1. Selected Issues Confronting Building Owners and Managers
National Air Filtration Association
Saint Louis, Missouri
May 4, 2006
Presented by Dave Johnston
Director – Codes and Standards
BOMA International

2. Presentation Outline Overview of BOMA International Advocacy Issues
Codes and Standards Issues
BEEP – Building Energy Efficiency Program

3. BOMA International 19,000 individual members
90 Local BOMA Associations
Own or manage over 9 billion sq ft
Downtown and suburban commercial space
Includes offices, medical, governmental, institutional, and industrial space
90% of Class A Office Space

4. BOMA International Services
Research and Data Gathering
Representation/Advocacy
Codes and Standards
Education and Custom Services
Print/Electronic Publications
Special Interest Groups/Committees
Networking
Annual Convention and Office Show

5. Advocacy Issues

6. Leasehold Depreciation
108th Congress reduced depreciation period to 15 years through 12/31/05
Senate and House passed one-year extension as part of larger tax reconciliation package (H.R. 4297, S. 2020)
1st Session of 109th Congress concluded without final action
Retroactive extension anticipated in early 2006
Despite reports, tax cuts are still a priority for the Republican majority.
These bills will probably need to be rolled into a larger tax cut bill in order to pass.
There’s a good chance we’ll be able to get it into reconciliation bill planned for the fall (according to staff director of Sen. Republican Policy Cmte)
Senator Conrad (D-ND) – S 621
Congressman Shaw (R-FL) – HR 1663
To permanently extend 15 year depreciation period

7. Capital Gains
Capital gains and dividend rate will revert from 15% to 20% in 2008
House passed tax reconciliation bill includes two-year extension (H.R. 4297)
Senate tax reconciliation package (S. 2020) does not include cap gains
Extension is expected to be included in final package anticipated in early 2006
HR 1500 – Rep. Dreier
One of main components of Tax Reconciliation Bill
(Cap gains and AMT fix)

8. National Energy Policy Act of 2005 BOMA Victory!
Energy Efficient Commercial Buildings Tax Deduction included in National Energy Policy Act of 2005
Tax deduction of up to $1.80/sq. ft.
Partial credit of up to $0.60/sq.ft.
Lighting
HVAC
Building Envelope
2 year program (1/1/06 – 12/31/07)
Coalition already lobbying for an extension

9. Terrorism Insurance - BOMA Victory!
Terrorism Risk Insurance Act (TRIA) of 2002
In final days of the 1st Session, Congress passed S. 467 to extended TRIA for two years
New Act now set to expire on 12/31/07
Congress hopes it will be the last extension
CIAT efforts paid off!

10. Terrorism Insurance Key Elements of S. 467: Insurer Deductibles:
17.5% of premiums received by insurer in 2005 for Year 1 of the program (2006)
20% of the premiums received by the insurer in 2006 for Year 2 (2007)
Retention levels:
$25 billion in 2006
$27.5 billion in 2007
Trigger level:
$50 million in 2006
$100 million in 2007 (Increased from $5 million under 2002 law)

11. Codes and Standards

12. ASHRAE 90.1 Proposed Amendment to Addendum z
Requires Continuous Air Barrier for Bldgs.
BOMA opposes because:
No conclusive reason for air barriers
Buildings need to “breathe”
Air Barrier could create health hazards
In-depth research needs to be conducted

13. NIST WTC Research BOMA supportive of NIST research into WTC collapse
Focus on high rise buildings to address practices, standards, and code issues
Structural Integrity
Enhanced Fire Resistance
Evacuation, Procedures, Programs
Emergency Response
Education/Training
Sensitivity to industry concerns critical

14. What Is a High-Rise? Evolving Definition
Early 20th century - 7 to 10 stories
Generally accepted now - 50 stories
Code defines as 75 to 100 feet above reach of firefighting equipment

15. What Enabled High-Rises?
Elevators
Steel Frames
Lightweight fireproofing materials

16. Why Build High-Rises? Location, location, location
Increase site density
Tenant prestige
More amenities
Demand continues to be strong –
High-Rises fill a market niche

17. Strong Demand for High-Rises
Great views
Distinctive architecture
Notable structure and prime location
Proximity to like economic activity
Proximity to successful neighbors
Tenants generally feel secure

18. Benefits of High Rises Increase city density
Population
Number of businesses
Increase economic activity and tax base
Distinctive skyline providing a unique identity for the city
Market niche

19. Issues in Consideration of NIST Recommendations
Cost/Benefits Analysis Should Accompany Recommendations
Statistics show high rise and commercial office buildings have performed well
Caution for possible unintended penalties with unnecessarily restrictive requirements

20. More BOMA Comments Provide safety in a cost-effective manner
Must identify the extent to which certain criteria need to be met
Confirm differences between existing buildings and new buildings
National private codes & standards development processes are the proper forum for consideration of regulatory changes

21. More BOMA Comments
Determine the general characteristics of building population to “right-size” life-safety requirements
BOMA believes that lessons learned from World Trade Center 7 may be more useful than the WTC 1 and 2
Building design is a difficult balance of life-safety, energy conservation, environmental sensitivity, and tenant satisfaction.
Opportunities for collaboration between NIST and commercial real estate industry (BOMA)

22. NIST Proposed Code Revisions What’s the Proper Forum
Must be addressed in a national codes and standards forums, not community by community adoption
Recommendations developed after one event should not reverse over 70 years of advancement in the national building codes

23. NIST Proposed Code Revisions What’s the Proper Forum
Code development is evolutionary, not a reactionary process
Trade offs must exist to meet fire safety and life safety requirements

24. High Performance Buildings
No uniform definition for ‘High Performance Buildings’
Lack of uniform definition creates confusion over what HPBs are
HPBs include more than the latest software
NAFA should be prepared to join effort to establish uniform definition

25. BOMA Energy Efficiency Program - BEEP

26. BOMA Energy Efficiency Program (BEEP)
New operational excellence program to educate and train real estate practitioners on sound management - rather than solely focus on purchase new technologies
Tracks and measures results with national energy performance rating system
Provides recognition for achievements – baseline, 10, 20, and 30-point improvements

27. Economic Case for BEEP
CRE spends approximately $24 billion annually on energy costs.
30% reduction in energy consumption, or $7.2 billion is readily achievable by improving building operating practices.
At 8% capitalization rate, the equivalent of adding $90 billion in asset value.
In 2004, buildings on average paid $1.83 per square foot for energy, or 18.7% of a buildings operating and fixed expenses, compared with $1.82 the year before.
We estimate 2,000 members representing 2 billion square feet will adopt no cost and low cost best practices as a result of BEEP over the next 3 years.

28. Energy Saving Focus Adopting Programs like Energy Star
Appealing Tax Bills
Implementing bulk purchasing across portfolios, national contracts (with procurement teams)
Searching for utility company rebates
Anything that can save operational money is today’s mantra.

29. BEEP Overview
Developed in partnership with ENERGY STAR® and BOMA member expertise
Online and in person training
Web portal of resources
templates, checklists, & guidance

30. BEEP Objectives
Educate owners and managers of commercial office buildings about the financial and environmental benefits of improving energy efficiency
Train practitioners on no- and low-cost strategies for optimizing equipment, people, and practices
Develop industry standard for operational excellence

31. BEEP Goals
Improve tenant comfort and satisfaction through reduced operating expenses and better building temperature control
Make buildings more competitive with increased NOI and enhanced asset value
Reduce the industry’s impact on the global warming
Position real estate practitioners as solution providers to owners and tenants seeking environmental stewardship and operational excellence
Document successes, provide recognition, and communicate those successes to the industry at large

32. Educational Offerings
Introduction to Energy Performance
How to Benchmark Energy Performance - Using EPA’s Energy Performance Rating System
Energy-Efficient Audit Concepts and Economic Benefits
Low-Cost Operational Adjustments to Improve Energy Performance and Reduce Costs
Valuing Energy Enhancement Projects and Financial Returns
Building an Energy Performance Awareness Program
Seminar 1: Introduction to Energy Performance. This seminar reviews the concepts of energy management, provides an update on deregulation, discusses why energy performance is important to building operators, quantifies the financial and environmental impact of energy management in commercial real estate, a teaser of no and low cost tips for operational adjustments, and identifies way to use energy performance as a competitive advantage in your market.
Upon successfully completing this seminar, attendees will be able to:
Provide an overview of the BOMA Energy Efficiency Program
Read and understand an energy bill
Explain how generation and transmission systems operate
Create an energy management policy and plan
Identify financial and environmental impacts of improved energy performance
Explain the benchmarking process and its usefulness in improving the energy performance of office buildings
Seminar 2: How to Benchmark – EPA’s Energy Performance Rating System. This seminar demonstrates how to benchmark commercial real estate using the EPA energy performance rating system. Manual and automated data input alternatives for benchmarking will be reviewed. In addition, lessons learned from building operators will be presented to facilitate fast, effective, and accurate benchmarking results.
Benchmark the energy performance of an office building
Evaluate the data for accuracy
Describe manual and automated data input methods
Identify methods to improve the energy performance ratings
Describe where to find answers to benchmarking questions
Seminar 3: Energy Efficient Audit Concepts and Economic Benefits. This seminar reviews energy audit practices and describes the benefits for energy management. The training focuses on how to inventory equipment, sequence equipment for optimal performance, and provides tips for record management and measurement and verification.
Identify key aspects of an energy audit
Describe benefits of energy management and upfront analysis to make the most of your audit
Create an inventory of your equipment and determine the best sequence of operations to maximize energy efficiency
Manage your records to ensure fast access to building drawings, equipment specifications, and user manuals
Identify the largest building energy consumers and create a staged approach to sequencing energy management improvements
Verify energy performance and describe tips for measurement and verification
Seminar 4: No and Low Cost Operational Adjustments to Improve Energy Performance and Reduce Costs. This seminar presents best practices for operations and maintenance measures to improve the energy efficiency of commercial real estate without capital expenditures. The seminar focuses on the financial impact of no and low cost adjustments and reviews how to use tools such as data loggers and metering to identify and verify improvement opportunities.
Identify no and low cost operational adjustments
Quantify the financial returns of operations and maintenance measures
Identify how and when to use metering and data loggers
Describe how to make the most of your energy management and building automation systems
Explain why and when to commission existing buildings
Seminar 5: Valuing Energy Enhancement Projects and Financial Return. This seminar focuses on using financial metrics and tools to calculate and sell enhancement projects to owners, asset managers, and tenants by highlighting the positive financial and environmental impacts of improved energy performance. Put energy efficiency into the context of “what’s important” to financial decision makers.
Build compelling arguments to sell the financial benefits to senior decision makers
Calculate the financial benefits of improvements such as NPV, IRR, ROI, payback, NOI, and asset value
Calculate the environmental benefits of improvements
Describe how energy performance improvements benefit tenants, improve comfort, and extend equipment life cycles
Seminar 6: Building an Energy Performance Awareness Program. This seminar presents the key components of an energy awareness program for tenants, owners, brokers, and asset managers. The training focuses on how to create an effective awareness program, communicate accomplishments and benefits to key stakeholders, and provides samples and templates for attendees to easily customize.
Create an energy awareness program and maximize communications efforts
Create a compelling case study and success stories
Educate owners, tenants, brokers, leasing, and sales staff about the benefits of improved energy performance

33. Introduction to Energy Performance
Program Overview
Fundamentals of Energy, Including Concepts, Loads, Utilities, and Rebates
The Importance and Benefits of Energy Performance
Benchmarking Overview
How to Create an Energy Management Plan and Policy
Success Stories and Case Studies
How to Get Started

34. How to Benchmark Energy Performance
Overview of Benchmarking and Operating Performance Enhancements
The Value of Measuring and Benchmarking Energy Performance
A Demonstration of Portfolio Manager
How to Review Data for Accuracy and Tips for Improving Scores
Review of a Sample with Errors and Learn How to Fix an “N/A” Rating
Sharing of Best Practices

35. Energy Efficient Audit Concepts and Economic Benefits
Overview of an Energy Audit and its Benefits
How to Inventory Equipment and Determine the Sequence of Operations
The Importance of Record Management and How to Review, Compile, and Create System Drawings and Records
Understanding Energy Loads
Where to Start
Ways to Verify Performance
Sharing of Best Practices

36. No- and Low-Cost Operational Adjustments to Improve Energy Performance
Operations & Maintenance Measures and Practices to Improve Efficiency without Capital Expenditures
Best Practices from Industry Leaders – Janitorial, Lighting, Maintenance & Preventative Maintenance
Metering and Data Loggers
Optimizing Energy Management Systems/BAS
The Importance and Timing of Re-Commissioning
Sharing of Best Practices

37. Valuing Energy Enhancement Projects & Financial Returns
Overview of Key Concepts – Understanding “Value” and “Financial Returns”
Financial Concepts Overview – NPV, IRR, ROI, and Payback
How to Sell Enhancements to Owners/Asset Managers/Tenants
Case Studies: Lighting Retrofit, Variable Speed Drives, EMS
Sharing of Best Practices

38. Building an Energy Awareness Program
Key Components and Importance of an Awareness Program for Tenants, Owners, Brokers, and Asset Managers 
BEEP and ENERGY STAR Recognition Opportunities
How to Create a Communications Plan
How to Create a Project Case Study
Overview of Tools & Resources
Sharing of Best Practices

39. National Rollout Web-supported audio seminars Target audience
Tailored to real estate practitioners
National program promoted and distributed through BOMA International and Local associations
Live presentation, industry conferences and seminar/luncheon opportunities
Highlight regional content and resources
Web-supported audio seminars – talk about the delivery system, best way to reach re practitioners, 1.5 hours is max to keep their attention/get their commitment.
Target audience: owners, asset managers, property managers, facility managers, engineers, architects, service and product providers.
Tailored – designed and developed by BOMA expertise. Uses re vernacular and puts information into the context that re executives and managers will understand. Uses the ENERGY STAR platform, and customizes each piece to put it in perspective for the re industry. What matters to them, in their terms. Makes financial case in terms of NOI, asset value, and tenant satisfaction. In turn, these are the decision makers of $85 billion of purchasing power. BOMA will make them better educated consumers of energy related issues.
BOMA locals have the direct access to BOMA members in North America, representing nearly 19,000 members or 80% of the commercial real estate square footage. Provides a local flavor to national program. There will be an opportunity to collaborate with regional programs and gain access to real estate decision makers.
Live presentation, industry conferences, and seminar/luncheon opportunities – discuss options under consideration. Nothing has been finalized or set in stone. Willing to work with CEE members to maximize value, reach and effectiveness.
Regional content and resources could augment live presentations and be highlighted in handouts, web portal, speakers comments.

40. BEEP Web Portal
One-stop shop for BEEP resources, templates, checklists, and course handouts
Links to industry programs (ACEEE, CEE, ENERGY STAR, PECI, etc)
Opportunity to link to CEE member programs, rebates, audits, technology updates, etc.
ACEEE – American Council for an Energy-Efficient Economy
CEE – Consortium for Energy Efficiency
PECI _ Portland Energy Conservation

41. Current Activities Educational offerings now available
Pilot courses conducted & BOMA member feedback gathered
Actively pursuing opportunities to work with BOMA Locals and regional energy efficiency programs (i.e., NYSERDA)
National rollout started in 2006
Would note that the Pilot offering of Course 1, Introduction to Energy Performance was “standing room only” or about 100 attendees and Course 2 Pilot, How to Benchmark Energy Performance was an overwhelming success where in registration had to be closed three weeks early with over 300 registrants!
Key point is our membership is reinforcing our belief that energy efficiency and BEEP are important. Thus by BOMA, locals and International, working together we can not only brand BEEP as a BOMA operational excellence program but also drive value, relevance for BOMA membership.
Potential for a third pilot, course 3, Energy Efficient Audit Concepts and Economic Benefits, in November – will depend on ability to finish content and attendance will be limited to 100, so watch for s on this.

42. National Energy Bill
Includes a provision that would give commercial buildings a tax deduction of up to $1.80/sf for investments in energy efficiency that result in performance exceeding the ASHRAE 90.1 energy efficiency standard by 50%.
Also includes a partial credit incentive of up to $0.60/sf for upgrades to lighting, HVAC and hot water systems, and/or building envelope.
Tax deduction is only available for a 2-year period, from Jan Jan
BOMA has worked hard to encourage legislation that assures that all consumers have access to adequate supplies of reasonably priced energy.

43. BOMA Web Resources Energy Resource Center (www.boma.org)
Energy Savings Tips
Load Shed Tips
Tenant Conservation Tips
What if the power goes off?
The Property Professional’s Guide to Energy Performance (CD ROM)

44. Other Energy Efficiency Initiatives
All new “Green Buildings Pavilion” will bring together exhibitors who provide “green” resources to the industry at The Office Building Show.
Education sessions focused on energy efficiency initiatives, technologies, and case studies of success stories will be featured at the 2006 North American Real Estate Congress in Dallas.

45. Energy and Environment Committee
Louis Mantia, New York, Co-Chair
John Scott, RPA, Miami, Co-Chair
Craig Sheehy, CPM, Sacramento, Vice Chair
Works with BOMA International's advocacy staff to recommend policy positions on energy and environmental issues, such as national energy policy and sustainability. It also serves as an education and discussion forum for members to exchange information on developments in energy and environmental issues at the national, state, provincial and local level.

46. Final Thought According to the EPA:
Commercial and institutional buildings use about $80 billion worth of energy each year
Contribute about 20% of U.S. greenhouse emissions
With 10% cut in energy, in ten years would reduce greenhouse gas emissions equivalent to the emissions from 15 million cars and about $10 billion each year collectively.

47. Contact Information
Dave Johnston
Director of Codes and Standards
BOMA International
Suite 300
1201 New York Avenue, N.W.
Washington, DC
(202)

48. Questions and comments?
Open Discussion
Questions and comments?