January 7, 2021 | Alexandra Laney

Earlier this fall, facing a pandemic, a struggling commercial real estate market, and budget cuts, the City of Philadelphia managed to finalize Building Energy Performance regulations to improve the energy efficiency and building performance of the city’s largest non-residential buildings. This achievement shows progress is possible even in tough times, particularly when all stakeholders are aligned and see the common benefit. To find out how this was possible, I spoke to Zachary Greene, Climate Advisor to Philadelphia’s Office of Sustainability through the Bloomberg Philanthropies American Cities Climate Challenge.

Why is Philly’s Building Tune-Up Law important? 

The law is a critical step in meeting citywide climate goals of reducing emissions by 80% by 2050. We’ve seen 12% reductions from benchmarked buildings alone, but buildings and industry represent 72% of the city’s emissions and large buildings represent 15%. The Building Energy Performance Policy (Building Tune Up law) mandates improvements—not just reporting—but it’s focused on improvements that can be made to existing systems. This means owners can focus on low- and no-cost operational changes rather than capital improvements, although building owners with more ambitious building performance goals will also get credit through alternative compliance pathways. Beyond reducing emissions, we see many additional co-benefits of tune-ups—increased tenant comfort, financial savings for owners and recognition for those people and businesses already working toward high performance buildings.

How did you decide what to put in regulations vs legislation? 

This was a critical decision point because legislation is difficult to alter, whereas the regulations offer more flexibility and autonomy to the Office of Sustainability and the affected building owners. We wanted to leave enough flexibility to give stakeholders room to adjust while also ensuring we hit our policy goals. Before the law was passed last year, we convened a broad group of stakeholders to hear their perspectives and determine what items would need further discussion and research after the legislation passed, such as the requirements of a tune-up. In the legislation, we identified all the systems to be involved in a tune up, but we didn’t specify what needed to be done because we needed to hear more from building owners and service providers. As a result of this outreach and listening, a lot of stakeholders showed up in support of passing the legislation and engaged in regulation development.

In hindsight, there are still areas where we wish the legislation provided more flexibility. For example, some of the legislation language limits our ability to expand the credentialing options for those who can lead tune-ups. The narrower list of credentials means it’s harder for us to meet inclusive workforce goals. We also encountered challenges with extending compliance deadlines due to Covid-19. Many building owners requested a blanket extension, but the legislation did not provide the Office of Sustainability with that ability. So now we have to grant extensions on a building-by-building basis. This is unfortunate because we would prefer to streamline the process for building owners, but we just didn’t foresee something like this pandemic.

How did you engage with stakeholders before and during this pandemic?

As I mentioned, we started engaging stakeholders before the policy was drafted. We have a long-standing relationship with the building community going back to 2012 when we passed the Benchmarking law in partnership with many of these stakeholders. To get a head start on the tune-up legislation, we used the City of Seattle’s tune-up program as a model. This allowed us to be more efficient in our work and to benefit from lessons learned. I would like to thank Seattle’s staff for their support, along with IMT and the Urban Sustainability Directors Network (USDN) for helping make this city-to-city connection.

To develop Philly’s Building Energy Performance law, we brought together building owners, environmental advocates, service providers, utility representatives, and others, and then the law passed in 2019. We came into 2020 with the signed law, not sure what to expect at our first advisory committee meeting to develop the regulations. This meeting was held in person in February and so many people attended that there weren’t enough chairs to seat everyone. It was great to have that much engagement, especially because it was mostly positive and focused on implementation. After the pandemic hit, the office reached out to stakeholders and requested the 65 members representing these various groups on the advisory committee to participate virtually. It wasn’t easy to review the technical aspects via videoconference. Still, people adapted and we were able to fully examine all aspects of the policy that we needed to address in the regulations development process. The first half of each committee meeting was spent with the full cohort and the second half involved facilitated breakouts and reviewing shared documents. We tried to provide content at least a week in advance of each meeting. This allowed people to prepare and to engage in different ways throughout the process.

We received very little opposition when draft regulations came out in August, which says to me that people felt heard and represented in what we put together. I am so appreciative of our committee for making that possible. Despite the difficulties presented by the pandemic, they carved out the time to be thoughtful about this process and to fully engage.

How are you engaging the local workforce to benefit from this law?

This policy is projected to have a positive economic impact and economic inclusion is a city priority. In particular, we want to make sure Black, Indigenous, and people of color, as well as low-income residents have access to quality, high-paying jobs. We worked with the Philadelphia Energy Authority, a local workforce development nonprofit and experts from the American Cities Climate Challenge (which IMT is also part of) to estimate the economic impact potential of the law. We found the law would create jobs, but that we needed to be careful not to create an oversupply of specialized jobs. The greatest opportunities for job creation are likely from the corrective actions requirements that result from our tune up law. Unlike the tune-up assessment, which must be undertaken by someone with Professional Engineer or Certified Energy Management credentials, corrective actions can be performed by anyone with training on building systems and operations. This will hopefully lead to more demand for Philadelphians in the skilled trades and new opportunities to train folks to fill these roles.

One major challenge is that the Office of Sustainability doesn’t yet have good tools to track the effect of the workforce impact. Additionally, due to Covid-related budget constraints, the city’s workforce development office has been restructured and city resources have been diverted to make sure people are healthy and safe. To address this, we are planning to work with local workforce organizations to get information on how the law affects our workforce and to evaluate its impact. This will be a public-private effort and we are committed to engaging in continuous dialogue and improvements.

What are the lessons learned for other jurisdictions?

Flexibility is really key right now. This policy is about building owners and operators doing the best with what they have. The goal is not to hit a set target, but to make improvements. We ultimately want a culture shift that supports a transition to more efficient, lower emission buildings over the long haul. With this in mind, we are allowing buildings to comply by demonstrating recently conducted retrofits or recommissioning efforts. We have a long list of compliance pathways available so building owners can have options and choose what’s best for their buildings. I’m really pleased our policy has a large building portfolio exception that encourages these portfolio owners to develop their own compliance plans and timelines. My hope is that this facilitates longer-term building maintenance and capital improvement considerations. The city will actually be using this opportunity for our buildings so we can experiment with different strategies in different building sizes and types. It will allow us to adjust for existing capital improvement schedules while smoothing out the upfront costs of the tune-ups and other building investments.

I’m hoping that this year we can shift from getting the regulations set and basic resources out to a phase focused on partnership and mentoring. We want to be there when people have questions. We want them to comply and to do it well because then everyone wins. We need this dialogue and the rapport. We know from Seattle that building operators that engaged achieved significant savings, valuable enough to do regardless of the law. We want to be at that point where high-performing buildings are the new normal.

Program Area(s):

Real Estate

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