Alert: Energy Benchmark Reporting Required for Large Commercial Buildings in Philadelphia

Last year we alerted you here (click for link) of the passage of Ordinance No. 120428-A, which requires owners of commercial buildings in Philadelphia with at least 50,000 square feet of indoor floor space, or of mixed-use buildings with at least 50,000 square feet of indoor floor space devoted to commercial use, to disclose energy consumption, water consumption and building data.  The information that must be disclosed, discussed in the prior Alert, includes data such as building construction, uses, gross floor area, operating hours, year of construction and use-specific information such as percentage of building heated and air conditioned and units of certain energy-consuming equipment such as computers, refrigerators and freezers.  Regulations by Philadelphia’s Department of Licenses and Inspections have recently been issued to implement the Ordinance, and the filing deadline was recently extended.  

Covered Buildings–According to the Regulations, covered buildings include: (i) any commercial building with indoor floor space of 50,000 square feet or more and (ii) all commercial portions of any mixed-use building where a total of at least 50,000 square feet of indoor floor space is devoted to any commercial use.  Two or more buildings that are served by one common energy meter without sub-metering, such that the energy cannot be tracked individually, will be considered one building for determining indoor floor space.  The term “commercial” is defined as “relating to or associated with any activity, whether or not undertaken for profit, involving any form of trade or commerce, or requiring consideration in exchange for any good, service, or privilege.”  A representative of the Mayor’s Office of Sustainability has clarified that the disclosure requirements do not apply to most uses considered residential, such as multifamily and residential buildings, apartment buildings, residential condominiums, nursing homes and dormitories, but do apply to hotels.

Provisions Relating to Leases, Improvements and Property Transfers–Under the Regulations, an owner may delegate its responsibilities to a single tenant who leases and is responsible for managing all energy and water usage for an entire covered building.  An owner of a new or renovated building must disclose under the Ordinance starting with the first full year following the year in which the building receives a certificate of occupancy.  If a covered building is transferred, the buyer and seller must arrange for the seller to provide to the buyer all information necessary for the buyer to timely report the energy and water consumption for the entire year.  

Exemptions–The Regulations contain 3 specific exemptions from the disclosure requirement: (1) in any calendar year where more than 50% of the indoor floor space is unoccupied for more than 180 days in total, (2) where the Mayor’s Office of Sustainability finds, upon application by an owner that benchmarking or disclosure would cause exceptional hardship or would not be in the public interest, and (3) for buildings primarily used for manufacturing or other industrial purposes for which benchmarking results would not meaningfully reflect building energy use characteristics due to the intensive use of process energy.  

Deadline for Calendar Year 2012 Reporting–While the disclosures need to be made on June 30 of each year, the deadline for calendar year 2012 information was recently extended until November 25, 2013.  Failure to comply with the requirements under the Ordinance subjects an owner to a fine of $300 for the first 30 days following a compliance deadline, and $100 per day thereafter.  

For guidance concerning compliance with Ordinance No. 120428-A and the implementing Regulations, and how to address them in leasing and other real estate documents, please contact Peter Kim at (215) 569-1639 or pkim@klehr.com or Doug Schleicher at (215) 569-2795 or dschleicher@klehr.com.