What Landlords Need to Know About Intro 1632

LandlordsNY Member

LandlordsNY Member

Local Law 84, the benchmarking law, was enacted eight years ago and currently affects all buildings larger than 50,000 square feet. Starting in 2018, owners with buildings between over 25,000 square feet will also be required to submit energy performance data to an agency of the City.

The goal of benchmarking is to encourage landlords to be more energy efficient by forcing them to track their energy and water usage, and to see how their buildings compare to similar buildings in terms of consumption. It has been successful. According to Christopher Halfnight, a Policy Manager at the Urban Green Council, buildings that have participated in benchmarking for at least three years in a row have seen an average energy savings of 6 percent from their baseline year. This may not seem like a lot, but it can add up quickly. After all, some large buildings spend hundreds of thousands of dollars each year on energy. This translates into savings in the thousands of dollars.

While benchmarking data is available online, landlords do not necessarily have to present any information about a building’s efficiency to potential tenants or individuals interested in purchasing their property. A proposed bill, Intro 1632-2017, would change this. It amends the administrative code of the city by adding a new section, 28-309.12, which requires owners of buildings over 25,000 square feet to provide the information accumulated via benchmarking to either potential buyers or potential tenants. The proposed new section can be read here.

However, it will not simply be a handing over of raw data. The bill proposes a means of processing this information and converting it into an easily digestible score and grade so that the potential buyer or tenant would be able to quickly ascertain the level of efficiency of the building. It would be like the grading system for restaurants in the city. Rather than being confronted with a series of numbers and statistics that may be difficult to understand, consumers can simply look to the letter grade that the restaurant received from the city to quickly discern what conditions in the restaurant are like.

It is unlikely that Intro 1632 will pass in its current form. Its impetus is sound. The bill will increase transparency for buyers and renters, and it will most likely encourage owners to make their buildings even more energy efficient. This is because a higher score or grade will have some influence on the value of the building. However, there needs to be a better way of determining a building’s score and grade than the one proposed by the bill, which is the source energy use intensity (EUI) of a building. It is, at best, problematic, because it is a measure of the energy consumption of an entire building over the course of a year, per square foot of floor area. This metric has almost nothing to do with how efficient a building is.

At a meeting for the Committee on Environmental Protection at City Hall Tuesday, Adriana Espinoza of the New York League of Conservation Voters was one of many experts to express her concern about this issue while giving testimony. Though the NYLCV supports disclosing data pertaining to a building’s energy performance, Ms. Espinoza said, using EUI to determine a building’s grade fails to take into account building density. John Lee, Deputy Director for Buildings and Energy Efficiency at the Mayor’s Office of Sustainability, echoed her concerns. The current legislation, if enacted, would award similar grades to efficient buildings and vacant buildings, Mr. Lee said.

Ryder Kimball of Green Building Worldwide noted yet another problem with the proposed grading process. In written testimony submitted to the committee, Mr. Kimball wrote, “The proposed mechanism of determining a building’s energy efficiency grade, as it is presently written, is an inadequate and inaccurate measurement system.” Mr. Kimball claimed that the grading system could allow the possibility of not rewarding increased efficiency, and could “create a situation wherein a building that significantly reduces its source energy use intensity could still receive the same grade” it received prior to the improvements.

Though everyone who provided or submitted testimony at the committee meeting approved of the spirit of Intro 1632, no one believes the legislation, as it currently exists, should be enacted. Once a better method of determining how to grade buildings is established, however, landlords should anticipate Intro 1632 becoming law.

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