In December, 2009, a task force convened by San Francisco Mayor, Gavin Newsom, issued a report on the steps necessary to make existing commercial buildings more efficient. (Click here for the full report) It’s not as comprehensive or technical as reports one expects from the specialists and experts that comprise the task force, but it is a good policy report. Why am I slightly “cool” on the report? It’s no fault of the task force.
The reason is because it’s a policy report, and until the policies are enacted, the report is just hot air blowing in December. (Cue sly grin for “hot air” pun). The reason this post is coming up now, however, is not only the fact that I’m finally getting around to it, but also the fact that Mayor Newsom seems to be as well…(getting around to the report, that is).
San Francisco has arguably the best green building track record of any city in the United States, so if anyone can enact the recommendations, San Francisco can. As you will read below, Mayor Newsom is reportedly going to propose enacting one of the recommendations into law. Before addressing the proposed law, let’s look at how the task force recommends we fix the existing commercial buildings.
Rather than reinvent the wheel, the task force recommends following the California Long Term Energy Efficiency Strategic Plan (CEESP). CEESP sets a goal of zero net energy for new (and some existing) residential buildings by 2020 and commercial buildings by 2030. Regarding existing buildings in San Francisco, the task force believes the CEESP goal could be achieved with a 50% reduction in all existing building energy use by 2030. That amounts to a 2.5 % reduction in energy use every year . . . daunting, but doable.
The task force report uses four general “themes” to suggest meeting and exceeding CEESP: 1) maximize transparency, 2) partner with the private sector, 3) attract game-changing capital, 4) lead by example. I will address each of these in turn, but don’t worry, I only address number 1 in this post. The rest will wait for Part 2.
1) Maximize Transparency: The task force recommends the disclosure of energy performance for all existing commercial buildings. Sounds pretty good, right? Well, the requirement to disclose energy efficiency in commercial buildings has been law for some time now. AB 1103, enacted in 2007, with requirements set to trigger in 2009 (delayed until July 2010), requires “electric and gas utilities . . . to maintain records of the energy consumption data of all nonresidential buildings to which they provide service.” And the utilities must provide those records to property buyers, tenants, or investors.
According to the San Francisco Examiner, the mayor will propose a similar requirement shortly, but with the added bonus that the energy consumption data would be available to the general public.
This idea sets off a slew of potential legal issues, and here’s one: From a transaction side, a lease now has new potential incentives and benchmarks. If a tenant reduces energy consumption over a series of years, that could be worth a bonus from the landlord because it makes the property more valuable from a public relations standpoint and also from a re-sale re-lease perspective. On the contrary, a landlord may simply require that a tenant improve energy efficiency every year, and set penalties if they fail to meet the benchmarks. A successful business relationship will find a middle ground, but these are certainly new bargaining chips. Just think we haven’t even entered the world of cap and trade…
Lets also remember there is no current penalty for failing to increase efficiency. The rest of the task force recommendations rely on private help and public leadership. Is that enough? I’m not so sure…
Stay tuned for Part 2….
(Editor’s Note: check out the Institute for Market Transformation – a great resource I found in researching some of this post.)