SB5722 – Creates a benchmarking and energy management program (and eventual performance standards) for multifamily buildings of at least 50,000 sq. ft. and other buildings between 20,000 and 50,000 sq.ft.
Prime Sponsor – Senator Nguyen (D; 34th District; Vashon Island & Southwest Seattle.) (Co-Sponsor Senator Liias – D) (By request of the Governor.)
Current status – Senate concurred in House amendments.
Next step would be – To the Governor.
Legislative tracking page for the bill.
HB1774 is a companion bill in the House. (Dead bill)

In the Senate – Passed
Had a hearing in Environment, Energy & Technology January 13th. Replaced with a substitute by the prime sponsor and passed out of committee February 2nd. Referred to Ways and Means. Had a hearing February 4th and passed out of committee February 7th. Referred to Rules, and passed by the Senate February 12th.

In the House – Passed
Had a hearing in the House Committee on Environment & Energy February 17th, and passed out of committee February 22nd. Referred to Appropriations; amended to make it null and void if funding for it isn’t appropriated; and passed out of committee February 28th. Referred to Rules. Replaced by a striker on the floor delaying the start date of the expanded early adoption incentive program for smaller buildings by a year, to July 2025, and making a couple other minor changes. (I now think the bill caps these expanded incentives at $150 million.) Passed by the House March 3rd.

Summary –
Substitutes –
The substitute would expand the current early adoption incentive program to include buildings where the sum of multifamily, nonresidential, hotel, motel, and dormitory areas is between 20,000 and 50,000 square feet. They’d get 30¢/sq.ft for implementing their benchmarking, energy management, and operations and maintenance planning requirements without having to meet the performance standards for bigger buildings, and these incentives would be available for buildings using gas, without regard to their greenhouse gas emissions. Multifamily buildings over 50,000 sq. ft. would be eligible for these incentives as well, rather than being able to choose to apply for the 85¢/sq.ft. incentives for early compliance with the performance standards for non-residential over 50,000 sq.ft as they could in the first version of the incentives. Owners could apply from July 1, 2024 to July 1, 2030. (I think the bill would allow another $75 million for these incentives, and that the additional funding would not be available for the previous phase of incentives, which reached their $75 million cap very quickly, but the language of that provision isn’t very clear.)

The bill also requires a small business impact statement, and an appeals process for administrative decisions including penalties. It would authorize enhanced incentive payments for building owners committing to anti-displacement provisions rather than limiting incentives for multifamily buildings to those limiting increase in rent to inflation for four years.

Original bill –
By December 31, 2023, the bill would have the Department of Commerce create a benchmarking and energy management requirement for multifamily buildings of at least 50,000 sq. ft. and buildings where the sum of multifamily, nonresidential, hotel, motel, and dormitory areas is between 20,000 and 50,000 square feet. The requirements are to be consistent with the current Clean Buildings energy performance standards for non-residential buildings over 50,000 sq ft, but are limited to energy use analysis through benchmarking and reporting, energy management planning, and operations and maintenance planning. The Department would be required to create an actual performance standard for these buildings by 2030, and the bill would authorize it to establish targets for buildings’ greenhouse gas-adjusted energy use intensity in this and the current performance standards.)

Commerce would provide a support program for building owners including outreach and informational materials connecting them to utility resources, periodic training, phone and email support, and other technical assistance. It would have to include enhanced technical support such as assistance with benchmarking and planning for buildings whose owners typically don’t employ dedicated managers, such as multifamily housing, child care facilities, and houses of worship. The bill also says the department “shall consider” underresourced buildings with a high energy use per square foot, buildings in rural communities, buildings whose tenants are primarily small businesses, and those located in high-risk communities according to the Department of Health’s environmental health disparities map. [I think that probably means it’s supposed to consider what additional support owners of those buildings might need, and provide that, but it’s not clear.] (The requirements would also have to include provisions for financial hardship.)

Commerce would also be required to establish an incentive program to supplement the cost to building owners or tenants, less utility incentives and annual savings resulting from the requirements. It would have to require that tenants’ rent could not be raised at a rate above inflation for four years after receiving the incentives.

The Department would have to notify the owners of covered buildings of the requirements by July 1, 2025, and owners would have to file reports demonstrating they’d developed and implemented the bill’s required procedures by July 1st, 2027 and every five years after that. It would adopt rules imposing a penalty of not more than 30 cents a square foot for failing to submit documentation demonstrating compliance with the requirements, or for increasing rent above the rate of inflation for multifamily leased space receiving the incentives. (Penalties would be deposited in the low-income weatherization and structural rehabilitation assistance account and reinvested into the program to support compliance with the standard.) [I think this means the actual performance standard to be established by 2030.]

The department would have to evaluate the benchmarking data to determine energy use and greenhouse gas emissions averages by building type, and report to the Legislature and the Governor by October 1, 2029, with recommendations for cost-effective building performance standards for the covered buildings, their estimated costs for building owners, and anticipated implementation challenges.

By December 31st, 2030, the Department would be required to adopt rules to add these buildings to the State’s energy performance standard program. It would have to consider the age of buildings in setting performance targets, and might establish a longer timeline for compliance by multifamily buildings than for the other buildings covered by the bill. The rules could not take effect until the end of the 2031 regular session.