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Ready or Not, Chicago Energy Benchmarking Ordinance Requires Action in 2014!

Partner Engineering and Science, Inc.’s Bob Geiger and Joanne Choi discuss Chicago’s new benchmarking ordinance and the requirements for compliance.

In September 2013, the Chicago City Council approved the Building Energy Use Benchmarking Ordinance in Chapter 18-4 of the Chicago Municipal Code.  The Chicago Energy Benchmarking Ordinance became effective on September 21, 2013 and requires building owners with over 50,000 square feet (SF) to track and report energy consumption to the Chicago Commissioner of Business Affairs and Consumer Protection.   More controversially, the energy benchmarking ordinance allows the City to publicly release an annual report of building energy efficiency rates.  With this move, Chicago joined New York City, Philadelphia, Washington D.C., Minneapolis, Boston, Seattle, Austin, and San Francisco and the States of California and Washington in launching an energy benchmarking and disclosure program.

The Chicago Energy Benchmarking Ordinance impacts over 3,500 commercial, residential and municipal buildings that exceed 50,000 SF.  Although this represents less than 1% of all city buildings, this group is responsible for approximately 22% of the total building energy consumption.  According to the Office of the Mayor’s press release from September 11, 2013, the hope is that “the ordinance will spur the market for energy efficiency by encouraging building owners to make improvements.” Mayor Rahm Emanuel introduced the Ordinance with the stated intent of “…arming building owners, real estate companies, energy service companies and others with the information they need to make smart, cost-saving investments.” (To read more about how energy disclosure laws may guide buildings towards greater efficiency and better fundability, check out this article: Hit the Mark with Energy Efficiency)

What do you need to do to comply with the Chicago Energy Benchmarking Ordinance?
Owners of covered buildings over 50,000 SF (with some exceptions noted below) will be required to track and verify building energy consumption using the U.S. Environmental Protection Agency’s free online Energy Star Benchmarking Portfolio Manager (Portfolio Manager).   Building owners are defined by the Chicago Municipal Code to not only include the holder of the legal title, but also those who have care or control of the building – property managers, and agents who collect rents or control the building.  ‘Covered building’ is defined as any building affected by the Ordinance – specifically any building in Group 1 or Group 2 (as shown in the chart below) that is not exempt (see below for exemptions).   The building owner or a representative can use the Portfolio Manager tool to enter 12 consecutive months of electrical and natural gas utility consumption data.  The information reported to the Commissioner will include your building identification number, address, SF, energy performance score, energy use intensity, and greenhouse gas emissions.

With the reporting of consumption information comes the challenge of obtaining from the tenant their specific information and/or data.  If tenant data is needed to benchmark a building, the owner must request this information from tenants by March 1 of the year benchmarking is required.  The tenant then has 30 days from the date of the request to provide such information.  If the tenant does not provide the necessary information in 30 days, the building owner must use all other information available to benchmark the building.  As long as the building owner has requested tenant data by March 1 of the year benchmarking is required and still benchmarked the building with other available information, such as reasonable approximation or default values, the building owner is considered to be in compliance.  Engaging an experienced energy consultant will help to accurately fill in any data gaps and achieve compliance.

The owner will be required to annually report benchmarking information for the previous calendar year, beginning on the appropriate deadline shown in the chart below.   In addition, every three years the owner will need to have the benchmarking information verified by a licensed architect (AIA), professional engineer (PE), or other professional appointed by the City of Chicago.

What will be disclosed? Are you exempt?

The reporting deadlines are staggered based on building size, type and use as shown in the chart below.
* * Certain buildings are exempt, see below
** Buildings are considered residential if 10% or more of occupancy is residential

The Chicago Commissioner will release an annual energy efficiency report, with the first being in 2015.  The building owner’s reported information will be made available to tenants, buyers, investors, and the general public.  As shown in the above chart, covered buildings exceeding 250,000 SF will be the first group of buildings required to submit benchmarking reports to the City by June 1, 2014.

A number of buildings will be exempted from the Chicago Energy Benchmarking Ordinance.  If a building has more than 10% of floor space occupied by data centers, TV studios, or trading floors, the energy use data will not be publicly available until EPA’s Portfolio Manager can account and correct for these highly consumptive uses.  In addition, the following buildings are considered exempt from compliance with the Chicago Energy Benchmarking Ordinance:

  • Industrial facilities, storage units, and hazardous use units
  • New construction, – certificate of occupancy issued in the calendar year benchmarking is required
  • Buildings facing financial distress defined as follows:
    • Building is the subject of a qualified tax lien sale or public auction due to property tax arrearages
    • Building is controlled by a court appointed receiver
    • Building has been acquired by a deed in lieu of foreclosure;
  • Building has less than 50% average physical occupancy throughout the calendar year benchmarking is required

 

If a building owner does not comply or meet the reporting deadline, a fine of up to $100.00 will be imposed, plus an additional $25 a day until compliance is achieved.  The Chicago Energy Benchmarking Ordinance is still relatively new and in the beginning stages of implementation.  In fact, the City of Chicago recently held a public comment period from January 31 to February 14, 2014 for draft energy benchmarking rules and regulations to provide additional details on its implementation.  Nevertheless, compliance for the first group is required by June this year so it is important building owners understand the energy benchmarking and disclosure requirements.  As Chicago moves forward with this Ordinance, we will keep you informed of any updates and support we can provide.

 

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