The city of Boston wants to affect the value of privately owned real estate. The city’s initiative, which has taken the form of a proposed ordinance, is intended to spur investment in energy efficiency upgrades by shaming owners of inefficient buildings into making improvements on their properties. By requiring upgrades, the city seeks to impact the value of these properties. The environmental goal makes good sense; how the city proposes to get there does not.
If passed, the city’s ordinance will require property owners, including condominium associations, to collect utility information, and disclose the results — which will then be evaluated or “scored” by government regulators. Owners who refuse to comply will face enforcement and fines. This would apply to both commercial and residential buildings.
This ordinance is only the first in a series of steps the city has in mind to force property owners to invest in energy saving technologies. There is every indication that the next step will require building owners to retrofit their building’s inefficient energy systems at the time of property transfer.
The city has gone on the record at working sessions before the City Council Committee studying this ordinance, stating that they want this to use this law to affect the “values” of buildings in the marketplace. Energy efficient buildings should be more valuable. However, it is a slippery slope when a city tries to mandate that outcome through regulation. This measure has been estimated to cost owners in the hundreds of millions of dollars by its proponents. It will likely result in higher rents to tenants as those costs are passed down to them.
Boston hopes to replicate energy scoring programs that have been adopted in other cities, but there is no evidence to date that this regulatory approach has been effective in achieving the goals for which they are intended. A study that has received national acclaim by a professor at the Kennedy School of Government at Harvard University has concluded this. Unfortunately, it has been largely dismissed during the public process before the Boston City Council.
The Greater Boston Real Estate Board supports policies and programs aimed at conserving energy or protecting our environment; but those policies must not arbitrarily assign market values to buildings, stigmatize property, or otherwise interfere with transactions. This proposal simply detracts time and resources from meaningful incentive based efforts. We are concerned not only with the impact on the business community, but on housing affordability.
Boston can and should be proud of the work the City has done to voluntarily encourage conservation measures but taxpayers, ratepayers and property owners should not be saddled with a new unfunded mandate with questionable environmental benefit. To put that burden on Boston taxpayers when to date, no city has shown energy scoring to be effective, is ill advised.
Greg Vasil is the CEO of the Greater Boston Real Estate Board.
