Real Property Law

Cal. Real. Prop. Journal 2014, Vol. 32, No. 4

LEGISLATIVE UPDATE: The California Energy Commission Postpones Implementation of the Final Phase of the Energy Disclosure Requirements (AB 1103) for Buildings of 5,000 to 10,000 Square Feet

By Dennis Wu and Dan Villalpando

©2014 All Rights Reserved.

On September 2, 2014, the California Office of Administrative Law approved the California Energy Commission’s emergency regulatory action to amend existing regulations establishing a deadline ofJuly 1, 2016 for compliance with the final phase of the Nonresidential Building Energy Use Disclosure Program enacted by Assembly Bill 11031 in 2007. The extension affects certain owners of nonresidential buildings comprised of 5,000 to 10,000 square feet, who will not have to comply with the new energy disclosure requirements until July 1, 2016. The new energy disclosure regulations require owners or operators of nonresidential buildings to disclose the U.S. Environmental Protection Agency’s ("EPA") Energy Star Portfolio Manager benchmarking data and ratings for the most recent twelvemonth period to: (i) a prospective buyer, no later than twenty-four hours prior to the execution of a purchase and sale agreement; (ii) a prospective tenant of an entire building, no later than twenty-four hours before execution of the lease; and (iii) a prospective lender providing financing secured by the entire building, with the submittal of the loan application. The disclosure requirement only applies to "nonresidential buildings," which are defined to include any building that is heated or cooled in its interior and does not fall into an excluded occupancy type.2 With respect to leases, disclosure is not required for multi-tenant buildings.3

The new regulations are effective in three phases, with the largest buildings required to comply with the disclosure requirements first. The first phase commenced on July 1, 2013, and applies to nonresidential buildings with a total gross floor area of more than 50,000 square feet. The second phase commenced on January 1, 2014, and applies to nonresidential buildings with a total gross floor area between 10,000 and 50,000 square feet. The final phase applies to nonresidential buildings with a total gross floor area between 5,000 and 10,000 square feet and was originally scheduled to commence on July 1, 2014, but will become effective as of July 1, 2016.

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