During the last year's legislative session, the Washington legislature adopted the Efficiency First Act, which establishes statewide standards for the Washington Energy Code, which preempts many aspects of energy codes adopted by local jurisdictions, covering commercial and residential construction projects.
The code changes are estimated to increase the cost of home construction by 17 to 20 percent, putting additional pressure on an industry that has yet to recover from the recession and a credit crunch.
and the subprime mortgage-market meltdown.
Changes to the state energy code are scheduled to go into effect on July 1. Efforts to delay implementation of the changes during the recent legislative session have, as of VBJ's press time, been 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 office of Gov. Christine Gregoire (D-Wash.) to delay the code changes until the economic impact statement was completed was also rejected.
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 with 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 a joint Sustainable, Affordable Residential Development Study, 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. To those in the hard-hit construction industry, a piece of good advice in regards to the new regulations: forewarned is forearmed.
Thomas B. ("Brad") Eriksen represents business and corporate clients in all aspects of business operations. His practice also includes executive and deferred compensation planning for nonprofit entities, such as credit unions and governmental entities. You can contact Brad at 360.567.3903 or by email at brad.eriksen@jordanschrader.com.
