The enforcement of Assembly Bill No. 1103 (“AB 1103”), which requires owners of certain commercial buildings to make disclosures regarding a building’s energy usage in connection with certain commercial real estate transactions, has been further postponed to July 1, 2016 for buildings with a total floor area between 5,000 square feet and 10,000 square feet. Prior to the closing of a sale, lease or financing of an entire commercial building, the property owner must make certain disclosures about the buildings energy usage for the twelve month period prior to the disclosure using the Energy Star® Portfolio Manager website. Enforcement of the disclosure requirements for commercial buildings with total floor area of 10,000 square feet or greater began on January 1, 2014.
AB 1103 was enacted in 2007 to promote energy conservation by establishing a standard framework which allows prospective tenants, purchasers and lenders to compare the energy efficiency and consumption of commercial buildings and motivates building operators to take actions to improve their building’s energy profile. The required disclosures make energy consumption data available in a standardized form that facilitates comparison between buildings. Potential lessees, buyers and lenders will be able to use this data to evaluate their options and make informed decisions before entering into transactions. Accordingly, these disclosures can potentially affect the value and marketability of the building. Additionally, property owners can use the information gathered by participating in the Energy Star® Portfolio Manager Program to more efficiently manage their energy related costs.
Enforcement applies only to certain commercial buildings based on the occupancy type of the building. Owners of affected buildings and potential lessees, purchasers and lenders contemplating a transaction involving an affected building should be aware of the disclosure requirements of AB 1103 and the timeline for implementation. Please contact us to find out if the reporting requirements apply to your building or if you would like more information regarding AB 1103 and how to comply.