Beginning September 2013, owners of nonresidential buildings in California will face a new administrative hurdle under California Law AB 1103 when selling or leasing a building in its entirety.

California's Nonresidential Building Energy Use Disclosure Program

Under California Law AB 1103, building owners must disclose energy usage statistics to any potential buyer or lessee of the entire building and to any potential lender financing the transaction. The California Energy Commission recently promulgated regulations implementing AB 1103 (the "Nonresidential Building Energy Use Disclosure Program").

The first phase of the Program kicks in on September 1, 2013. Owners should familiarize themselves with the new regulations' requirements to ensure compliance and avoid delays in executing a sale or lease. The effective dates for the new regulations are as follows:

• On and after September 1, 2013, for buildings with a total gross floor area of more than 50,000 square feet

• On and after January 1, 2014, for buildings with a total gross floor area between 10,000 and 50,000 square feet

• On and after July 1, 2014, for buildings with a total gross floor area between 5,000 and 10,000 square feet

AB 1103's Requirements

AB 1103 requires owners to disclose a building's energy usage statistics for the last 12 months to any prospective buyer or lessee of the entire building or any lending institution financing such a transaction. Disclosure is also required when renewing a lease of the entire building, even if the original lease was executed before the law went into effect. Owners must provide this information to a buyer or lessee at least 24 hours prior to the execution of the sales contract or the lease. Owners must provide this information to lenders no later than upon submittal of the loan application.

How Do I Comply?

The EPA's ENERGY STAR® program Portfolio Manager Web site generates the required energy usage statistics. Owners must create an account for a building on the Portfolio Manager Web site at least 30 days before a required disclosure. Owners with an existing account must update the account with current energy usage information for a required disclosure. After creating an account, owners must provide their name and e-mail address, as well as certain information about the building, including the building name, street address, year of construction, and space use characteristics.

Owners must then use the account to request energy use data for the building from all utilities and energy providers for the previous 12 months. The utilities and energy providers have 30 days to provide this information to the Portfolio Manager account.

After all utilities and energy companies have provided the requested information, owners must submit a compliance report through the account. Owners must then download the energy usage reports from the account and provide them to the potential buyer, lessee or lender. The energy usage reports consist of the following:

• Disclosure Summary Sheet (details the report's content and relevance to California buildings)

• Statement of Energy Performance (supplies data about a building's energy performance and the building's ENERGY STAR® energy Performance Score, if available)

• Data Checklist (summarizes a building's physical and operating characteristics)

• Facility Summary (summarizes the space and energy usage of a building and compares a building's energy use to national medians)

Owners should be aware that the Statement of Energy Performance, Data Checklist, and Facility Summary expire 30 days after they are generated. Because it could take up to 30 days for all relevant utilities and energy providers to respond, owners are encouraged to start the process early by opening an online account well in advance of an anticipated required disclosure. This will help avoid any additional delays due to unexpected problems associated with opening a new account.

To view the California Energy Commission regulations, click here (PDF).