Frequently Asked Questions About New Energy Regulations
In response to the sweeping energy regulations introduced by the city and county of Denver, the Apartment Association of Metro Denver (AAMD) and Colorado Apartment Association (CAA) have taken proactive steps to navigate the challenges posed by the Energize Denver program. These FAQs are designed to provide clarity on the litigation assessment and funding strategy initiated by the AAMD and CAA, shedding light on the voluntary contributions sought from building owners to support legal efforts challenging the impactful regulations. Explore the intricacies of the funding strategy, the legal team spearheading the initiative, and the comprehensive approach adopted by these associations to safeguard their members' interests amidst the evolving landscape of energy efficiency mandates.
About the Regulations
What are the recent energy regulations impacting commercial buildings in Denver?
In the new year, the city and county of Denver have introduced stringent "energy efficiency" mandates known as the "Energize Denver" program. These mandates require all existing
commercial, multifamily, and public buildings with 25,000 square feet and larger to comply with strict energy efficiency measures.
What is the purpose of the Energize Denver program?
The Energize Denver program aims to dramatically reduce greenhouse gas emissions (GHG) to zero by 2040 for all existing and new Denver "covered buildings." The program has no soft
implementation phase, and the first mandatory compliance period started on Jan. 1, 2024.
How does Energize Denver enforce compliance?
Denver plans to enforce compliance with steep penalties, liens for noncompliance, and mandated compliance status disclosures prior to any future sale of a "covered building."
What contributes to GHG emissions in these buildings, and how can it be reduced?
GHG emissions in these buildings primarily come from the use of natural gas for heating and hot water. To reduce or eliminate these emissions, building owners are required to either forego the use of natural gas amenities or convert the building to use more costly electricity.
What are the main components of Energize Denver, and how are they measured?
Energize Denver has two main components: annual bench marking reporting of a building's energy usage and final building performance standards that covered buildings must meet by 2030.
Both components are expressed using an Energy Use Intensity (EUI) metric, representing the building's energy use per square foot.
What measures are building owners required to take to comply with Energize Denver?
Starting Jan. 1, 2024, covered building owners must implement energy efficiency measures necessary to meet their first interim building performance standard requirement. This includes retrofitting existing buildings to convert natural gas equipment to electric space and water heating, meeting energy efficiency targets, using a combination of efficiency and natural gas conversion measures, or installing on-site renewable power generation.
How does Energize Denver compel building owners to electrify equipment?
The regulations provide a 10% increase in required EUI targets for covered buildings that demonstrate their building is 80% electrified, emphasizing the push towards electrification.
What penalties are in place for noncompliance with Energize Denver?
Penalties for covered buildings failing to meet EUI building performance standards are steep, with fines up to $0.70 per year for each required kBtu reduction not achieved. These penalties
can result in significant financial burdens for building owners.
How can covered buildings apply for timeline adjustments?
Covered building owners can apply for timeline adjustments for deadlines in 2024, 2027, and 2030 based on factors such as end of major equipment system life, major renovation, change
of ownership or tenant, and financial distress. These applications are handled individually by Denver's Office of Climate Action, Sustainability, and Resiliency (CASR).
What challenges do covered buildings face under Energize Denver?
Covered buildings may face challenges in meeting stringent energy efficiency requirements, potentially impacting marketability and financing.
The fines, if not paid within 180 days, become a perpetual lien on the covered building, taking precedence over other liens, except for general taxes and prior special assessments.
About the Litigation Funding Strategy
What is the purpose of the "Assessment" mentioned in the communications?
The "Assessment" is a term used for a voluntary contribution from members to support legal costs associated with challenging State and City of Denver energy regulations. It is part of a funding strategy aimed at protecting members from potential Billions of dollars in expenses related to converting natural gas to electric energy.
Who is being asked to contribute, and how are funds collected used?
The group targeted for contributions includes Apartment Association members and non-members with buildings over 25,000 sq. ft. that will be impacted. Funds collected will be
specifically used for legal and research expenses associated with energy regulations. Administrative costs are covered by AAMD & CAA general funds.
How transparent will the fund utilization be, and will there be updates on progress?
There will be extreme transparency regarding the fund, detailing where expenses are allocated. Regular updates on progress will be provided to keep contributors informed about the legal and research efforts.
Will contributors' information be made public, and is it optional?
The decision to publish contributions is optional and at the contributor's discretion. At present, there is no plan to publish contributions without the contributor's consent.
How has the response been from members, and is contribution mandatory?
The response from members has been positive and supportive of the funding strategy. However, contribution is entirely voluntary, and there are no plans to mandate contributions. The association(s) have the financial capacity to support any potential shortfall from the membership.
What is the funding strategy and how is it determined?
The funding strategy involves a per-building assessment, with buildings between 25,000-50,000 sq ft assessed $1,250, and buildings over 50,000 sq ft assessed $2,500. The strategy was approved by the AAMD Board of Directors, CAA Board, Joint Legislative Advisory Council, and the AAMD Alliance.
How is the legal team involved, and who leads the effort?
The legal team leading the effort is GreenbergTraurig, a reputed firm for these types of cases. Paul Seby leads the team at GT. The Association has already invested over $175,000 through this legal team in being formal participants in the rulemaking process.
What is the ultimate goal of the legal efforts, and what are the estimated costs?
The ultimate goal is to challenge both State and City of Denver energy regulations in State and Federal Court. The estimated costs for the litigation efforts are in excess of a million dollars, considering the potential Billions of dollars in impact on members' businesses.
How can companies provide support beyond financial contributions?
Beyond financial support, the Association seeks individuals with experience on the issues of conversion costs, time frames, and negative impacts on residents to help articulate the
challenges. Additionally, a professional fundraising group is engaged to seek support from other industries negatively impacted by these regulations.
What happens if more money is raised than needed?
In the unlikely event of excess funds, a pro rata share refund policy is in place to ensure responsible handling of contributions.
For any additional questions or clarification, feel free to reach out to the Association directly. Thank you for your consideration and support.