The Benchmarking Shame Game
By George Crawford
An under-the-radar benchmarking requirement may soon surprise many buildings—namely, those properties with low benchmarking scores that have been buried and unnoticed in databases for years. These scores will soon be prominently posted at the front entrance of each and every building, for all to see.
Starting in 2020, New York City buildings will need to display their benchmarking grades at all entrances. Those grades will be based on 2019 benchmarking scores.
Local Law 33 of 2018
When Local Law 84 was first enacted in 2009, benchmarking scores were designed to rate the energy-efficiency level of every building and to encourage those with low scores to improve their energy efficiency through positive peer pressure. In reality, however, these scores have been difficult to access and are generally unknown to the general public. So under-performing properties have no incentive to keep up with like buildings.
That’s about to change in a very big way.
Starting in 2020, in compliance with Local Law 33 of 2018, buildings must prominently post their benchmarking scores by each entrance—including the front entrance—within 30 days of receipt. Numerical benchmarking scores will be converted to a letter grade:
- Grade “A” – Benchmarking scores of 90+
- Grade “B” – Benchmarking scores of 50 to 89
- Grade “C” – Benchmarking scores of 20 to 49
- Grade “D” – Benchmarking scores of 19 and under
- Grade “F” – Noncompliance
- Grade “N” – Exempt
Once letter grades are posted, managers should be prepared to answer a host of questions from their building residents.
‘B’ Buildings
First of all, expect questions regarding the benchmarking grade itself. The vast majority of buildings will have a Grade B. Since most New York City residents are accustomed to letter grades of A for restaurants and the common “A-rated” building designation, a benchmarking grade of B is sure to raise concerns. Expect the majority of these concerns to focus on the potential negative impact on apartment values.
Accurate responses from management to such questions on benchmarking scoring will be important, especially for B ratings. It is factually correct to tell building residents that literally every similar building will also have a B grade. Only a handful of buildings with high levels of energy-saving technology will receive an A. In other words, Bs will be the citywide norm and should have no negative implications.
With building residents walking past these benchmarking grades every day, expect them to focus more on energy-efficiency issues, with respect to apartment valuations. The best approach to this increased awareness of energy efficiency is to be able inform residents that your building has taken, or is planning to take, steps to improve its efficiency. Such steps could include installation of energy-efficient LED lighting in common areas, in compliance with Local Law 88, or even the installation of stand-alone domestic hot water production—both of which are highly recommended energy savings measures.
‘C’ and ‘D’ Buildings
Buildings that receive grades of C or D will land in the “penalty box” with their low benchmarking scores. Low efficiency ratings will have a negative impact an apartment valuations. Managers of these properties should take immediate corrective action. Recommendations include a common-area lighting upgrade to LED bulbs and installation of independent domestic hot-water production, as mentioned above. If the score improvement is not sufficient to qualify for a B grade, managers should engage a professional engineer (PE) to perform a targeted energy audit of the building’s heating system to further improve benchmarking scores.
Time to Act
For buildings that want to improve their 2020 benchmarking scores, you will need to act now. Your 2020 score will be based on the amount of energy consumed by your building in 2019, from January 1 through December 31.
Initiating an LED upgrade now will not only allow you to start realizing savings in the early months of 2019, but it will also improve the benchmarking score that will determine the letter grade posted by all entrances in 2020.
George Crawford leads Green Partners LLC, which identifies money-saving solutions for owners of commercial and residential properties in New York City. For help with your energy needs, please contact George by email at gcrawford@greenpartnersny.com.