Recently I received a telephone call from a worried client who was contacted by an unscrupulous vendor who insisted that the association will be heavily penalized in the event it does not comply with Existing Building Energy and Water Efficiency (“EBEWE”) Ordinance requirements set forth by Los Angeles Department of Building Safety (“LADBS”).

The compliance deadline was only two days away, and the vendor offered to rescue our client by offering to file an extension on its behalf, but only under the condition that the association hire the vendor to conduct the compliance work. The vendor emphasized that for the “right price,” he will lead the association to light (an energy-efficient light that is) by reciting an overwhelming slew of requirements that the Association would need to comply with by the fast approaching deadline.

Thankfully, the client contacted our office in time for me to do some research and prevent the client from paying an inordinate amount of money for compliance work that was not yet required.

Energy and Benchmarking Disclosure laws are popping up across the nation. In California similar laws have been adopted in the cities of San Francisco, Berkeley and San Diego. Now certain buildings in Los Angeles must undergo energy and water efficiency audits.

L.A.’s new law, the Existing Buildings Energy and Water Efficiency Ordinance (EBEWE) was unanimously adopted by the LA City Council as part of Mayor Eric Garcetti’s Sustainable City plan and is geared toward reducing energy and water consumption in existing buildings in the City.

The ordinance requires existing commercial and multi-family buildings to be “benchmarked”. Benchmarking in this context is the practice of comparing the measured performance of water and energy efficiency of particular building to established norms set by the LADBS, with the goal of informing and motivating performance improvement. These efficiency improvements are intended to lower the use of energy, water, and greenhouse gas emissions citywide.

Common Interest Developments are not exempt from this requirement. As such, associations must be on the lookout for Notices from the City and compliance deadlines to avoid being penalized by incurring noncompliance fees.

Step 1: Notice of Compliance

A property owner must benchmark energy and water consumption by June 1, 2019 annually if the building is 20,000 sq. ft. or greater, is located in the City of Los Angeles, and the owner has received a notification letter from the Department of Building and Safety (LADBS). The square footage requirement pertains to an entire single building (multiple buildings on a parcel added together exceeding 20,000 sq. ft. would not require compliance).

Building owners impacted by EBEWE deadlines should have already received Notice of Compliance from LADBS. As such, in the event an association did not receive such a notice, compliance may not be required – which ended up being the case with our client.

Step 2: Annual Benchmarking Report

In the event that a building is on the compliance list, then the owner must begin preparing a benchmarking report. First, before performing the building benchmark, the building must be registered with the LADBS.

The EBEWE benchmarking process is easy if the building has already received an ENERGY STAR certification in the past year. To be certified as ENERGY STAR, a building must meet strict EPA energy performance standards and use the Portfolio Manager program to compile necessary data.

Anyone who has completed Portfolio Manager requirement for a multi-tenant building knows that one of the most difficult parts of the process can be getting energy bills from all of their tenants. Thankfully, this will no longer be an impediment since EBEWE requires utility companies to provide full building data upon request. Presently LADWP is conducting pilot engagements to test new data aggregation systems that will allow them to provide full building data to building owners.

Similarly to Energy Star Certification, EBEWE heavily relies on Portfolio Manager to benchmark subject buildings and compile necessary data. Each benchmark requires building owners to report a full year of energy data (electric, gas, etc.) as well as a full year of water use data. Compliant buildings will have their annual utility consumption data posted to an LADBS database, which will be made public.

Once a benchmark has been completed, covered buildings will need to complete their annual energy and water benchmark every June 1st thereafter.

Step 3: After Benchmarking Compliance – What’s Next for Larger Buildings?

All buildings over 20,000 square feet must undergo an energy audit which focuses on an in-depth identification and documentation of the building’s energy and water – use equipment. The compliance dates for energy certification and water audit completion and submittal began in 2019 and these reports will be required to be completed and submitted every 5 years.

Every 5 years thereafter buildings must achieve either an ENERGY STAR certification or have a licensed engineer certify they have reduced their Energy Use Intensity by 15%. If this standard is not achieved, the building must perform an Energy Audit.

Fees

The Annual Disclosure Compliance Fee (Sec. 91.9710.1): Will cost the building owner $61 for each Annual Benchmarking Report submitted to the LADBS.

The Audit and Retro-Commissioning Compliance Fee (Sec. 91.9710.2): Involves a charge to the building owner of $183 for each Confirmation of Audit and Retro-Commissioning submitted to the Department during a five year compliance cycle.

Noncompliance Fee: Failure to comply with this ordinance subjects the building owner to noncompliance fees per Section 98.0411 of the LA Municipal Code, at the amount of $202 with monthly double digit interest added on.

Associations with larger buildings everywhere should begin planning and preparing for increasing future monitoring of resources use.

Written by Tamara A. Yeritsyan

Tamara A. Yeritsyan is an Associate at Richardson|Ober|DeNichilo.