Legal Alerts

Minneapolis Commercial Building Rating and Disclosure Policy

Lindquist Gets Real: Real Estate Tips from Lindquist & Vennum

The City of Minneapolis has enacted a policy requiring certain disclosures about the energy efficiency of commercial buildings. The original goal of the policy was to increase the energy efficiency of existing buildings in the commercial real estate marketplace by providing efficiency data to prospective buyers. However there is already buzz being generated in the Landlord/Tenant community as to how this information will be utilized in giving more efficient buildings a competitive advantage in leasing.

The policy requires the building owner, operator, or manager to measure the building's energy performance and generate an energy performance score and other performance metrics, similar to a fuel economy rating on a vehicle. Building owners/operator/managers are required to benchmark the energy and water use of their buildings on an annual basis. This can be done using the free, web-based Energy Star Portfolio Manager software. After the benchmarking is complete, the data from each building is transmitted to the City through the Portfolio Manager tool. After a grace period, the City will make the data available to the marketplace on a publicly accessible website.

This process mirrors similar processes being implemented elsewhere in the nation, also using the Energy Star Portfolio Manager software. The ubiquity of these processes suggests that we are entering an era in which building energy efficiency will become a component of its market value.

For non city-owned buildings, the disclosure requirements will begin to phase in over a period of two years in accordance with the following schedule:

Initial Compliance Schedule

City-owned buildings

25,000 SF or more By May 1, 2013
Covered buildings (commercial) 100,000 SF or more

By May 1, 2014

Covered buildings (commercial) 50,000-99,000 SF

By May 1, 2015

After full phase-in, the energy rating and disclosure ordinance will affect only buildings that include at least50,000 square feet of commercial space.

The cost to do the tracking is minimal. According to city estimates, building owners for properties greater than 50,000 square feet will typically spend between $100 to $500 per year, or about two to five hours of staff time, just to collect and input information in the free software program from the Environmental Protection Agency. Landlords are not required to upgrade their properties in order to improve their scores.

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