State Financial Incentives Available for Creating Mandated Clean Buildings

By Perry England, Vice President of Building Performance 

Featured on 425 Business Magazine:

Two large Eastside businesses – Kemper Development Co. and PACCAR– are already working toward meeting the state’s new Clean Buildings requirements — something owners of most buildings 50,000-square-feet or larger will need to do.

Building owners, property managers, and landlords who start this process also soon can apply for financial incentives from the state to retrofit their buildings to comply with the state’s new standards.

Kemper Development Co. is making improvements to its Bellevue campus to better understand energy usage and controls upgrades are underway. Like Kemper Development, PACCAR and other property owners stand to benefit greatly from the state’s early adopter incentives. PACCAR is already making improvements to its portfolio of facilities around the Puget Sound to better understand its energy usage using the U.S. Environmental Protection Agency (EPA)’s Energy Star’s Portfolio Manager.

Approved by the Legislature through SHB1257 and signed into law by Gov. Jay Inslee in 2019, the Clean Buildings standards make Washington a national leader for mandating energy efficiency numerical targets based on a commercial building’s size and use. The performance standards offer the opportunity to reduce greenhouse gas emissions by lowering a building’s energy consumption.

Based on the size of the building and how it is used, owners starting in June 2026 must comply or face fines of $5,000 plus $1 per square foot per year. Buildings greater than 220,000 square feet will be the first to meet the requirements in June 2026. 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. Agriculture and some manufacturing buildings are exempt. Although some buildings don’t have to comply for several years, the time to qualify for the state financial incentive is now.

The penalty for non-compliance is steep. That’s why the state is offering financial incentives to help offset the costs of needed retrofits for buildings that are more than 15 points away from their performance targets. As part of the Clean Buildings legislation, lawmakers approved $75 million to put toward financial incentives. Funds will be appropriated on a first-come, first-served basis. Building owners could qualify to receive incentives of up to $0.85 per square foot to help offset retrofitting costs.

Applications will be accepted starting July 1.

With financial awards starting in July to those who are the first to apply, it’s time for those who own and manage buildings larger than 50,000 square feet to do what’s necessary now so they don’t miss out. According to initial research, 10,681 commercial buildings in Washington will need to meet the new requirements.

Building owners should benchmark current energy use by conducting an energy audit to compare the building’s energy use using the EPA’s Energy Star Portfolio Manager. This involves reviewing 12 months of utility data, along with the square footage of the building, to determine its Energy Use Intensity (EUI). The lower the EUI, the more energy-efficient the building is. The new state law establishes maximum energy use by square foot and building type. For example, commercial office buildings have a lower required EUI than hospitals or restaurants.

Once a benchmark is established, it’s possible to determine how to make the building more efficient, to improve the building’s EUI so it complies with state law. The further away from the required standards the building is, the more work will be required to bring it into compliance. Fixes could include improving antiquated technology (such as mechanical equipment and controls), upgrading lighting to LED technology, and making sure systems are working in harmony with each other rather than against each other. The upgrade costs will depend on what is needed. We have found that when the required energy efficiency improvements are done in a smart and comprehensive manner, it actually pays for itself within the useful life of the improvements.

Having a clean building is a state requirement and it can be good for your business. Don’t miss the opportunity to have some of these retrofits paid for by the state by working with a contractor that can provide cost-effective energy-saving solutions and develop energy-management plans.

Learn more about how MacDonald-Miller can help you meet the mandate: Clean Buildings Standard.

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