New York City's "Benchmarking Law," NYC Administrative Code § 28-309, is one component of the City's Greener, Greater Buildings Plan, which seeks to reduce building emissions and energy costs citywide. Under the Benchmarking Law, owners of certain privately owned buildings will be required to measure and report (or "benchmark") their building's energy and water usage to the Department of Buildings ("DOB") as of August 1, 2011. The Benchmarking Law applies to (a) owners of privately owned buildings larger than 50,000 square feet; (b) all buildings on a common tax lot that together exceed 100,000 square feet; and (c) two or more condominium buildings governed by the same board of managers that together exceed 100,000 square feet. The Mayor's Office has created a list of buildings that it believes are subject to the Benchmarking Law, which can be found online at:  

http://www.nyc.gov/html/planyc2030/downloads/pdf/benchmarking_covered_buildings.pdf

Affected building owners will be required to benchmark their respective buildings' energy and water usage through an online tool called "Portfolio Manager," which is maintained by the U.S. Environmental Protection Agency. Although the original deadline for submitting benchmarking data to the City was May 1, 2011, the deadline was extended to August 1 to allow more time for affected building owners to comply with the reporting requirements. However, building owners will be required to benchmark no later than every May 1 thereafter. On March 30, 2011, DOB also adopted a rule to provide guidance to building owners on how to comply with the Benchmarking Law (the "Benchmarking Rule"). Affected building owners that are required to benchmark should be aware of the following key provisions in the Benchmarking Law and Rule:

  • Certain buildings that normally would be subject to the Benchmarking Law may be exempt. These include, for example, buildings that received their first Temporary Certificate of Occupancy in the previous calendar year, a building that changed ownership in the previous calendar year, or a building that can no longer be legally occupied prior to May 1 of the current calendar year and has been issued a full demolition permit.
  • The following key information must be submitted into Portfolio Manager: (1)whole building energy use for the previous calendar year (this can be obtained from Con Edison for a fee of $102.50 per building or from National Grid for its customers in Brooklyn, Queens, and Staten Island); (2) the actual gross square footage of the building; and (3) the square footage of each "space type" as set forth in Portfolio Manager (e.g., office, retail store, parking, etc.). It is not necessary to collect the building's water data, as the NYC Department of Environmental Protection is responsible for uploading this data directly to Portfolio Manager.
  • In January of each year, building owners are required to send a "Non-Residential Tenant Information Collection Form" to non-residential tenants that use individual utility meters. This form, which is available online at www.nyc.gov/ggbp, requests energy consumption and space type information from the tenant. Proof of sending this form, as well as copies of certain other records produced during the benchmarking process, must be maintained by the building owner for three years following benchmarking. While owners are not required to request space type information from residential tenants and tenants who are not individually metered, it is beneficial to request this information, as inputting accurate space type information will improve the accuracy of the building's benchmarking.
  • If a building owner is unable to obtain actual energy data from residential tenants that pay their utilities directly, then owners can either extrapolate the total energy use of the tenant population or use default values established by DOB. However, if the building owner is unable to obtain energy data from non-residential tenants that pay their utilities directly, then owners must use default values established by DOB. Beginning with benchmarking reports that are due in 2013, default values for non-residential tenants will be prohibited.
  • A future goal of the Benchmarking Law is public disclosure of the energy and water use of large buildings. However, 2010 energy and water usage will NOT be disclosed to the public. The 2011 energy and water usage for non-residential buildings will be disclosed in September 2012 and on an annual basis thereafter, and the 2012 energy and water usage for residential buildings will be disclosed in September 2013 and on an annual basis thereafter.

Building owners that fail to benchmark by the August 1, 2011 deadline are subject to a penalty of $500. Continued noncompliance may result in additional penalties of $500 per violation once every three months. Affected building owners are required to benchmark even if tenants fail to respond to their request for energy use information. Since permitted extrapolation and default values may misstate actual energy consumption and characterize a building as being less efficient than it actually is, building owners using such values should consider modifying tenant leases to require the collection and timely provision of energy use information by tenants.

Another benefit of the extended 2011 reporting deadline is that it will allow eligible building owners more time to seek funding from the New York State Energy Research and Development Authority ("NYSERDA") to help defray the costs of benchmarking. Owners of commercial, industrial or institutional (e.g., school or hospital)buildings that contribute to the NYSERDA electric System Benefits Charge ("SBC") (a surcharge on utility bills that is used to fund energy efficiency initiatives) can receive up to $7,000 per building under NYSERDA's FlexTech Benchmarking Pilot program to defray the cost of benchmarking, with costs above $7,000 shared by NYSERDA and the building owner. Certain multi-family building owners that contribute to the SBC can receive up to $3,000 per building to defray the cost of benchmarking. Applications for the FlexTech Benchmarking Pilot program are accepted on a first-come, first-serve basis until its funding of approximately $8 million runs out.

Building owners not eligible for the FlexTech Benchmarking Pilot program may reduce their benchmarking costs by enrolling in NYSERDA's broader FlexTech Program. This FlexTech Program is not specifically tailored to benchmarking, but benchmarking may be included in the scope of work of another project affecting the building, for example, an energy efficiency study. Under this program, NYSERDA can cover 50% of the cost of the project up to the lesser of either $1,000,000 or 10% of the applicant's annual energy costs. Applications for the FlexTech Program are accepted on a first-come, first-serve basis until its funding of approximately $16 million runs out.

Although NYSERDA cannot guarantee that the benchmarking projects it funds for calendar year 2010 will be completed in time to comply with the Benchmarking Law's August 1 deadline, an owner may save a significant amount of money by participating in either of the programs mentioned above, should they still be available.