AHK Law Office

Commercial Energy Use Disclosure Program (AB 1103) Drastically Altered by California Legislature, Eliminating Owner Burden

October 2015 –The California legislature passed Assembly Bill 1103 in 2007 which required an owner of certain non-residential buildings to disclose the energy consumption of that building to prospective buyers, to lessees of the entire building and to lenders financing the entire building.

The burden of this obligation was put on the property owner. One method of complying with this obligation was to use an Environmental Protection Agency program entitled The Energy Star Portfolio Manager. In essence, the owner of the building had to upload all of the building's energy usage to this program. Or, the owner could provide the potential buyer, tenant or lender with alternative means of understanding the energy usage.  While the legislation limited the requirements to buildings of more than 10,000 square feet, there were future requirements that would have required buildings of 5,000 square feet to be involved in the program. These mandates were postponed from time to time but ultimately implemented, at least for the 10,000 square foot building category. There were a few exemptions, of course.

The entire law has now been revised. Beginning the first of the year, the new law will still require disclosures but the disclosures must be made by the utility companies. The new law is found in Assembly Bill 802.  It was approved by the Governor on October 8, 2015 and filed with the Secretary of State on October 8, 2015.

The result of this bill is good news for building owners. They no longer have to go through a burdensome and oppressive record keeping routine before the building owner can rent, sell or refinance the owner's building.  It is now up to the utility provider to comply with the energy record-keeping duties.