Tony Liou, president of our sister company Partner Energy, recently discussed energy efficiency and energy audits for commercial buildings on GlobeSt.com’s “The Science of Real Estate” blog.  Below is a recap of what he discussed: 

An energy audit is often the first step in making your commercial building more efficient.  The goal of an energy audit is of course to identify energy-saving opportunities, but also to increase asset values, lower ownership costs and promote environmental stewardship, human comfort, health and safety.  This is done by taking a comprehensive look at the energy consumption data associated with a commercial building, as well as the energy and resource consuming infrastructures, to identify fiscally responsible, sustainable energy efficiency measures that reduce energy usage and carbon emissions. 

Nuts and Bolts of a Commercial Building Energy Audit

More specifically, the energy audit examines all of the major factors effecting energy consumption by performing the following:

1.       Utility bill analysis based on historical data provided by the client:

          a.      Summary of the utility service feeds (electric and gas meters)

          b.      Summary of the areas and processes served by each utility service feed

          c.      Spreadsheet analysis of the utility data and provide corresponding charts

          d.      Determination of average load factors

          e.      Summary of the billing rate schedules

 2.       On-site survey of the property

          a.       Collect nameplate data and performance/efficiency information for all energy using systems and equipment. These systems include but are not limited to

                    i.      Lighting systems

                    ii.      Space heating and cooling

                    iii.      Other power-using systems such as exhaust fans and domestic hot water

                    iv.      Plug/industrial/process loads

                    v.      Building envelope

           b.      Collect data and calculate equipment performance and runtime

                    i.      Utilize existing building management system and/or data loggers to collect building operating and equipment data

                    ii.      Ensure temperature, pressure, flow, humidity sensors are properly calibrated

                    iii.      Collect electric power and thermal consumption data

                    iv.      Analyze trend data and curve-fit to determine actual performance curve

           c.       Review as-built construction drawings if available

           d.      Review the condition of the building envelope

           e.      Conduct interviews with facility managers and other facility staff to:

                    i.      Determine current hours of operation

                    ii. Determine areas of concern and areas of opportunity

           f.        Examine current controls and operating schedules.

 3. Diagnostic testing, including:

          a.      Smoke Pencil and Infrared Camera Testing of Building Envelope Sealing

          b.      Insulation Installation Inspection

          c.      Duct Leakage

          d.      Cooling Coil Airflow Testing

          e.      Air Handler Fan Watt Draw

          f.       Refrigerant Charge

          g.      Central DHW/Hydronic Heating Systems

          h.      Centralized Ventillation Systems

          i.        Exhaust Fan Flow Measurements

          j.        Combustion Efficiency & CO Testing

          k.       Equipment kW and kWh draw

Levels of Energy Audits

There are different kinds of energy audits with different levels of comprehensiveness, so commercial building owners may need to think about their end goals before deciding which kind of audit is best for them.  The American Society of Heating, Refrigeration, and Air Conditioning Engineers (ASHRAE) has defined three levels of energy evaluations: 1) Level I “Walk Through Assessment” 2) Level II “Energy Survey and Analysis” and 3) Level III “Detailed Analysis”.

Level I – Walk-Through Analysis

An ASHRAE Level I energy audit assesses a building’s energy cost and efficiency by analyzing energy bills and conducting a brief on-site survey of the building.  A Level I energy analysis will identify and provide a savings and cost analysis of low-cost/no-cost measures.  It will also provide a listing of potential capital improvements that merit further consideration, and an initial judgment of potential costs and savings.

Level II – Energy Survey and Analysis

An ASHRAE Level II energy audit includes a more detailed building survey and energy analysis. A breakdown of the energy use within the building is provided.  A Level II energy analysis will identify and provide the savings and cost analysis of all practical measures that meet the owner’s constraints and economic criteria, along with a discussion of any changes to operation and maintenance procedures.  It may also provide a listing of potential capital-intensive improvements that require more thorough data collection and engineering analysis, and a judgment of potential costs and savings.  This level of analysis will be adequate for most buildings and measures.

Level III – Detailed Analysis of Capital-Intensive Modifications

This level of engineering analysis focuses on potential capital-intensive projects identified during the Level II energy analysis and involves more detailed field data gathering as well as a more rigorous engineering analysis.  It provides detailed project cost and savings calculations with a high level of confidence sufficient for major capital investment decisions.

Putting Energy Audit Data to Use

All of the data gathered about a commercial building is useless without a plan for how to use it. A proper energy audit will determine and outline which energy efficiency measures (EEMs) will help you reach your target energy reduction goals and meet your capital investment return criteria. The EEMs section of the energy audit will specifically detail how the recommended EEMs might be implemented, and what the costs and payback would be:

Typical EEMs that carry a five year or less simple payback include:

1.       Lighting retrofits, including lamp replacement and delamping

2.       Adding variable speed drives to fans and pumps

3.       Control changes, enhancements, and repairs

4.       Retrocommissioning

5.       Daylighting controls (where applicable)

Typical EEMs that carry a longer than five year paybacks include:

1.       Replacement of package HVAC units to high efficiency models

2.       Changing constant air volume systems to variable air volume

3.       Replacement of chillers and boilers in a central plant

4.       Rewiring lighting systems for better control

5.       Upgrading to ENERGY STAR® rated appliances and computers

Natural gas and electric utility rebates help lower payback periods and are factored into potential Energy Efficiency Measure recommendations.  In addition, a number of utility companies offer various incentives and rebates in order to help reduce the payback period of EEMs and to encourage retrofits to more efficient equipment. 

The recommended EEMs section essentially presents the client with an energy/fiscal conservation action plan, arguably the most useful information.

Upcoming Interview with Tony Liou

Look for a video interview with Tony on GlobeSt.com in the coming weeks on some of the energy financing programs available right now to help building owners pay for energy audits and the implementation of energy efficiency measures.

The Property Condition Report is a due diligence tool that helps buyers and lenders of real estate to understand the condition of the asset they are buying.   The most important section of the Property Condition Report is the Immediate Repairs table and the Replacement Reserves Table, where we express to the report user the capital spending that needs to happen in the near term and long term respectively.  

Often a Property Condition Report (PCA) is required by lenders during the financing of commercial real estate.   Buyers may call the report a Property Condition Report, a Property Condition Assessment or a Commercial Building Inspection.   

In this blog we discuss a wide range of types of Property Condition Assessments done for a variety of users.

ASTM E2018- Standard for Property Condition Assessments

The American Society of Material Testing (ASTM) published the standard “ASTM E2018 Standard Guide for Property Condition Assessments: Baseline Property Condition Assessment Process,” originally in 1999 and updated the Standard in 2001 and 2008 (now called E2018-08).       

According to ASTM E2018, the goal of the Property Condition Report is to identify and communicate physical deficiencies to a user. The term physical deficiencies means the presence of conspicuous defects or material deferred maintenance of a subject property’s material systems, components, or equipment as observed during the field observer’s walk-through survey. This definition specifically excludes deficiencies that may be remedied with routine maintenance, miscellaneous minor repairs, normal operating maintenance, etc., and excludes de minimis conditions that generally do not present material physical deficiencies of the subject property.

The ASTM guideline is careful to point out that the Property Condition Report is a Walk-Through Survey. Users are wise to appreciate that many building deficiencies are hard to find in a walk through survey.  If the user is not comfortable with such limitations, they should ask for a more comprehensive inspection including sub-specialists such as an MEP engineer, a structural engineer, roof inspector, ADA specialist, etc. (refer to the Equity Property Condition Report section below).

The building inspector will opine on the expected useful life (EUL) and remaining useful life (RUL) of each major system.   The EUL is the average amount of time in years that an item, component or system is estimated to function when installed new and assuming routine maintenance is practiced.  The RUL is a subjective estimate (based upon observations, or average estimates of similar items, components, or systems, or a combination thereof) of the number of remaining years that an item, component, or system is estimated to be able to function in accordance with its intended purpose before warranting replacement.  

The Property Condition Assessment Focuses on Large Issues.

Unlike a home inspection, a property condition assessment ignores small repairs.   ASTM E2018 requires the building inspector to identify material physical deficiencies.  The standard states that “opinions of probable costs that are either individually or in the aggregate less than a threshold amount of $3,000 for like items are to be omitted from the PCR. If there are more than four separate like items that are below this threshold requirement, but collectively total over $10,000, such items should be included.”  So an inspector could ignore graffiti on a window or a hole in a wall.   The inspector may include an item below $3,000 if it represents a life safety issue.

Qualification of the Property Condition Assessor

As with any consulting product, the qualifications of the consultant are directly related to the quality of the product.  The ASTM Standard does not contain requirements for the qualifications of the inspector.   Some clients may request that the inspector is a Professional Engineer or a Registered Architect.   I support clients that insist on particular qualifications of their inspectors; however, some of the best inspectors in the field are professional commercial building inspectors and don’t necessarily have an engineering or architectural degree. 

Property Condition Report for CMBS Lenders

Many lenders require their own type of Property Condition Reports.  Commercial Mortgage Back Security (CMBS) Lenders are one of the largest classes of users of Property Condition Reports.   CMBS Lenders are generally required to provide a Property Condition Report as part of the underwriting package submitted to rating agencies.  Standard and Poor’s guidance document entitled “STRUCTURED FINANCE RATINGS REAL ESTATE FINANCE PROPERTY CONDITION ASSESSMENT CRITERIA” defines S&P’s expectations in a Property Condition Report and their expectations are rather similar to ASTM E2018. 

Physical Needs Assessment – Fannie Mae DUS Lenders

Fannie Mae DUS Lenders require a Physical Needs Assessment which is essentially their version of the Property Condition Report.   The Physical Needs Assessment is defined in the Fannie Mae Delegated Underwriting and Servicing guide, Part 111, Chapter 3, 308.  The PNA is required for Fannie Mae financing on many types of residential properties, including apartment communities, assisted living facilities, skilled nursing facilities, student housing, and manufactured housing communities.   While the PNA is similar to an ASTM 2018 PCA in many respects, there are distinct differences in several areas.   Fannie Mae requires more detail on the replacement of apartment appliances and finishes as these replacement schedules are significant capital events for the owners of multifamily assets.

Other key items to consider include the following:

• Fannie Mae has designated several building materials / conditions that are deemed critically important when completing a PNA. Particular items of concern include the presence of fused subpanels, electrical service less than 60-amp capacity, presence of fire retardant treated plywood, and the presence of aluminum branch wiring.
• The PNA does not distinguish between “Short Term” and “Immediate” repair items. Typically, all life safety issues and deferred maintenance items above a designated cost threshold are included in the Immediate Repairs table. Furthermore, Fannie Mae and DUS lenders are sensitive to major capital expenditures in the first two years of a Replacement Reserve schedule. It is common for these items (other than typical spread cost items) to be moved to the Immediate Repairs table.
• Fannie Mae dictates specific requirements on termite inspections at the property. The DUS Guide currently requires the Lender to provide a termite inspection report or a termite bond or other evidence of adequate coverage. This “other evidence of adequate coverage” can be satisfied in two ways: “1) A letter from the current pest control company providing regular service to the Property, stating that the Property has been regularly treated to prevent termite and other wood boring insect infestation and, to its knowledge, there is no current infestation”; or 2) “A letter from a qualified engineer (which must be the same engineer performing the physical needs assessment) indicating that there is no evidence of termite or wood boring insect infestation. In order to be a “qualified” engineer, such engineer must have completed termite inspection training and certification and must provide evidence of such”.

Property Condition Report – Freddie Mac

Freddie Mac also has its own requirements for their version of a Property Condition Report.  The scope of work, as specified in the Freddie Mac Multifamily Seller/Servicer Guide and Chapter 15 Engineering and Property Condition Requirements, is similar to an ASTM 2018 PCA, but also requires more detail on apartment appliances and finishes.  Additionally, a few hot button items for a Freddie Mac PCR include the following:

• In a fashion similar to Fannie Mae, Freddie Mac has designated several building materials / conditions that are deemed critically important when completing a PCR. Particular items of concern include electrical service less than 60-amp capacity, presence of fire retardant treated plywood, and the presence of aluminum branch wiring. In addition, Freddie Mac requires the consultant to inspect for evidence of “problem drywall”. Such evidence may include deterioration of other building components caused by the problem drywall such as blackening of copper electrical wiring or other metallic components, blackening of air conditioner evaporating coils or a pattern of early failure of these coils, the presence of a sulfur odor within the building, confirmed markings of known manufacturers of problem drywall, or other corroborating evidence that is readily available to the consultant.
• Freddie Mac requires the consultant completing the PCR to inspect interiors at 10% of all dwelling units, including 50% of vacant units and 50% of down units. For larger properties (generally over 400 units), the lender is often granted waivers to reduce the 10% requirement.
• For all PCRs, the consultant must complete Form 1105 Multifamily Property Condition Form. The Form 1105 is designed with distinct sections that include a summary of the property systems, details regarding the inspection and units accessed, immediate repair needs, and capital needs over the loan term (replacement reserves). While the general industry standard for inflation rates of replacement reserves is considered to be 2.5%, the Form 1105 differs in that it dictates an inflation rate of 3%. Freddie Mac is sensitive to the completion of this form and can be critical when they deem that consultants are not properly completing the form. Freddie Mac maintains that the reserve analysis should not be manipulated merely to produce a number that works with the underwriting analysis. For instance, Freddie Mac will no longer accept a consultant’s opinion that the remaining useful life of a system is “12+ years” as it appears to be an effort to simply move that component out of the replacement reserve analysis.

Project Capital Needs Assessment – FHA Lenders

Housing and Urban Development (HUD) / Federal Housing Authorities (FHA) Lenders require a Project Capital Needs Assessment in place of the Property Condition Report.  The HUD Multifamily Accelerated Process (MAP) and Lean Healthcare Process Guides contain detailed guidelines for the Property Condition Assessor.  

There are some distinctions that clearly define a FHA/HUD Physical Inspection Report (PIR – a part of the Project Capital Needs Assessment).  A significant difference is the capital replacement reserve analysis requirements.  A FHA/HUD loan typically requires a 37-year loan term (as opposed to the standard 10+2 or 20-year loan term for Fannie Mae or Freddie Mac), and also requires a higher Initial Deposit and Annual Deposits for reserves with a “healthy” remaining balance. The additional years mean that items that would not typically require replacement within the 12- or 20-year loan term scenarios, such as windows, cabinetry, etc., will need to be budgeted for replacement, adding to the overall capital reserves. 

Other key distinctions of a HUD PCNA include:

• Tables:

1. Critical and Non-Critical repairs. Comparable to Immediate Repairs, but HUD distinguishes between life safety and non-life safety repairs).
2. Capital Replacement Reserves. Much longer term (37- or 42-year).

• Accessibility issues are always critical repairs.
• Accessibility reviews must encompass FHA, ADA & UFAS.  Consultants need to understand each of them, when they apply, and know the differences between them.
• Smoke Detectors must be inside all bedrooms, outside every sleeping area in the immediate vicinity of the bedrooms, and on all levels of the dwelling unit, including basements.  If they’re not, they must be added to the critical repairs.
• Sub-rehab analysis.  If a property has a lot of needed repairs to sub-rehab may be required.
• Unique HUD Forms. There are several required.  Not all of the sections are intuitive but the form instructions are helpful.
• Net rentable square feet (SF) vs Gross SF.  HUD considers net rentable SF as paint-to-paint, which is typically less than the values provided by the leasing office via the rent rolls or marketing brochures.
• Coordination with Appraiser to complete the Property Insurance Schedule form,

Green Property Condition Reports

Recently clients have begun requesting Green Property Condition Reports.  However, all clients don’t mean the same thing when they ask for “green”.   Three common goals in Green PCRs:

• Property Condition Report plus Energy Audit (or Energy Benchmarking);
• Property Condition Report plus an analysis of a wide range of sustainability issues.
• Property Condition Report plus a LEED check list.

In our practice, we see clients asking for the Energy Benchmark most often.  Clients buying a building rightly want to know how energy efficient the building is.  Click here for further discussion of Green PCRs.

Equity Property Condition Reports

For clients buying significant assets that want a high degree of certainty that they know all of the investment and repairs property will require, then they should look for a more detailed evaluation than the walk-through report defined by ASTM E2018-2008.   The basic difference between Equity Property Condition Reports and Property Condition Reports typically done for lenders is the number of people that we send to the site.   For ASTM E2018-2008 / lender assessments, we send one architect, engineer, or commercial building inspector to the site.  For our Equity Property Condition Reports we send a generalist (one of the above), and additional specialists.   Commons specialists are:

• HVAC Specialists / MEP Engineer
• Structural Engineer
• Elevator Inspector
• ADA Surveyor
• Roof Specialist
• Building Envelop Specialist
• Pavement Specialist

Appreciate the difference between the generalist and, for example, the elevator specialist.  The generalist will ride the elevator, look at available records, and interview available staff.  The elevator specialist can shut the elevator down and go down into the elevator pit.  If there is a hydraulic leak in the pit, the generalist will have a hard time discovering this issue.

As you can see there are several types of Property Condition Reports and a client must express their needs to the engineering firm prior to ordering a report.   At Partner we have a robust Property Condition Assessment practice and we have groups that focus on each type of PCR discussed above.   Other firms specialize in one or the other type of report.   For any questions on Property Condition Reports feel free to contact me or Bruce Dalton, Technical Director of our Building Sciences Group at 800-801-4923.

The Green Property Condition Assessment (PCA), also known as a Green Physical Needs Assessment, offers the user advice on how to optimally run the asset that he or she is buying.  A Green Property Condition Assessment essentially combines a standard PCA and an Energy Audit to provide in-depth information on the building condition and increasing operational efficiency.

A standard PCA provides the user with Immediate Repairs and Replacement Reserves over a given term.  All of these costs are provided under two assumptions:  1) replace like with like; 2) replace equipment at the end of its useful life.  The Green PCA takes a much more real world approach—replace equipment when it is costing more to run than makes sense and replace equipment with new equipment that will maximize return on investment (ROI).  The “green” could just as easily symbolize more money as the environment. 

My sister company, Partner Energy, does hundreds of energy audits per year on commercial buildings.   The energy audits identify Energy Efficiency Measures (EEMs).  Many of these EEMs amount to replacing old, but functioning, HVAC equipment with newer higher SEER rated HVAC equipment (Seasonal Energy Efficiency Ratio).  These capital events have a very measurable ROI.  The Energy Audit might identify 6 to 18 EEMs and we will rank these in terms of ROI.  Most clients consider ROIs greater than 30% an obvious opportunity, and it is not uncommon for EEMs to result in such high ROIs.

What is a Green PCA?

Combining the energy audit with the PCA has obvious advantages.  We can provide more real world advice on the equipment replacement.  Replace the equipment either: 1) when it reaches the end of its useful life; or 2) when the energy saving associated with replacing the equipment meets the client’s ROI requirement.  

There are other financial incentives for conducting Green PCAs or implementing the recommended EEMs, such as incentives from the SBA, FHA and Fannie Mae. 

Small Business Administration (SBA) 504 Loan Program: Qualify for More by Going Green

Borrowers can increase their SBA 504 loan amount by up to $4 million by implementing projects that meet the SBA 504 new public policy goals of reducing energy consumption by 10% or generating renewable energy.  Click here for more info on the SBA energy program.

FHA/HUD and Fannie Mae: Green Refinance Plus

Green Refinance Plus is a program between HUD’s Federal Housing Administration (FHA) and Fannie Mae to allow owners of existing affordable rental housing properties to refinance into new mortgages that include funding for energy- and water-saving upgrades, along with other needed property renovations.  Under this program, borrowers must obtain a Green Physical Needs Assessment to identify property improvements that will reduce energy use and operating costs.

Additionally, many cities and states are requiring that building owners disclose their building’s energy efficiency or consumption. Click here to see the cities and states with energy disclosure requirements. This energy disclosure information can be identified during a Green PCA and/or an energy benchmarking study.

Making your Property Condition Assessment or Physical Needs Assessment a Green one really just makes dollars and sense.

The California Energy Commission delayed the implementation of AB 1103, California’s landmark energy disclosure law.   This is the 4th time that the law’s implementation has been delayed in the past two years.   Now the first set of buildings will require energy disclosure in January of 2012–unless the law is delayed again.   

No doubt the law has serious opponents.  

There is still plenty of activity in the world of energy audits and energy benchmarking on the local level and the Federal level. 

Keywords

energy disclosure, ab 1103, energy audit, energy disclosure

Earlier this year, Wal-Mart announced goals to reduce its carbon footprint by reducing greenhouse gas (GHG) emissions from its supply chain.  Wal-Mart’s GHG emissions goal was set at a 20 million metric ton reduction of GHG emissions by 2015.  The implication for suppliers is clear and substantial – measure your footprint and find ways to improve.

Measuring your carbon footprint (which also refers to any greenhouse gas, measured in carbon dioxide equivalents or “CO2e”) is the first step in reducing GHG emissions, providing a baseline from which to start.  A carbon footprint study can also identify areas where you can cut down on energy use.  From this point, an energy audit or sustainability consultation can provide a comprehensive look at how to reduce or off-set your impact.  The value of such a program is not just good PR (though the benefit of employee moral or customer goodwill should not be underestimated) – it can produce savings through reduced fuel, utility or travel costs and reduced material consumption, as well as allow a corporation to get ahead of future carbon cap and trade regulations or taxes.

Wal-Mart has realized the relationship between being a profitable business and a sustainable business.  Many retailers are also taking up this charge – Target, Whole Foods and Starbucks have similar programs in place for their supply chain.  Carbon Partner has seen the result of this movement first-hand in recently working with several wholesale suppliers to Wal-Mart, Target and Whole Foods to measure and reduce their carbon footprint.  Carbon Partner expects this trend will continue as public pressure mounts for corporations to show measurable steps to advance their sustainability platforms.

Property Condition Report

What is included in a Property Condition Report (PCR)? The short answer is that the Property Condition Report evaluates all improvements.    Most Property Condition Reports done for lenders are done within the scope and limitation of the ASTM Standard E2018. 

My firm, Partner Engineering and Science, typically defines the scope as follows:

1. Conduct a thorough walk-thru inspection of the asset by an experienced building inspector or engineer;
2. Interview tenants, building maintenance staff, and building management;
3. Visit the city building department to look for violations, records of improvements, and the certificate of occupancy;
4. Review of building plans, quotations for work, and warranties provided by the seller;
5. Develop a schedule of Immediate Repairs necessary due to failed systems, systems being past their useful life, and/or building code violations;
6.  Develop a Replacement Reserve Schedule for the next 12 years (or the requested reserve period), where Partner will estimate the remaining useful life of major systems and provide an estimate of the replacement cost at that time in the future;
7. Prepare a detailed report discussing each building system and its condition.

Partner’s PCR will evaluate the following systems and conditions:

• Site Improvements
• Site Access and Traffic Flow
• Topography
• Storm Water Drainage
• Paving Type/Age
• Curbing/Wheel Stops
• Pavement Striping
• Parking
• Flatwork/Stairs/Railing
• Landscaping and Appurtenances
• Retaining Walls
• Utilities
• Site Lighting
• Waste Storage Area
• Site and Building Signage
• Other Site Amenities/Recreational Facilities
• Structural Foundation and Frame
• Structural Design Criteria
• Soils/Geotechnical
• Foundations
• Structural Frame
• Parking Garage/Carport
• Facades/Exterior Wall Systems
• Exterior Walls
• Windows
• Insulation
• Doors/Frames
• Balconies
• Stairs
• Roofing
• Roof Type
• Active Leaks
• Roof Drainage
• Thermal Insulation
• Flashings/Details
• Expansion Joints
• Maintenance
• Warranty
• Ancillary roof(s)
• Mechanical, Electrical & Plumbing
• HVAC Systems
• Electrical Systems
• Plumbing Systems
• Vertical Transportation/Conveyor Systems
• Elevators
• Escalators
• Fire/Life Safety
• Fire Sprinklers
• Life Safety/Alarm Systems
• Interior Elements
• Viewed Spaces
• Floor Coverings
• Ceiling/Walls/Window Coverings
• Common Areas

All of these elements are inspected during a walk-through inspection. The inspector will not be turning systems on and off; rather, the inspector will visually inspect the systems and ask questions of building personnel. Some clients want us to do more, and for those clients, Partner will hire sub-specialist to accompany our inspector.   

POTENTIAL EXTRA SPECIALTY SERVICES:

In addition to our walk-thru assessment, Partner can provide specialty inspections. Specialty inspections are done by our significant roster of sub-contract specialist. The Specialty Inspectors investigate beyond the requirements of ASTM E2018. For example, Partner’s general inspector will inspect the elevator and the elevator controls, but an elevator specialist is qualified to open and inspect the elevator pit. The following specialty inspections are often added to Equity Property Condition Reports: 

Specialty                                                   Description 

Energy Audit                                           Model the entire building’s energy consumption, rate building against peer buildings; enter into Portfolio Manager; and make recommendations for energy efficiency improvements.

Energy Benchmark/Disclosure   Enter the building’s utility data and relevant building parameters into EPA’s Portfolio Manager and get a rating for the building.

Structural Inspection                      A registered engineer / structural engineer will inspect the sites superstructure foundations for signs of deflection, structural sagging, cracking, and vulnerability to future loading (seismic if applicable).

Elevator Inspection                         Inspect elevator cab, elevator equipment room, the elevator shaft and hydraulic lifts.

HVAC Inspection                               Inspect all heating and cooling equipment as well as ducting and heat conveyance systems.   Test the heating and cooling output regardless of the season (i.e. test the air condition in the winter).

ADA Compliance Inspection     Inspect the entire asset for compliance with the Americans Disability Act (ADA) and catalogue each system that does not meet ADA Compliance.   Provide a cost estimate for bringing the asset into compliance with ADA.  

Roof Inspection                                     A Roof Inspector will inspect the roof of each of the buildings.  The roof inspector will map all signs of roof aging and failure including: cracking, silting, ponding, bowing, leaking, and patches.

Building Envelope Inspection    Inspect the entire building envelope and curtain wall for its ability to serve as an effective moisture barrier.  Complex curtain wall systems should be evaluated by a specialist.

California is requiring Energy Disclosure via Assembly Bill 1103 (AB 1103) starting in 2011.   The California Energy Commission recently published the AB 1103 implementation schedule.

Real Estate owners are actively beginning to do energy audits and energy benchmarking to prepare for the implementation of this law in 8 months.

Building owners must disclose their building’s energy rating when:

(a) at or before the time the owner presents a sales contract to a prospective buyer;

(b) at or before the time the owner presents a lease for the entire building to a prospective lessee; and

(c) at or before the time the owner presents a loan application to finance the entire building to a prospective lender.

 The implementation schedule is as follows:

 (a) On and after January 1, 2011, a building owner shall disclose, pursuant to Section 1684, the building’s the CEC Commercial Building Energy Disclosure report for nonresidential buildings that:

     (1) are solely occupied by the owner; or

     (2) measure more than 50,000 square feet.

(b) On and after January 1, 2012, a building owner shall disclose, pursuant to Section 1684, the CEC Commercial Building Energy Disclosure report for nonresidential buildings that measure 10,000 to 50,000 square feet.

(c) On and after July 1, 2012, a building owner shall disclose, as described in Section 1684, the CEC Commercial Building Energy Disclosure report for buildings that measure from 1,000 to 10,000 square feet.

My firm, Partner Energy, is actively benchmarking hundreds of large commercial office buildings.   Give us a call at 888-826-1216 when you are ready to address this requirement.

As I mentioned in my first posting, I took a survey of the Environmental Bankers Association Membership as to what is and is not a recognized environmental condition.  The results were presented at the Environmental Bankers Association Conference in Utah on June 9th.   The survey results are posted on the EBA’s Website and my website (www.partneresi.com).