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Philadelphia’s Energy and Water Use Benchmarking Program – Creating Obligations and Opportunities for Owners and Tenants of Commercial and Multi-Family Buildings

March 10, 2017

Background: Do you own or rent a commercial or multi-family building in Philadelphia having indoor floor space of 50,000 square feet or more? If so, you should be aware of Philadelphia’s Energy and Water Use Benchmarking Program. This ambitious program is intended to reduce energy consumption and greenhouse gas emissions, and provide water and energy use information to prospective tenants and buyers. Similar programs in other cities have enabled owners and tenant to better manage existing space and to better evaluate the costs of prospective new space.
 
Obligations and Opportunities: The program applies to commercial and multi-family buildings (defined as having two or more residential living units), including hotels, hospitals, schools, offices, dormitories, apartments, and mixed-use buildings.  Square footage is based on total enclosed interior space, including common areas.  Importantly, the regulations provide criteria for requesting exemptions from reporting, based on hardship, vacancies, and other factors.
 
For regulated buildings, by June 30th of each year, the owner must report the building’s characteristics and its energy and water use information, such as building use(s), gross floor area, operating hours, percent of building heated and air conditioned, number of computers, uninterruptible power supply sources and usage, and number of refrigeration/freezer units.  The owner must also report prior year’s energy and water usage by either (a) entering the information into the City’s online, publicly accessible benchmarking application called “Portfolio Manager”, or (b) arranging for the information to be entered by the building’s utility supplier.
 
To the extent regulated space is leased to others, the owner is obligated to request energy and water usage information from the tenant(s).  However, a single tenant responsible for managing all energy and water usage can agree to assume the reporting obligations.  Finally, at the time of sale or lease, the owner must provide prospective purchasers or lessees with a copy of the building's most recent Statement of Energy Performance generated through Portfolio Manager.
 
Enforcement: Although the amount of energy water use is unregulated, the reporting and disclosure requirements have pretty sharp teeth.  Owners are subject to a $300 fine for the first thirty days of violations, and $100 per day thereafter.  Additionally, as more prospective buyers and tenants use the program, failure to provide this information will diminish a property’s marketability.
 
Conclusion: Regulated property owners need to understand and satisfy their reporting obligations, to avoid penalties and remain competitive.  Prospective and existing tenants and owners should evaluate reported data in order to make wise decisions on water and energy costs.
 
This is only a summary of the law, and is not complete or intended to constitute legal advice.  For additional information, or for representation in negotiations or enforcement, contact Paul M. Schmidt, Esq. at (267) 765-9636 or at pmschmidt@zarwin.com.
 

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