As previously reported, AB 1103 is California's energy benchmarking and disclosure law (codified in California Code of Regulations, title 20, sections 1680-1684), that requires owners of non-residential buildings to provide a "Data Verification Checklist" report to buyers, tenants, or lenders when an entire building is sold, financed or leased. The law became effective on January 1, 2014 for buildings over 10,000 square feet, and was scheduled to become effective for buildings with total square foot area of 5,000-10,000 on July 1, 2014. However, the Commission has postponed implementation of the requirements for buildings over 5,000 square feet to July 1, 2016.
According to the information provided by the Commission, the reasons for the postponement shed much light on the problems encountered by various transaction parties in attempting to comply with the program requirements. If you or your organization had difficulty complying with the reporting requirements in connection with your transaction, you were not alone. During the first part of 2014, the Commission received information from various stakeholders indicating that there are significant barriers to compliance with the program, including (i) technical difficulties with rolling out the agency's Energy Star Portfolio Manager software, (ii) high transaction costs due to the various consents of tenants and utilities involved in providing the required information, (iii) the inability of smaller utilities to process the information required to comply, and (iv) the commercial impracticality of providing such information at the beginning of a real estate transaction. Based on this information, the Commission determined that postponing the implementation would allow time to study these barriers and avoid causing further market confusion and hardship on affected stakeholders by addressing such barriers prior to implementation of the program.