensive alternative, however, there are some very important ramifi- cations that building owners must keep in mind. For in- stance, building owners who fail to pay the applicable pen- alties may find themselves de- fending an enforcement action brought by the City. The risk of a potentially hefty legal bill is probably not a scenario worth the risk of noncompliance. Noncompliance also pres- ents a significant amount of uncertainty upon the sale of a benchmarked property. It is unclear whether unpaid viola- tions could ultimately rise to the level of a lien against the property. To date, the City of Philadelphia has not concluded how unpaid fines would be treated upon the sale of an af- fected building. For instance, could this bill result in future title or legal problems for a new owner if the seller failed to comply? What liability would a title insurance company face for failure to search whether a building is covered by the bill and/or disclose the existence of unpaid penalties for failure to comply? Hopefully these questions and more will be addressed in the regulations currently being drafted by the Mayor’s Office of Sustainability. In the near months, the regulations will be published for public com- ment. Real estate professionals should stay tuned. Hope Hammer, Esq. is the head of RCCB’s Real Estate Practice, and Sean litz, Esq. is an associate practicing in the areas of clean technology, energy and transactional law. n

quires own- ers of com- mercial build- ings contain- ing 50 , 000 s/f or more to benchmark and repor t energy and water usage

Energy and Water Bench- marking or- dinance (Bill No. 120428) in an effort to “make Phila- delphia the greenest city in America.”

Hope Hammer

Sean Litz

data through the use of ENER- GY STAR’s Portfolio Manager. The initial database includes approximately 1,500 buildings in the City of Philadelphia.

According to Mayor Nutter, “energy benchmarking and dis- closure will encourage people and organizations to think how to be more energy efficient and

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