State financial incentives available for creating clean buildings
The state will soon require owners, property managers and landlords of buildings larger than 50,000 square feet to hit energy efficiency numerical targets. This makes Washington a national leader for mandating such targets based on a commercial building’s size and use, offering the opportunity to reduce greenhouse gas emissions by lowering a building’s energy consumption.
Now is the time for owners and managers of such buildings to understand what they need to do to meet those requirements – and do so soon enough that they can apply for state financial incentives to retrofit their buildings to comply with the standards.
Based on the size of the building and how it is used, starting in June 2026, owners 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 by June 1, 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 part of the $75 million in state financial incentives is now.
These incentives can help offset the costs of needed retrofits for buildings that are more than 15 points away from their performance targets. 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. According to initial research, 10,681 commercial buildings in Washington will need to meet the new requirements. Applications will be accepted starting July 1 of this year.
Our team recently met with a building and operations director for a company that owns and manages several commercial, office and multi-family residential buildings in Seattle, Kirkland, Renton and Tukwila.
That company has done a stellar job of upgrading its buildings to make them as energy efficient as possible by installing new LED lighting and sensors to monitor electrical use as well as monitoring controls adjusting heating, ventilation and air conditioning equipment. Tom Bendzak, building and operations director at Blume Company Real Estate, says the company has been doing that since 2005, when it started focusing on green building conservation and reducing its carbon footprint.
Most of those buildings are already in compliance with the state’s new clean building regulations. But one of the buildings, the 45th Street Plaza in the University District, could use a little help.
To understand how far away from the state targets a building is, owners should first benchmark their 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.
This is important for the 45th Street Plaza because its use has changed over time. The property is currently being measured for use under office/retail regulations. However, it now has two restaurants and another food-producing tenant. Correctly classifying how the property is used will change the required EUI, bringing the building closer to compliance.
Once a benchmark is established, conducting an energy audit will determine how to make the building more efficient, to improve its 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.
The upgrade costs will depend on what is needed. We have found when the required energy efficiency improvements are done in a smart comprehensive manner that 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 and contact our team for your Energy Benchmark: Clean Buildings