The city of Bellevue took the bold step recently of creating a program to encourage building owners, landlords and building managers to participate in the state’s financial incentive program to make large buildings more energy efficient.
It’s working, as several building owners, property managers and landlords have stepped forward to apply to use $75 million in state financial incentives to create a more energy efficient work and living environment as part of an effort to transition our state toward a greener, cleaner future.
This is all part of Washington’s effort to take the national lead in reducing our carbon footprint by mandating a maximum amount of energy that can be consumed in a year based on a commercial building’s size, use and location. Aiming to reduce greenhouse gas emissions by lowering a building’s energy consumption, lawmakers in 2019 allocated funds to incentivize building owners to retrofit their buildings to comply with the standards.
We encourage other municipalities to follow Bellevue’s lead and set up programs to reach building owners within their cities. Public and private utilities should step up as well. They have direct access to the commercial bill payers, all of whom pay a tariff on their utility bills to cover energy conservation and efficiency projects. Our dozens of public utilities as well as investor-owned utilities such as Puget Sound Energy and Avista are all important players in getting the word out.
The state rules require buildings to hit energy efficiency numerical targets beginning in 2026 and initially applied only to buildings larger than 50,000 square feet. But state lawmakers this year expanded the program to include buildings down to 20,000 square feet and multifamily housing buildings starting at 50,000 square feet. The expansion created a Tier 2 covered building category.
Based on the size of the building and how it is used, come June 2026, owners of buildings 220,000 square feet and over must comply or face fines of $5,000 plus $1 per square foot per year. Buildings that are 90,000 to 220,000 square feet have until June 1, 2027, to comply, and buildings 50,000 to 90,000 square feet must comply by June 1, 2028. The recently expanded Tier 2 covered buildings need to submit reports documenting their energy use analysis, energy management plan, and operations and maintenance program by July 2027 to be eligible for an additional $75 million incentive pool. Agriculture and some manufacturing buildings are exempt. Although some buildings don’t have to comply for several years, the time to apply for part of the $150 million in state financial incentives is now.
Funds will be appropriated on a first-come, first-served basis. Tier 1 building owners, including multifamily buildings greater than 50,000 square feet, could qualify to receive incentives of up to $0.85 per square foot to help offset retrofitting costs. Eligible Tier 2 building owners could receive $0.30 per square foot by demonstrating compliance. According to initial research, more than 24,000 commercial and multifamily buildings in Washington will need to meet the new requirements.
When done right, energy efficiency improvements pay for themselves. The upgrade costs will depend on what is needed. Fixes could include improving antiquated technology, such as mechanical equipment and controls, upgrading lighting to LED technology, switching to high-efficiency heat pumps, and making sure systems are working in harmony with each other.
By taking a comprehensive approach, the required energy efficiency improvements can be performed with minimum owner capital contribution and no impact to leasing costs. A smart energy efficiency project, when executed under a performance contract, is like a free lunch that pays you to eat it.
Building owners and landlords should quickly determine whether they comply with the state standards since it takes time to actually retrofit their buildings. Even though it appears the deadlines are years away, building owners will face fines for noncompliance.
Having a clean building is a state requirement, and is the right thing to do for the environment and for building occupants.