Real estate owners are familiar with March 15 and April 15 deadlines for filing income tax returns, but owners of large projects in Boston also must schedule May 15 as an important deadline. The Boston Energy Reporting and Disclosure Ordinance (BERDO) now requires owners of properties having 50,000 or more square feet, or 50 or more dwelling units, to report energy and water usage annually by May 15. This requirement broadens over the next two years until it includes all privately owned buildings with 35,000 or more square feet or 35 or more dwelling units.
Boston’s late Mayor Thomas Menino signed BERDO into law in 2013, hoping to reduce greenhouse gas emissions. BERDO follows the lead of similar ordinances in New York, Seattle and San Francisco. BERDO requires the city of Boston to publicly disclose energy and water usage for all city-owned buildings, regardless of size. It also requires annual reporting of energy and water usage for large privately owned buildings. Not to be outdone in this area, Cambridge enacted a similar ordinance in 2014. To comply with BERDO’s annual reporting requirement, building owners must enter energy use data into the Energy Star Portfolio Manager, an online tool used by the U.S. Environmental Protection Agency (EPA). The Boston Air Pollution Control Commission is charged with enforcing BERDO. Property owners other than the city who fail to comply with BERDO risk fines of up to $3,000 per year.
During 2014, the first year after BERDO’s enactment, only commercial buildings with 50,000 or more square feet were required to report. The first-year deadline of May 15, 2014, was extended to Sept. 15, 2014, to accommodate building owners. The commission worked diligently to educate building owners about BERDO, resulting in an impressive 85 percent compliance rate for 2014.
Rolling Implementation
Beginning in 2015, residential properties with 50,000 or more square feet or 50 or more dwelling units also must report annually. The reporting requirement will cover commercial properties having 35,000 or more square feet in 2016, and residential properties having 35,000 or more square feet or 35 or more dwelling units in 2017. BERDO obligates the commission to publicly disclose energy use information, and to periodically report on implementation, compliance and overall results of the ordinance. The commission’s first report was due by Dec. 31, 2014, but the report has not yet been issued and is not expected until March.
BERDO’s reach extends beyond mandatory reporting. Unless exempted by the commission, building owners must complete an “energy assessment or action” every five years. The commission’s regulations exempt buildings from this requirement if they have EPA Energy Star certifications or LEED Silver ratings, produce more energy than they consume or use renewable electricity or fuels without net greenhouse gas emissions. The regulations also exempt buildings that have been vacant for five years or are scheduled for demolition. Owners of financially distressed buildings may apply to the commission for one-year temporary exemptions.
The commission has broad discretion in establishing energy assessment requirements and energy actions for non-exempt buildings. The commission’s regulations currently require building owners to obtain a detailed energy assessment from a qualified professional or to complete one of several listed actions that substantially reduce energy usage. The regulations do not compel owners to complete both an assessment and an action. Owners must submit a report to the commission every five years, summarizing their energy assessment results or documenting their completed energy action.
BERDO regulates millions of square feet of building space, many within older buildings lacking the energy-saving features found in newer construction. The ordinance has not been in place long enough for the commission to exercise its full authority to mandate energy assessments or actions. How the commission exercises this authority over the next several years will be of great interest to Boston real estate investors.
Christopher R. Vaccaro is a partner at Looney & Grossman LLP in Boston. His email address is cvaccaro@lgllp.com.
