April 1, 2010

Energy Regulations Are Heading Your Way


By Brad Eriksen

Spring 2010

During the 2009 legislative session, the Washington legislature adopted the Efficiency First Act (the "Act"), which establishes statewide standards for the Washington Energy Code. The Washington Energy Code preempts many aspects of energy codes adopted by local jurisdictions and therefore directly affects commercial and residential construction. State and local jurisdictions are now developing administrative rules and ordinances to implement the Act. The code changes are estimated to increase the cost of home construction by 17 percent to 20 percent, putting additional pressure on an industry that has yet to recover from the recession, the credit crunch, and the subprime mortgage-market meltdown.

Changes to the state energy code are scheduled to go into effect on July 1, 2010. Efforts to delay implementation of the changes during the recent legislative session were unsuccessful. These efforts included a bill that would require the Washington State Building Codes Council to prepare a complete small-business economic impact statement prior to implementing the code changes. A similar request to the governor's office to delay the code changes until the economic impact statement was completed was also rejected. The sweeping energy code changes adopted in the Act remain scheduled to take effect on July 1.

In order to implement the Act, Seattle has enacted new energy-reporting regulations for owners of commercial and multifamily residential buildings. Mandatory reporting obligations for commercial buildings exceeding 50,000 square feet begin in 2010, with the initial benchmarking report due by April 1, 2011. Commercial buildings exceeding 10,000 square feet and multifamily residential buildings (five or more dwelling units) must begin reporting in 2011, with the initial benchmarking report due April 1, 2012. Among other things, the new reporting obligation adds new due diligence and disclosure obligations in commercial lease and sale transactions. Energy reports must be made available to existing tenants and to prospective tenants, buyers, and lenders. A series of escalating fines and citations will ensure compliance with the new reporting obligations.

In 2008, the City of Vancouver and Clark County completed the "Joint, Sustainable, Affordable Residential Development Study." The study was undertaken to identify barriers to sustainable, affordable residential development and to develop strategies for overcoming those barriers. These strategies will undoubtedly consist of additional regulations and ordinances attempting to address the perceived problem of sustainable, affordable housing. Lost in the study will be the realization that the new regulations and ordinances will certainly add to the cost of construction.

Regulation of energy use is still in its infancy. While national efforts to regulate energy use are still being debated, local and statewide regulations are beginning to come on line. Forewarned is forearmed.

Back to Top