City of Reno
Nevada

Staff Report
10199

Staff Report (For Possible Action): Presentation, discussion, and potential direction to staff on a proposed Energy Benchmarking, Reporting, and Transparency Ordinance to encourage energy efficiency in large, existing commercial and multifamily buildings, which generate the largest percentage of climate pollution in our community, and establish a path for achieving incremental progress toward our commitment to reduce climate emissions 28 percent by 2025 from the 2008 baseline.

Information

Department:City Manager's OfficeSponsors:
Category:Presentation

Recommendation and Proposed Motion

Recommendation:  Staff recommends City Council provide direction to staff on a proposed Energy Benchmarking, Reporting, and Transparency Ordinance.

 

Proposed Motion:  I move to approve staff recommendation.

Staff Report Formal Body

Summary: The purpose of a benchmarking and transparency ordinance is to establish a program that encourages large commercial, institutional and multifamily buildings to invest in energy efficiency to improve building performance, which will result in lower carbon emissions from the commercial building sector. The commercial building sector generates 32 percent of carbon emissions in the community and is the largest contributor to community-wide climate pollution. A benchmarking and transparency ordinance is a proven, local government intervention that results in decreased energy use and reduced carbon emissions. The ordinance will only apply to the largest buildings in the community.

 

Annual benchmarking and disclosure of building performance will increase market value for energy efficiency. The ordinance will also allow the city to monitor and report changes in energy and water use toward our carbon emissions reduction targets, and identify and create programs and resources that support the commercial building sector in meeting the requirements of the ordinance and improving building performance.

 

Previous Council Action:

 

·         August 23, 2017 – Council adopted a resolution to launch a Better Buildings Challenge, a national, voluntary leadership initiative of the U.S. Department of Energy designed to create American jobs through energy efficiency. This activity is an element of the City Energy Project grant proposal. The Better Buildings Challenge invites building owners and facilities managers to benchmark building energy use and invest in energy efficiency through their commitment to reduce energy and water use 20 percent over 10 years. 

·         July 26, 2017 – Council accepted sponsorship donations of $50,000 from: Nevada Governor's Office of Energy - $20,000 in the form of a sub-grant; Truckee Meadows Water Authority - $20,000 in the form of an Inter-local Agreement; McDonald Carano Wilson - $5,000; and Technical Designs - $5,000. The donations meet the 2017-2018 matching fund requirement of $104,000 for the City Energy Project grant awarded to the City of Reno.

·         April 12, 2017 -  Council accepted donations of $40,500 in sponsorship donations from: Renown - $20,000, Basin Street Properties - $5,000, Barrick Gold - $5,000, EDAWN - $5,000, Gaia Development - $5,000, and Ameresco - $500 to go toward the 2017-18 matching fund requirement of $104,000 for the City Energy Project grant awarded to the City of Reno.

·         October 12, 2016 – Council accepted a Grant Award from the City Energy Project to the City of Reno for direct funding for a new staff position for $200,000 with a City match requirement of $52,000 per year for two years totaling $104,000 in matching funds.

·         September 9, 2015 – Council approved the City of Reno joining the Compact of Mayors, a global coalition of mayors and city officials committing to reduce local greenhouse gas emissions, enhance resilience to climate change and track their progress publicly. The initiative was launched at the 2014 United Nations Climate Summit.

 

Background: Reno’s Commitment to the Paris Climate Agreement - In 2015, the City of Reno joined the Compact of Mayors, now the Global Covenant of Mayors, which today has more than 9,000 participating cities. Participating cities have committed to battling the increasing threats of climate change and accelerating ambitious, measurable climate and energy initiatives that lead to an inclusive, low-emission and climate resilient future and in accordance with the Paris Climate Agreement. The Paris Climate Agreement is an international treaty ratified in October 2016, which aims to limit the rise in global temperature to 2 degrees Celsius.

 

In the most recent report of the United Nations’ Intergovernmental Panel on Climate Change (IPCC), scientists warn that governments around the world must take "rapid, far-reaching and unprecedented changes in all aspects of society" to avoid disastrous levels of global warming. To reduce the risk of extreme drought, wildfires, floods and food shortages, the IPCC states that carbon emissions would need to decrease by 45 percent by 2030 from 2010 levels.

 

Because climate impacts pose economic risks for cities, in November 2017 Moody’s Investors Service announced it will assess a city’s commitment to reducing climate pollution and ability to adapt to a changing climate. Moody’s will embed climate risks as a key factor in its determination of a local government’s credit rating.

 

Climate Change in Reno

As the fastest warming city in the U.S., Reno already experiences the impacts of a changing climate. Over the past 50 years, Reno’s average annual temperature has climbed 1.39 degrees Fahrenheit per decade. The impacts of climate change — less snowpack, multi-year droughts, a dramatic increase in flooding, and more frequent wildfires — have shaken our perspective and challenged our assumptions about our future. Climate change will directly affect the natural environment we so highly value, the health and safety of our families, and the economic growth that is creating greater prosperity for Reno businesses and families.

 

Through the Global Covenant of Mayors, the City of Reno committed to meet an interim carbon emissions reduction goal of 28 percent by 2025 from 2008 levels. Total CO2e (carbon dioxide equivalent, the standard unit for measuring carbon pollution) emissions dropped from just over 3.2 million metric tons in 2008 to 2.75 million metric tons in 2014. This translates to a 13.62 perecent drop in total emissions in six years. The emissions reductions were achieved primarily through increases in the State of Nevada’s renewable energy portfolio, improvements in fuel efficiency through the national Clean Car Standards, implementation of single-stream recycling, and actions taken by residents and businesses that have resulted in lower emissions such as rooftop solar and LED lighting retrofits.

 

To reach our target and reduce emissions 14 percent by 2025, the city will need to take action through policies and programs focused on the following areas:

 

·         Renewable Energy

·         Energy Efficiency

·         Green Building

·         Electric Vehicles

·         Mixed-Use Development with Jobs/Housing Balance

·         Public Transit

·         Shared Mobility

·         Waste Minimization

 

Commercial Building Sector Benchmarking and Transparency Ordinance

In Reno, commercial buildings account for largest portion of community-wide climate pollution contributing 32 percent of emissions. The U.S. Department of Energy estimates that up to 30 percent of energy used in buildings is wasted through inefficiencies. Benchmarking building energy use is the first step to making cost-effective efficiency improvements in Reno’s commercial buildings.

 

The benchmarking and transparency ordinance supports Reno's goal to reduce climate pollution, build our clean energy economy, and create good, highly skilled jobs.

 

Organizations manage what they measure. Energy benchmarking is the process of collecting building energy and water usage data over time using standardized metrics to establish a baseline. It provides a way to evaluate the building’s energy use over time, compare to similar buildings, and determine the magnitude of potential energy savings. When building owners and managers understand their building’s performance they can make smart, cost-effective operational and capital investment decisions. 

 

Utilities represent 29 percent of the average company’s operating budget. Improving the energy efficiency of buildings produces real financial benefits including lower operating costs, increased property values, and enhanced competitive advantage. Intangible benefits are also significant, from enhanced corporate image and customer loyalty to improved productivity and employee satisfaction.

 

Buildings Magazine found that 84 percent of facilities managers and building owners surveyed who benchmarked their buildings energy use made low- to no-cost operational improvements, and 82 percent invested in energy efficiency upgrades to improve the performance of their buildings. Investments in energy efficiency also create an abundance of local jobs — in trade, installation, professional services, manufacturing, engineering, and research.

 

Discussion: A benchmarking and transparency policy is a market-based tool designed to overcome barriers and create demand for energy efficiency improvements in commercial, institutional and multifamily buildings. Energy benchmarking is the process of measuring a building’s energy use over time. Benchmarking will give owners the information they need to identify opportunities to cut energy waste and understand how their building performs relative to similar buildings.

 

To benchmark the energy and water use, building owners and facilities managers will use the U.S. Environmental Protection Agency’s ENERGY STAR Portfolio Manager, an online tool designed to measure and track energy and water consumption. The Portfolio Manager gathers basic property information, building details such as gross floor area, and energy and water usage data. It may take from twofour hours, or more, to benchmark a building each year depending upon the type of property, access to property information and building details, digital access to the energy and water usage data or automated data transfer into the Portfolio Manager, and familiarity with the tool.

 

Today, 40 percent of U.S. commercial building space already benchmarks their buildings using the Portfolio Manager, including more than half of the Fortune 100, half of the largest U.S. healthcare organizations, major league sports teams, colleges and universities, and entire cities.

 

The City of Reno has been working with industry stakeholders and continues to work closely with stakeholders to refine the elements of the benchmarking and transparency ordinance, gathering input on:

 

·         Roles and responsibilities of city departments

·         Market sectors included

·         Minimum building size covered

·         Exemptions

·         Party responsible for reporting

·         Implementation schedule and phases

·         Reporting requirements

·         Transparency approach

·         Enforcement

·         Pathways for low performing buildings to improve performance

·         Reporting schedule

 

The city will produce a periodic report of compliant, high-performing buildings during the initial phase, and aims to produce a comprehensive report of compliant high and low performing buildings in future years. The information will help to create effective market mechanisms, programs, and services that accelerate investments in energy efficiency. It will give building owners and facility managers more opportunities to explore options for improving performance.

 

The ordinance proposes only no- to low-cost options for compliance and energy performance improvements. Fees would be consistent with existing code compliance fees.

 

Direct and Indirect Benchmarking Benefits

Energy and Cost Savings: Buildings across the U.S. that benchmarked over a 3-year time span reduced energy consumption by an average of 2.4 percent annually, which for a 500,000-square-foot office building could result in cumulative energy cost savings of $120,000. In Washington, D.C., buildings that benchmarked from 2010 to 2012 under the District’s ordinance have reduced energy use by nine percent on average, adjusting for weather, over that three-year period.

 

Higher Occupancy and Rents in Leased Spaces: An analysis of data from a single portfolio of more than 100 U.S. office buildings from 2004 to 2013 found that ENERGY STAR certified buildings experienced 9.5 percent higher occupancy rates and 2.5 percent higher rental rates than conventional buildings. The study also found that buildings certified as energy efficient enjoyed a higher likelihood of lease renewal and average rent concessions to tenants of just 7 percent compared to 11 percent for conventional buildings. On average, ENERGY STAR- labeled buildings also rent for $2-$3 more per square foot.

 

Direct Resources to the People and Resources Most in Need: Affordable resources are constantly in high demand in the Reno market. Once building efficiency information is available, local policymakers and electric, gas, and water utilities can better identify and develop valuable policies, programs, and financial tools to focus on the areas of the market with the greatest opportunities for efficiency savings.

 

Community Benefits:

·         One dollar spent on energy efficiency is more economically productive than a dollar spent on buying energy.

·         Spending on energy efficiency stays local. Energy consumption costs are more likely to leave the local market.

·         Energy efficient properties are better long-term investments for owners and financiers.

·         Jurisdictions with benchmarking policies have seen reductions in local greenhouse gas emissions.

Stakeholder Process

Staff developed the benchmarking and transparency policy through a robust stakeholder process. The stakeholder group convened is referred to as the Technical Committee – Policy Development, organized under the Commercial Green Building Task Force. The Commercial Green Building Task force has been meeting for the past 1.5 years offering guidance on how to expand green building and energy efficiency in Reno’s marketplace.

 

More than 50 organizations were invited to participate on the Technical Committee and are kept informed through the process, including: industry associations, labor, local and state government, major institutions, real estate developers, property owners and facility managers, industry professionals, local businesses, non-profit organizations, and concerned residents. Sixty stakeholders have been actively engaged in the process. Attendance at each meeting ranged between 15 and 25 people.

 

Four stakeholder meetings have been held to date in which stakeholders helped to shape the benchmarking and transparency ordinance. At least one more stakeholder meeting will be held prior to presenting the final ordinance to Council for adoption. The meetings and topics were as follows:

 

·         August 2, 2018: Goals, City of Reno overview, national trends, benchmarking goals, and metrics.

·         August 20, 2018: Recap, in-depth review of benchmarking, key decision points, ENERGY STAR Portfolio Manager, and next steps.

·         September 10, 2018: Example Ordinance structure, building stock data, benchmarking criteria, and exemptions.

·         September 25, 2018: Options for non-compliance and low-performance buildings (education, services, audit or retro-commissioning requirement).

 

City Energy Project

The benchmarking and transparency ordinance is an output of the City Energy Project grant awarded to the City of Reno in 2016. The City of Reno was invited to join the City Energy Project as one of 20 pioneering cities working to boost our local economies and reduce climate pollution by cutting energy waste in large buildings. Our efforts here in Reno will help to shape next-generation clean energy policies for communities nationwide.

 

The City of Reno’s commitments to the City Energy Project were to implement a set of policies and programs designed to dramatically improve the energy performance of large commercial buildings, including:

 

·         Energy benchmarking and transparency policy for buildings;

·         Building energy audit and/or retro-commissioning policy designed to drive improved energy efficiency;

·         Program to provide training and certification of building operators to accelerate energy efficiency investments;

·         Adoption of 2018 International Energy Conservation Code standards for new and renovated commercial buildings;

·         Assessment and process improvements for effective energy code compliance;

·         Energy efficiency improvements in municipal buildings;

·         Citywide Better Buildings Challenge to promote energy efficiency in private sector; and

·         Commercial Property Assessed Clean Energy (C-PACE) finance program to provide access to private capital to finance energy efficiency projects.

 

Financial Implications: Implementation and management of the ordinance, along with program and services designed to support building owners and facilities managers in meeting the ordinance, and supportive commercial building programs and services will require staffing resources of 1.0 FTE. Funding for the management analyst position currently filled to develop and implement the ordinance is secured through June 30, 2019. After that date, the annual staff and programmatic costs are estimated to be $120,000.

 

Legal Implications:  Legal review completed for compliance with City procedures and Nevada Law.

 

 

 

Meeting History

Oct 24, 2018 10:00 AM Video Reno City Council & Redevelopment Agency Board Joint Regular

COUNCIL MEMBER BREKHUS ABSENT AT 12:47 PM.

Public Comment:

Tom Polikalas, representing Southwest Energy Efficiency Project, spoke in support of the sustainability policy and initiatives for benchmarking.

James Dillard, representing Local 26 Sheet Metal Workers Union, spoke in support of benchmarking initiatives.

Council Member McKenzie made the following disclosure and recused himself from this item:

"Given the public comment that was just made; I've been advised by the City Attorney's Office that due to my position with the Building and Construction Trades Council, I need to recuse myself from this item."

COUNCIL MEMBER MCKENZIE RECUSED AT 12:50 PM.

Doug Thornley, on behalf of NAIOP, spoke in support of initiatives and will continue to work with staff on initiatives.

Online public comment, did not wish to speak, in support of Energy Benchmarking and Transparency: (5 individuals listed below)

Jaime Villarino-Eilenberger, Carol Garda, Christine Brinker, Kevin McGhee, Ed Friedrichs

Suzanne Linfante, City of Reno Management Analyst, gave a presentation, answered questions, and received feedback from Council.

COUNCIL MEMBER JARDON ABSENT AT 12:58 PM.

COUNCIL MEMBER JARDON PRESENT AT 1:00 PM.

COUNCIL MEMBER BREKHUS PRESENT AT 1:01 PM.

COUNCIL MEMBER DELGADO ABSENT AT 1:03 PM.

COUNCIL MEMBER BREKHUS ABSENT AT 1:05 PM.

COUNCIL MEMBER BREKHUS PRESENT AT 1:08 PM.

COUNCIL MEMBER JARDON ABSENT AT 1:11 PM.

COUNCIL MEMBER JARDON PRESENT AT 1:14 PM.

It was moved by Council Member Bobzien, seconded by Council Member Duerr, based on direction from today, to direct staff to move forward on their path for the proposed Energy Benchmarking and Transparency initiatives.

RESULT:APPROVED [5 TO 0]
MOVER:David Bobzien, Councilmember
SECONDER:Naomi Duerr, Councilmember
AYES:Hillary Schieve, Jenny Brekhus, Naomi Duerr, Neoma Jardon, David Bobzien
ABSENT:Oscar Delgado