Expense Management: City Ordinances Requiring Energy Benchmarking Gaining Momentum
The trend toward mandated energy usage benchmarking is gaining traction among U.S. cities. In the last few years, several cities have passed ordinances requiring existing buildings—including in some cases multifamily buildings—to track energy usage. Some of the cities that recently implemented or are starting to implement energy benchmarking requirements include New York City, Washington D.C., Seattle, and Austin, just to name a few. Several states are also moving toward mandated benchmarking and others are sure to follow.
Differences may exist among the various ordinances—some benchmark both water and energy or have a phased approach for implementation, for example. But overall, these new requirements require owners to report their buildings’ utility usage data, which can then be compared to data from buildings of a similar size and function as well as to past data from the same buildings.
Importance of Benchmarking Utility Usage
Benchmarking software tools are available for multifamily companies looking to benchmark utility usage. Utilities (electricity, natural gas, water and sewer) are one of a multifamily portfolio’s biggest expenses. Water and sewer rates across the country continue to increase as cities and municipalities struggle to keep up with demand and rising costs. Rates for electricity and natural gas continue to mount as well.
Owners and managers of multifamily properties need to ask themselves: how much of the pending rate increases are they willing or able to absorb? Would raising rents put their properties at a competitive disadvantage in the market? Bear in mind that rents can’t be raised in mid-lease, so chances are rate increases will, at least initially, be borne by the owners.
Benchmarking is an important tool you can use when developing a plan to reduce expenses and consumption. After all, you have to know where utility consumption and waste are occurring before you can take measures to reduce expenses and/or alleviate waste. Owners can use benchmarking data to determine which properties are utility hogs and which are more efficient. An energy audit can help identify areas ripe for improvement or intervention. For example, a property can adjust its landscape watering schedule to reduce water consumption (and cost) on a yearly basis or adjust heat and air conditioning in non-residential areas of the community.
From the residents’ point of view, this knowledge can be valuable as well. Residents care about the energy efficiency of their communities. Living in an apartment complex that cares about saving water and energy, not to mention lower individual utility bills, are important considerations when selecting an apartment. Being able to provide this data to prospects and residents boosts a community’s marketing appeal.
Learn more about RealPage Utility Cost Benchmarking.