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The State of California as well as individual municipalities within California are on the forefront of energy disclosure.  Section 25402 of the California Public Resources Code requires benchmarking and disclosure of energy usage of commercial properties.  Energy benchmarking can be conducted through the EPA’s Energy Star Portfolio Manager, which provides ratings based on energy usage compared to similar buildings.  This data is required to be disclosed to prospective buyer, lessee of the entire building, or lender financing the building.

Improving energy efficiency in California buildings is a hot topic, and the state is now pushing the issue by requiring disclosure of energy ratings during lease, lending, and sale transactions for nonresidential buildings. In 2007, section 25402.10 was added to the California Public Resources Code to create a system for measuring the energy consumption of nonresidential buildings. The goal? A 20 percent increase in energy efficiency by 2015. The statute outlines a simple, two-part benchmarking and disclosure process.

Tracking energy usage and benchmarking data can be complicated and there are inherent limitations in the process.  Many building owners will seek to hire an energy engineering consultant to ensure the energy data required to be disclosed to buyers is accurate and meets statutory disclosure requirements.   This process may lead to a more pro-active approach and a full-blown energy audit can lead to increased energy efficiency, lowering Net Operating Income, and increasing the value and marketability of an asset, not to mention helping to sustain the planet.

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