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What is AB 1103?

-Assembly Bill 1103 (Non-Residential Energy Use Disclosure Law) is a law that requires building owners (responsible party) to disclose their building’s energy usage when certain financial transaction occur. This disclosure is like any other disclosure required for a real estate transaction. IT IS THE LAW!

 

When did the law start?

-Signed into law by Governor Schwarzenegger in Oct. 2007. The law went into effect on 1/1/14.

 

What is the purpose of AB 1103?

-So building owners are aware of their building’s energy usage and hopefully will be inspired to reduce their energy consumption.

 

What are the financial transactions that require a building owner to comply with AB 1103?

-When a property is sold, the seller must provide the report to the buyer of their property 24 hours prior to the signing of the Purchase Agreement. If the building owner did not disclose the report prior to the 24 hour deadline, the building owner must provide the report to the applicable party prior to close of escrow.

-When a property is being refinanced, the building owner must provide the report to the Bank, 24 hours prior to submitting the Loan Application;

-When a single tenant building is being leased to a single tenant lease, the report must be provided to the prospective tenant, 24 hours prior to signing of the Lease.

-Multi-tenant buildings do not need to provide the report to a multi-tenant prospective tenant. However, when this same multi-tenant building is sold or being refinanced, it must provide the report to the applicable party.

 

Which buildings must comply?

-All commercial buildings over 10,000 sq ft must comply when financial transactions occur. On 7/1/14, the law required commercial buildings over 5,000 sq ft to comply. However, it was it was postponed to 7/16/16.

-Clarification: If a group of buildings (campus) are being sold/refinanced, it is only the individual buildings over 10,000 sq ft that must comply. It is not the total of the sq ft of all of the buildings. It is each individual building’s sq ft that determines if the building must comply.

 

What type of commercial buildings need to comply?

-Buildings that have an Occupancy Type below must comply: It does not matter what is performed in the building, the Occupancy Type is the key.

-A (Assembly) – Theatres, Restaurants, Art Galleries, House of Worship

-B (Business) – Offices, Banks, Labs, Car Dealers

-E (Educational) – Schools

-I-1 (Institutional) – Assisted Living

-I-2 (Institutional) – Surgical

-M (Mercantile) – Retail, Markets, Gas Stations

-R-1 (Residential-Transient) – Hotel, Motel

-S (Storage)

-U (Utility) – Parking Garage

 

-If it is vacant building, it still must comply. Even if there is no energy usage data for the building, we must estimate the usage by looking at a similar building that we have completed and use this energy data for this vacant building. We adjust for square footage differences.

 

Are there any commercial buildings that are exempt?

-Yes.

-Industrial building has an Occupancy Type/Group of F for Factory.

-An old (no longer existent occupancy type) manufacturing occupancy type of G-1 may not need to comply.  With a G-1, it actually does depend upon what was being done in the building. One building’s occupancy permit showed G-1 and then said warehousing and book binding. The CEC ruled it must comply. Another G-1 with manufacturing noted on the occupancy permit, was not required to comply. So, the bottom line on the G-1 occupancy permits, what occurred in the building is important.

-If a building has a residential component, it does not need to comply. So, multi-use (retail and residential) buildings currently do not need to comply.

-A brand new building (never occupied) is being sold, it does not need to comply.

 

Where do I find the Occupancy Type?

– The Occupancy Type can be seen on the most recent Occupancy Permit of the building.

-If the building owner does not have the Occupancy Permit, a copy of it can be requested by the Planning Dept. of the city where the building is located.

 

What information is needed from the client in order to produce the disclosure/compliance report?

-To produce the report required for compliance, the process involves “Benchmarking” the building in the “EPA’s Energy Star Portfolio Manager” Software.  It requires 12 months of energy (electric and gas) usage data along with information about the building and its use. Although, the law requires 12 months, the software prefers we use 13 months, so we always ask for 13 months of energy usage. Doesn’t require water.

-To attach the energy usage data from the “owner of the meter”, either the building owner or the tenant, we need their electric and gas (if they have gas) bills, or we can get the information from the utility. This requires the owner of the meter to sign a “Utility Authorization Form”, which we send to the utility. We then “share” the building in the software with the utility and eventually we will receive the downloaded energy data (takes 30 days).

-We also need a “Building Information Template” completed, which provides information about the physical and operational characteristics of the building. There are 80 different templates and whatever type of building and also the use of the building that makes up 50% or more of the space determine the template we provide.

-If a retail center is being sold, each type of use, i.e. restaurant, nail salon, convenience store, etc. all have their own “building information template.”

 

What if the client cannot provide utility statements?

-The building owner must make an attempt to gather the meter data. If the building owner is not able to get the meter data, we can estimate the data, but they must authorize us(via email) to do so.

 

What does the report provide?

-The report required for compliance is called the Data Verification Checklist.

-Benchmarking produces an Energy Star Score from 0-100 on 20 different building types within the Software, or a EUI (Energy Use Intensity) for all building types. These scores show how energy efficient the building is when compared to similar building types.

 

Does the report expire?

-The report is only good for 30 days once it is generated. If the date generated is older than 30 days, a new report must be printed. Energy Usage Data within the software also becomes stale after 120 days. After 120 days if a new report needs to be produced, we need to enter more energy usage data.

It is only if the deal falls through (i.e. escrow cancels) and a new transactions starts (i.e. new sale) after 30 days, do we need to produce a new report.

 

How long does it take for Green EconoME to produce the disclosure/compliance report?

-Once we receive the energy bills and the “building information template”, we can produce the report in 48 – 72 hours.

 

How does the California Energy Commission (CEC) know that the building owner complied?

-Once the report is presented to the receiving party during the 30 days, it meets the law’s requirements.

-Green EconoME will send the disclosure/compliance report to the CEC.

 

What if the building owner does not comply?

-The Energy Commission’s enforcement actions may include:

  • Investigating noncompliance allegations (which can involve issuing subpoenas, compelling testimony, and convening investigative hearings).
  • Initiating administrative proceedings before the full Energy Commission for an order compelling compliance.
  • Initiating a civil judicial proceeding to enforce an Energy Commission order.
  • Initiating a civil judicial proceeding to obtain injunctive relief.
  • Settling enforcement actions through negotiated settlements that impose reasonable and appropriate requirements, including possible payment of penalties.

 

How much does Green EconoME charge for this service?

-Starting cost is $600 is for an entire year, which includes 1 building and up to 3 meters.

-Each additional building on the same property is $200. Each meter beyond 3 is $50.

-Within the year, we can produce the new report at N/C and we also enter more energy data at N/C.

-We can be paid through escrow otherwise, invoice is due upon receipt.