The City of Chicago recently passed the Building Energy Use Benchmarking Ordinance of the City of Chicago (the “Ordinance”). 

Subject to certain exceptions, the Ordinance generally requires owners of buildings of 50,000 gross square feet and larger to track and report energy consumption.

The reporting requirements are phased in over the next three years, with the first phase requiring buildings of 250,000 gross square feet or greater to report in June 2014. The second phase requires buildings between 50,000-250,000 gross square feet to report in June 2015. Residential buildings (i.e., a building with 10 percent or more residential occupancy) within each of these two phases will have an additional year to comply with the Ordinance.

Note that the June reports cover the prior calendar year, so for the buildings in the first phase, efforts should be made now to gather the required calendar year 2013 information.

As a result of the Ordinance, now is a good time to review existing property management agreements to make sure that the scope of services is broad enough to cover these additional reporting requirements. In addition, while the Ordinance does impose obligations on tenants to cooperate in providing energy use information, building managers should review their form leases to ensure that tenants’ “compliance with laws” or similar obligation is broad enough to pick up the reporting obligations. Also, leases should be reviewed to determine the ability to pass through expenses related to the installation of more energy-efficient systems.

The Ordinance excludes certain industrial facilities, storage units and hazardous use units. The Ordinance also has temporary exemptions for new construction for the reporting year that the certificate of occupancy is issued as well as for buildings facing financial distress (e.g., buildings suffering foreclosure or 50 percent physical vacancy).

The reporting data must be verified by a licensed architect, engineer or other professional recognized by the City every three years. The City will publish an annual report on energy efficiency and, starting in June 2015, the City may publicly disclose individual building energy performance.

For more information about the topics raised in this Legal Update, please contact Paul E. Meyer at +1 312 701 7182.