May 2012

Taxation and Government Finance Committee
Federal Committee

This material is for discussion purposes only and has not been approved by the Taxation and Government Finance Committee, Federal Committee, Executive Committee or the Board of Directors.

Issue:
At the Taxation and Government Finance Committee’s Winter Business Meetings in Indian Wells, the committee requested staff put together a paper with greater depth and information on the issue of a Commercial Asset Rating Program.

Action:
No Action Required at this Time

Status/Summary
The U.S. Department of Energy (DOE), under its Building Technologies Program seeks to develop a voluntary National Asset Rating Program for Commercial Buildings (AR Program).  In August of 2011, the DOE issued a Request for Information seeking input on a proposed AR program.  The AR Program would establish an Asset Rating system for commercial buildings based on a national standard and would evaluate the physical characteristics and as-built energy efficiency of these buildings.  It would also identify potential energy efficiency improvements.  The goal is to facilitate cost-effective investment in energy efficiency and reduce energy use in the commercial building sector. 

The DOE is in the process of launching its voluntary pilot program and is now soliciting participants.

Background:
Where the issue is at the state level
Nonresidential Building Energy Use Disclosure Program: Implementation of AB 1103 (Saldana, 2007) - The proposed regulations require utilities serving commercial buildings to release 12 months of energy use data for an entire building to an owner’s U.S. Environmental Protection Agency (EPA) Portfolio Manager Account. Owners of nonresidential buildings are required, in advance of the sale, lease, or financing of the entire building, to benchmark the building’s energy use using the U.S. EPA’s Portfolio Manager System and to disclose statements of the building’s energy usage to potential buyers, lessees, and lenders. In lieu of any missing information in the disclosure, if the owner has made a reasonable effort to ascertain the missing information, the owner may use an approximation of the information, provided that the approximation is reasonable and based on the best information available to the owner.

The regulation contains an implementation schedule based on building size and requires non-residential building owners to open an account at the EPA’s ENERGY STAR® program Portfolio Manager website at least 30 days before a buildings energy use disclosure is required.
 
The schedule for implementation is as follows:
1.) January 1, 2013: Buildings with a total floor area measuring more than 50,000 square feet.
2.) July 1, 2013: Buildings with a total floor are measuring more than 10,000 square feet.
3.) January 1, 2014: Buildings with a total floor area measuring at least 5,000 square feet.

C.A.R. has participated as a stakeholder in the development of these regulations and sought to ensure that the regulations requirements are workable and do not increase owner liability.  

NAR Policy:
NAR has submitted comments to the Department of Energy on this issue stating:
• At this early point in the development of the program, DOE should better explain the market and policy case for the AR Program and further explain why it believes that the industry’s current needs are not being met through several already existing and widely accepted rating programs.
• Energy use labels drive down property values, impose unintended costs for owners and stigmatize older properties.
• The most effective way to achieve energy efficient buildings is to provide financial resources and incentives that educate property owners about the benefits of energy improvements.

See NAR’s Comment Letter