New Energy Rules for Your Properties
Entrata recently hosted a webinar on a critical new challenge for property owners—the new Building Performance Standards (BPS). Gary Crooks, Entrata's Senior Industry Principal for Utilities, led the discussion with partners David Bailey, EVP of Sustainable Turnkey Solutions, and Keeley Felton, Chief Sustainability Officer for Nova Group. The webinar showed how new energy regulations, prominent on the West Coast but expanding nationally, will affect property profitability and operations.
What Are Building Performance Standards (BEPS)?
Felton explained that Building Performance Standards (BEPS) go beyond basic energy tracking. While many areas already require properties to report energy use (like a first weigh-in), BEPS sets actual performance goals. Properties must show real improvement, such as achieving higher Energy Star scores or using less energy overall.
Not meeting these goals carries penalties, which can add up daily, and properties may also face liens and code violations. These can be publicly reported, creating significant problems, especially during property sales.
A Growing Trend Across the U.S.
While building performance standards first gained traction on the West Coast, many states and cities already are starting to implement programs or have them in development, including Colorado, Maryland, Oregon, and Washington. California has several city-specific programs already, and a statewide BEPS program is expected soon with some of the strictest BEPS in Denver and New York.
How to Achieve Compliance: A Step-by-Step Plan
For property owners, navigating BEPS compliance requires a clear plan:
- Compliance Review: First, identify which properties in your portfolio are subject to BEPS. Some buildings might be exempt due to size, location, or already meeting performance levels. This initial step helps owners focus resources where needed.
- Identify Best Path: Next, choose the most effective way to comply. BEPS often offer several options. Expert guidance helps determine the most cost-efficient route.
- Implement Improvements: This involves energy audits to find needed upgrades. Common improvements include LED lighting, HVAC system upgrades, and water-saving fixtures. California is also ideal for solar installations, especially with virtual net metering, which pools energy use from individual meters against one solar system.
- Track Performance: After making changes, continuous monitoring ensures ongoing compliance.
Owner Responsibility and Financial Support
Owners are generally responsible for BEPS compliance. However, some costs and penalties might be passed to residents, depending on lease terms and local rules. Owners should review their leases closely to see what their options are.
The good news is there is some financial help available:
- Energy as a Service (EaaS): Programs like PACE allow owners to use energy savings to pay for financing over time, avoiding upfront capital costs.
- Utility Incentives: Various utility companies offer incentives to lower project costs.
- Tax Programs: Federal programs, like 179D, provide tax incentives (e.g., up to $1.88 per square foot), potentially covering 100% of required solutions through financing.
These options aim to make compliance financially beneficial and not just a regulatory burden.
BEPS and Climate Disclosure Laws
The webinar also delved into how BEPS relate to California's new climate disclosure laws (Senate Bills 253 and 261). These laws require reporting greenhouse gas emissions by 2026 for businesses earning over $1 million in California. Properties that have already collected energy usage data for BEPS compliance will have a head start on meeting these new disclosure rules.
Get a Free Compliance Review
The experts advised owners to start with a compliance review. Owners should provide a list of their properties, including addresses, number of buildings, and square footage. Any existing energy use data (EUI) or benchmarking history will help.
Entrata, with its partners, offers a free compliance review to properties nationwide. This assessment identifies immediate risks, upcoming deadlines, and the best compliance pathways. It provides a roadmap to reduce risk, capture incentives, and improve long-term energy performance.
Click here to request your compliance review today.
