Public Policy Corner

Learn more about NAIOP Colorado's efforts to advance public policy that protects and encourages responsible, sustainable development that creates jobs and benefits the communities in which our members work and live. 


March 2022 Public Policy Update - Energize Denver Building Energy Performance Requirement

By Brie MartinDirector of Property Management, Prime West Real Estate Services, LLC

Since the adoption of the Energize Denver Building Energy Performance Requirement, I’ve spent a lot of time explaining to clients the details of the initiative, what it means to building owners, and how we can plan for it over the next 5-10 years. The ordinance defines Net Zero Energy as highly energy efficient, all electric, provider of demand flexibility to the grid, and powered by renewable electricity. This really means two things for building owners: site EUI (Energy Use Intensity) reduction and electrification of space and water heating systems.

The ordinance establishes requirements for all buildings in the City of Denver over 5,000 square feet, which is important to note as smaller buildings had previously been exempted from various ordinances. The purpose of this ordinance is to push towards net zero emissions by 2040, therefore requiring all buildings to do their part. The first main target year is 2030, with the goal to reach 30% energy savings across all large buildings in the City of Denver. An essential component to this 30% reduction is the phased in approach of partial electrification to space and water heating systems by 2027. The ordinance does allow building owners to request an alternate timeline as long as the same end goals are maintained.

The City of Denver will provide guided assistance to support both aspects of this ordinance. One support mechanism is a resource component on their website that will be added sometime during 2022. This resource will include a performance portal, how-to-guide, checklists, education, and financial assistance, among other components. The second mechanism is working alongside city building code and permitting to help incentivize replacement of equipment within the timeline specified through the ordinance.

The first step for all building owners is to understand the 2030 target EUI for building type, site EUI for the specific asset, useful life of space and water heating systems, and if all lighting is or has been converted to LED. The next step is to compile a 5-10 year compliance or maintenance program for their asset. 

Most building budgets are created in the third quarter of the preceding year, therefore waiting for the resource hub to be complete may create a tricky timing obstacle. Gathering as much information about your building over the next year will help to determine when and how capital money should be spent. 

The 2030 target EUI for building type (buildings 25,000 sq ft and higher) can be found on the Energize Denver Hub website. As an example, buildings deemed to be office have a 2030 EUI target of 48.3. Keep in mind that interim targets for 2024 and 2027 will be building specific and mailed out to owners in March 2022. A building’s site EUI can be found on the Energy Star Portfolio Manager. This will help building owners and property managers to create realistic timelines for each asset. As owners and property managers await the interim target guidelines, it is important to begin the process (if one does not already exist) of understanding what mechanical components in your building are not electrified and when their useful life expires. It would also be beneficial to complete a simple ASHRAE Level 1 Energy Audit which can run around $5,000 or more depending on the size of your asset. If no equipment is reaching the end of their useful life over the next 8 years, other means of achieving the target site EUI will need to be completed. An ASHRAE audit will help to compile possible energy saving components, which include high level energy saving estimates and costs.

Buildings 5,000 sq ft - 25,000 sq ft have a simpler method to contribute to the cause, although all buildings are required to partially electrify space and water heating systems upon system replacement. They must either install all LED lights or install solar panels. The smaller the building, the longer the building owner will have to comply, with the last year being the interim target of 2027. If an owner chooses to go the route of an LED upgrade, one item that will need to be considered is whether the current fixtures are LED bulb compatible or if upgrading to LED fixtures will be the route that needs to be taken. 

The City of Denver and the Task Force is continually learning from the process and will re-evaluate alternative compliance options, technological advancements, targets and timelines as we move throughout this process.  As items are re-evaluated, it is important to lean on local resources to stay in the loop.  The Office of Climate Action, Sustainability and Resiliency (CASR) is staffing up to implement these programs.  If you have questions before the help center is up and running, don’t hesitate to reach out to Sharon Jaye, CASR Energize Denver Policy Manager ([email protected]) or Daniel Rayner, CASR Buildings Policy Outreach Administrator ([email protected]). 

NAIOP Colorado continues to monitor the rules and regulations as they are developed and adjusted to ensure they meet the direction of the Energize Denver Task Force to include flexibility and options to help us all move from aspiration to implementation.


 

March 2022 Public Policy Update - NAIOP Advocating for Greater Flexibility on Denver’s Affordable Housing Proposal 

By Caitlin QuanderPartner at Brownstein Hyatt Farber Schreck

As you may be aware, the City & County of Denver is in the process of adopting new regulations intended to create more affordable housing options and increasing funding for Denver’s Affordable Housing Fund. The proposal, which is also known as Expanding Housing Affordability (EHA), focuses on two main areas: 

  • Requiring new residential development of 10 units or more to designate between 8% and 12% of the units as affordable, regardless of whether the home is for rent or for sale. In higher-cost areas of the city, such as downtown, developers would need to provide 2% to 3% more affordable units. 
  • Gradually increasing the “linkage fee,” which is a fee on development used to build and preserve affordable housing for people with lower incomes. Projects providing affordable housing are not subject to linkage fees. 

Over the past year, NAIOP has been working diligently on your behalf to provide data-driven, pragmatic feedback on the draft proposal. Because of our advocacy efforts, city staff has already made the following changes: 

  • Phasing in linkage fee increases over a three-year period to allow the market to adapt. The original proposal would have applied the 200%-900% linkage fee increases shortly after the ordinance is approved. 
  • Cut the linkage fee increases nearly in half for all industrial development. 
  • Exempted ground floor retail from all linkage fees. 

In order to be grandfathered under the current linkage fees and requirements, projects must meet the following milestones under Site Development Plan (SDP) review: 

  • Concept SDP submitted by June 30, 2022; AND
  • Final SDP approved by August 30, 2023 (14-month window)

This 14-month window is based on median review times for concept and final SDP approvals. Based on other peer cities and as we are already seeing in Denver, SDP submittals have increased and thus review times are likely to follow suit. Therefore, NAIOP is working hard to advocate on your behalf for flexibility for projects that are moving through the review process in good faith. 

Over the next few months, City Council and the Mayor need to hear directly from you too! Please consider calling or emailing your City Council representative and the Mayor’s staff on this important issue.   

Click HERE to contact City Council members.

Contact the Mayor’s Office by reaching out to his staff: Analiese Hock ([email protected]) and Brad Weinig ([email protected])  

It’s important to note that our industry is committed to being a part of the affordable housing solution in Denver, but will not overlook the importance of limiting the potential unintended consequences still imbedded within the proposal. The city will continue to take in feedback between now and anticipated adoption of the proposal in June of 2022.  

Have questions or feedback, please contact Caitlin Quander at [email protected]


 

January 2022 Public Policy Update 

By Erin GoffPrincipal at Husch Blackwell Strategies

The second regular session of the 73rd General Assembly of the State of Colorado is set to begin on Wednesday, January 12. While Democrats remain in control with a 41-24 majority in the House and a 20-15 majority in the Senate, it promises to be an interesting session with the 2022 election looming in the wake of the recent redistricting. 

As is the case every year, NAIOP Colorado will be present at the state capitol actively advocating on behalf of its members. While many issues impact the commercial real estate industry, following are a few that have already appeared on our radar, and with which we are actively involved:

Brownfields Tax Credit

The environmental remediation tax credit (Brownfields Tax Credit) is set to expire on January 1, 2023. NAIOP is working with a coalition of supporters and users of this tax credit on a bill to extend the tax credit another 10 years (through 2033) and increase the annual cap from three million to seven million dollars. This will likely be a late bill as the state auditor’s office has not completed the review of the tax credit. That report is scheduled to be available sometime in January. 

Premises Liability

Last year, a large and diverse coalition came together to educate the legislature regarding the ramifications for all landowners caused by the Colorado Supreme Court’s decision in Wagner v. Planned Parenthood of the Rocky Mountains. NAIOP was and remains a member of this coalition. The plan in 2021 was to introduce a bill that would reject this decision with respect to the tests of foreseeability and proximate cause applicable to claims brought under the Colorado Premises Liability Act (the Act). The intent of the bill being to establish the tests of foreseeability and proximate cause courts should apply in cases brought under the Act. While this effort did not gain enough traction last year to get a bill introduced, the coalition now has committed bipartisan House and Senate sponsors. A bill title has been secured and drafting should begin soon. 

Affordable Housing 

During the 2021 Legislative session the legislature created a number of interim committees and task forces. One of these, the Affordable Housing Transformational Task Force, was tasked with making recommendations to the legislature regarding how to spend the American Rescue Plan Act (ARPA) funds dedicated to affordable housing. In addition to the task force, a subpanel was appointed that includes a variety of community members (non-legislators) representing different housing interests. This subpanel made recommendations to the task force which in turn will make recommendations to the legislature. The ultimate allocation of these funds will be drafted into a bill or bills and must go through the legislative process like any other bill.  

Throughout the interim there has been much discussion (both in and outside of these task force meetings) about the local government-imposed hurdles that developers must overcome in order to build affordable housing. Colorado is a strong home-rule state which prevents our state legislature from placing mandates on local governments when it comes to planning and zoning. However, it is likely that we’ll see legislation come out of this task force’s work that creates incentives for developers and local governments to prioritize density. A significant sum of the ARPA funds could be directed toward grands and low-interest loans meant to encourage developers and local governments to build or preserve affordable units. As always, NAIOP will look for opportunities to push for additional construction defects reform that will further facilitate and encourage the development of affordable for-sale multi-family housing.

An adage often heard at the state capitol “if you are not at the table, you are on the menu” is absolutely true. If you do not know who your state Senator or Representative is, look them up here: https://leg.colorado.gov/find-my-legislator. The NAIOP Public Policy Committee meets twice a month during the legislative session. 

For more information regarding the Chapter's Public Policy efforts, please reach out to Public Policy Chair Chris Alcorn or NAIOP Executive Director Kathie Barstnar


August 2021 Public Policy Update 

By Kathie Barstnar, Executive Director, NAIOP Colorado

The Colorado General Assembly adjourned on June 8 after 116 days. This session has been described as one of the most controversial in recent memory and many in the business community believe the impacts will be felt for many years. Click Here for a recap of all the bills that NAIOP worked on in 2021.  A couple of the key bills were:

  1. HB21-1286 Energy-Use Benchmarking and Performance Standards for Buildings: This is one of the bills on which NAIOP Colorado secured a significant victory. At the beginning of the session it appeared that this bill would sail through as drafted. As introduced it would have required owners of buildings 50,000 sf or greater all across the state to benchmark their energy usage AND reduce such energy use by 15% by 2026 with additional reductions being designated by the Air Quality Control Commission (AQCC) every five years until 2040. Additionally, it would have required severe penalties for non-compliance including a $.02 per sf per day fine until compliance is achieved. NAIOP, along with a wide coalition of other building related organizations opposed this bill as overreaching and too aggressive. After significant testimony in opposition and a threat by the House Republicans to filibuster the bill, sponsors met with our industry representatives and an agreement to pivot the bill to a task force was forged. The task force will meet and determine ways to bridge the gap from the aspirational goals to implementable actions with a statewide reduction of 15% by 2026 and setting up a plan for future task force input to the AQCC. NAIOP Colorado has been given a designated position on the task force. Stay tuned for updates as the Task Force starts to meet later this year.
  2. HB21-1117 Local Government Authority to Promote Affordable Housing Units. This bill authorizes local government to require construction of affordable housing within their boundaries without being in violation of the state statute prohibiting rent control by exempting local government land use regulations that restrict rents on newly constructed or redeveloped housing units. NAIOP opposed this bill unless amended to provide guard rails on what local governments could implement. A qualification was added stating that “the (local) regulation provides a choice of options to the property owner or land developer and creates one or more alternatives to construction of new affordable housing units on the building site.” It was signed by the Governor and now local governments are considering what policies to implement. Our efforts now switch to working with county and municipal governments as they consider different ordinances with affordable housing requirements.

The City and County of Denver has been very active on several fronts including affordable housing and energy efficiency along with ballot initiative submissions in anticipation of the fall elections of 2021 and 2022. Here are some updates:

  1. Energize Denver Task Force: As an outcome of the recently completed Climate Action Task Force 2020 Recommendations Report the Energize Denver Task Force has been meeting the past 8 months to develop a plan to reduce energy use in commercial buildings to meet the 2030 and 2040. Kathie Barstnar has represented NAIOP Colorado on this Task Force. The final meeting of the task force is set for August 19 after which their proposed report will be presented to the Denver City Council. Here is a link to the latest draft report published on July 29, 2021. As soon as the updated report is available, we will make sure you have access to it and will request your participation during its process through the City Council and Regulatory drafting process.
  2. Denver Expanding Housing Affordability: In line with above report on HB21-1117, the City of Denver is undertaking a public process to involve: 1) Citywide zoning incentive for affordable housing; 2) increase to the City’s linkage fee; 3) requiring affordable housing as part of developments. For more information, please visit the City and County of Denver's Expanding Housing Affordability website.  Please consider sharing your feedback to the City about what you want to see in affordability or sign up to participate and attend an upcoming industry focus group. Click Here for more details

For more information regarding the Chapter's Public Policy efforts, please reach out to Public Policy Chair Caitlin Quander or NAIOP Executive Director Kathie Barstnar.