Background and Relevance

Effective January 1st, 2012, a new requirement for selling, leasing or financing of the following commercial buildings will require disclosure of the building's energy efficiency rating is mandatory by California State law (AB1103):

- All Non-Residential buildings 50,000 square feet or larger
- Solely owner occupied buildings of any size

The energy efficiency rating will be based on the system developed by the U.S. Environmental Protection Agency's Energy Star Portfolio Manager. Energy Star's benchmarking system rates buildings on a scale from 1 to 100. The scale rates a given building against similar buildings within its class. The system adjusts for climate but not for age (i.e. a building in New York will not be compared to a building in Los Angeles for heat use or space cooling). Premises that get a score 75+ are eligible to apply as an ENERGY STAR labeled Building which requires an additional procedure.

What's the payback

A study published by the Institute of Business and Economic Research at UC Berkeley found that office buildings with energy efficiency certification have rental rates that are two percent higher per square foot than otherwise identical buildings nearby, and when adjusted for their higher occupancy levels, the “green premium” goes to above six percent.

So the purpose of AB1103 is to (1) determine and document the energy efficiency of commercial buildings and (2) decrease its consumption through energy efficiency upgrades. It's a triple Win-Win for the property owner in terms of increasing a sustainable building's value - lowering operating cost for the tenants - and  reducing GHG (Green House Gas) emissions to help the environment.


• Civil suits related to general business practices, e.g. Bus. Code §§17200 et seq.

• Title 20 complaint and investigation procedures, Article 4, §§ 1230et seq.

– Anyone may file complaint

– Commission procedure may include investigation, hearing

– No fines under AB 1103

• Data collection civil penalties, Pub. Res. Code § 25321

– Continued or willful violations

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