New ‘building labeling’ ordinance in Boston is just another tax: Greater Boston Real Estate Board CEO explains

REALTORS and other real estate professionals in and around Boston should read this post from Greg Vasil, CEO of the Greater Boston Real Estate Board (GBREB), about the impact of a proposed building labeling ordinance in the City of Boston. The Greater Boston Association of REALTORS is a member of GBREB.

In Boston, Building Labeling Is A Tax, Will Hit Tenants And Small Commercial Building Owners Hardest

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Posted on March 4th, 2013
by Greg Vasil, CEO, Greater Boston Real Estate Board

The City of Boston is about to layer yet another level of penalties and fees on owners of condominiums, apartments and commercial buildings, and these assessments are sure to hit those least able to afford them the hardest. The city’s initiative, which has taken the form of a proposed ordinance, is intended to spur investment in energy efficiency upgrades by shaming owners of energy inefficient buildings into making improvements in their properties. The goal makes good sense; how the city proposes to get there does not.

If passed, the city’s ordinance will require property owners, including condominium associations, to collect utility information from every household or commercial tenant, complete complex energy audits, and then report and disclose the results – which will then be evaluated or “scored” by government regulators. Owners who refuse to comply will face enforcement or fines. The same goes for individual tenants or condominium owners who refuse to turn over their utility bills to allow for an accurate audit.

This ordinance is only the first in a series of steps the city has in mind to force property owners to invest in energy saving technologies. There is every indication that the next step will require building owners to retrofit their building’s inefficient energy systems at the time of property transfer.

The principal rational for energy scoring offered by the city seems to be grounded in consumer protection – that only through such scoring can a property buyer be fully informed about a building’s energy performance. But by that argument, the city would impose public disclosure requirements on property owners for other types of information that might be far more valuable to property purchasers, such as the MCAS scores for neighborhood schools or neighborhood crime statistics. As it stands now, individual market participants determine what information is important to them and use available options, such as conducting their own inspections, to gain what information they need to make informed decisions. That is how it should be.

The city hopes to replicate energy scoring programs that have been adopted in other cities but there is no evidence to date that this regulatory approach has been effective in achieving the goals for which it is intended. The Greater Boston Real Estate Board is deeply troubled by the eager embrace of an unproven program – particularly when it is expected to cost property owners hundreds of millions of dollars to implement – not to mention the financial burden imposed on customers who already pay a surcharge on their energy bills for energy efficiency programs.

We support policies or programs aimed at conserving energy or protecting our environment; but those policies must not arbitrarily assign market value to buildings, stigmatize property, or otherwise interfere with transactions. This proposal simply detracts time and resources from meaningful incentive based efforts. We are concerned not only with the impact on the business community, but on housing affordability.  Boston can and should be proud of the work the city has done to voluntarily encourage conservation measures but taxpayers, ratepayers and property owners should not be saddled with a new unfunded mandate with questionable environmental benefit. To put that burden on Boston taxpayers when, to date, no city has shown energy scoring to be effective, is ill advised.