HF 5423

as introduced - 93rd Legislature (2023 - 2024) Posted on 04/25/2024 10:43am

A bill for an act
relating to energy; requiring certain buildings to meet energy performance
standards; appropriating money; proposing coding for new law in Minnesota
Statutes, chapter 216C.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:

Section 1.

new text begin [216C.332] BUILDING ENERGY PERFORMANCE STANDARDS.
new text end

new text begin Subdivision 1. new text end

new text begin Definitions. new text end

new text begin (a) For the purposes of this section, the following terms have
the meanings given.
new text end

new text begin (b) "Building type" means a category of buildings similar in design, function, and energy
use.
new text end

new text begin (c) "Covered building" has the meaning given to "covered property" in section 216C.331,
subdivision 1.
new text end

new text begin (d) "Energy" has the meaning given in section 216C.331, subdivision 1.
new text end

new text begin (e) "Energy use intensity" has the meaning given in section 216C.331, subdivision 1.
new text end

new text begin (f) "Energy Star Portfolio Manager" has the meaning given in section 216C.331,
subdivision 1.
new text end

new text begin (g) "Final performance standard" means the numeric value of a performance metric that
covered buildings must meet by 2045.
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new text begin (h) "Financial distress" means that a covered building:
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new text begin (1) is the subject of a qualified tax lien sale or public auction due to property tax
arrearages;
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new text begin (2) is controlled by a court-appointed receiver based on financial problems;
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new text begin (3) is owned by a financial institution through default by the borrower;
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new text begin (4) has been acquired by deed in lieu of foreclosure; or
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new text begin (5) has a senior mortgage that is subject to a notice of default.
new text end

new text begin (i) "Greenhouse gas emissions" means emissions of carbon dioxide, methane, nitrous
oxide, hydrofluorocarbons, perfluorocarbons, and sulfur hexafluoride resulting from energy
used at a building site.
new text end

new text begin (j) "Interim performance metric" means the numeric value of a performance metric that
covered properties must meet every five years until 2045.
new text end

new text begin (k) "Multifamily affordable housing" means a covered building that:
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new text begin (1) contains five or more dwelling units;
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new text begin (2) is encumbered by an agreement that limits rents charged to tenants or imposes income
limits on tenants, whether those limits are imposed by a governmental entity or self-imposed
by the owner; and
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new text begin (3) receives or received financing or financial assistance from the federal government.
new text end

new text begin (l) "Owner" means:
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new text begin (1) an individual or entity that possesses the title to a covered building; or
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new text begin (2) an agent authorized to act on behalf of the covered building owner.
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new text begin (m) "Performance metric" means an objectively verifiable numeric measure of building
performance with respect to energy use or greenhouse gas emissions.
new text end

new text begin (n) "Total floor area" has the meaning given in section 216C.331, subdivision 1.
new text end

new text begin Subd. 2. new text end

new text begin Establishment. new text end

new text begin The commissioner must establish and maintain a building
performance standards program. The purpose of the program is to reduce: (1) the amount
of energy used to (i) heat and cool buildings, and (ii) provide other energy services; and (2)
greenhouse gas emissions from buildings to assist the state in meeting the greenhouse gas
reduction goals under section 216H.02, subdivision 1.
new text end

new text begin Subd. 3. new text end

new text begin Classification of covered buildings. new text end

new text begin For the purposes of this section, a covered
building is classified as follows:
new text end

new text begin Class new text end	new text begin Ownership new text end	new text begin Total floor area (square feet) new text end
new text begin 1 new text end	new text begin City, state, county, school district, metropolitan council new text end	new text begin 50,000 or more new text end
new text begin 2 new text end	new text begin Private new text end	new text begin 100,000 or more new text end
new text begin 3 new text end	new text begin Private new text end	new text begin 50,000 or more new text end

new text begin Subd. 4. new text end

new text begin Final performance standards; establishment. new text end

new text begin (a) No later than January 1,
2026, the commissioner must establish final performance standards with respect to energy
use and greenhouse gas emissions for all covered buildings. The commissioner must establish
the final performance standards at a level so that in 2045, if the performance standards are
met by all covered buildings:
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new text begin (1) the aggregated energy use intensity of all covered buildings is reduced by 30 percent
from a 2005 baseline; and
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new text begin (2) the aggregated greenhouse gas emissions from all covered buildings is reduced by
90 percent from a 2005 baseline.
new text end

new text begin (b) When establishing final performance standards, the commissioner may utilize the
building types used in the Energy Star Portfolio Manager benchmarking tool or other building
types.
new text end

new text begin (c) Class 1 covered buildings must meet the final performance standard no later than
2043. Class 2 covered buildings must meet the final performance standard no later than
2044. Class 3 covered buildings must meet the final performance standard no later than
2045.
new text end

new text begin (d) Final performance standards established for a covered property containing more than
a single building type must be calculated on a pro rata basis based on the square footage of
each building type.
new text end

new text begin Subd. 5. new text end

new text begin Interim performance standards; establishment. new text end

new text begin The commissioner must
establish interim performance standards for energy use intensity and greenhouse gas
emissions that each covered building must meet every five years, beginning in 2028 for
class 1 covered buildings and continuing until 2045 for class 3 covered buildings. The
interim performance standards must be calculated on a straight-line trajectory with respect
to the final performance standards so that covered buildings meeting the interim performance
standards demonstrate steady progress toward the final performance standards in equal
increments. Each owner must submit a report to the commissioner, on a form prescribed
by the commissioner, demonstrating the building's progress toward meeting the interim
performance standards.
new text end

new text begin Subd. 6. new text end

new text begin Performance standards; extensions; exemptions; adjustments. new text end

new text begin (a) An owner
may request the commissioner to issue the owner an extension, exemption, or adjustment
to an interim or final performance standard for a covered building. The commissioner may
approve the request if the commissioner determines that:
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new text begin (1) the covered building is experiencing financial distress;
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new text begin (2) during the 12 months before the performance standard becomes effective, the covered
building:
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new text begin (i) has been less than 50 percent occupied;
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new text begin (ii) does not have a certificate of occupancy or a temporary certificate of occupancy;
new text end

new text begin (iii) was issued a demolition permit that remains current; or
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new text begin (iv) received no energy services for at least 30 days;
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new text begin (3) meeting the performance standard would cause the owner financial hardship; or
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new text begin (4) meeting the performance standard is not in the public interest.
new text end

new text begin (b) If an owner submits a request under this subdivision less than one year before the
deadline for the applicable performance standard, the owner may be subject to a penalty of
up to $1,000, as determined by the commissioner.
new text end

new text begin (c) An owner of multifamily affordable housing is exempt from the requirements of this
section until the owner refinances the building after the effective date of this act, at which
point the multifamily affordable housing is subject to the next performance standard or
interim performance standard that covered buildings are required to meet under subdivision
3 or 4, as applicable.
new text end

new text begin (d) An owner is exempt from the requirements of this section with respect to a covered
building that the commissioner determines is subject to a performance standard required
by the state or a political subdivision that is more stringent than a performance standard
established under this section.
new text end

new text begin Subd. 7. new text end

new text begin Interface with utility conservation programs. new text end

new text begin Nothing in this section limits
the ability of a public utility or municipal utility to offer programs to covered buildings, or
to claim energy savings resulting from the offered programs, through the utility's energy
conservation and optimization plans approved by the commissioner under section 216B.2403
or 216B.241.
new text end

new text begin Subd. 8. new text end

new text begin Building Performance Advisory Committee. new text end

new text begin (a) No later than August 15,
2024, the commissioner must establish and make appointments to a Building Performance
Advisory Committee consisting of representatives from the following entities and professions:
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new text begin (1) the commissioner, or the commissioner's designee as a non-voting member;
new text end

new text begin (2) a public or municipal utility providing natural gas service to Minnesota retail
customers;
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new text begin (3) a public or municipal utility providing electricity service to Minnesota retail
customers;
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new text begin (4) a provider of energy efficiency measures to covered buildings;
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new text begin (5) a provider of renewable energy facilities to covered buildings;
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new text begin (6) a professional who designs covered buildings;
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new text begin (7) an engineer experienced in energy systems in covered buildings;
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new text begin (8) a manager of operations in covered buildings;
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new text begin (9) a labor union representative of workers who operate or service covered buildings;
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new text begin (10) an owner of a covered building containing residences for families;
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new text begin (11) an owner of a covered building providing affordable housing for families;
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new text begin (12) a tenant in a covered building providing affordable housing for families;
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new text begin (13) a nonprofit organization that addresses climate change, decarbonization, or green
building issues;
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new text begin (14) a nonprofit organization that addresses environmental justice issues;
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new text begin (15) an expert on sustainable buildings from the University of Minnesota's Center for
Sustainable Building Research; and
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new text begin (16) a local government unit.
new text end

new text begin (b) The Building Performance Advisory Committee must:
new text end

new text begin (1) advise the commissioner on implementing and operating this section;
new text end

new text begin (2) recommend final performance standards for different property types;
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new text begin (3) review and comment on building performance action plans; and
new text end

new text begin (4) recommend procedures for exemptions, extensions, and adjustments the commissioner
may grant under subdivision 5.
new text end

new text begin (c) The advisory committee must elect a chair by majority vote at the advisory
committee's initial meeting. The advisory committee must meet quarterly. Additional
meetings may be held at the call of the chair. The department must serve as staff to the
advisory committee.
new text end

new text begin (d) Advisory committee members other than state employees are governed by section
15.059.
new text end

new text begin Subd. 9. new text end

new text begin Penalties. new text end

new text begin (a) An owner whose covered building fails to meet an interim or
final performance standard by the date required, and who has not received a valid extension,
exemption, or adjustment from the commissioner under subdivision 5 with respect to the
applicable covered building and performance standard, must make a compliance payment
to the commissioner under this subdivision.
new text end

new text begin (b) This paragraph applies to an owner whose covered building fails to meet either the
applicable greenhouse gas emissions standard or the applicable energy use intensity standard,
or that meets the applicable energy use standard but fails to meet the applicable greenhouse
gas emissions standard. The owner must pay to the commissioner a penalty, determined by
the commissioner using the applicable greenhouse gas emissions valuations adopted by the
Public Utilities Commission under section 216B.2422, subdivision 3, for each metric ton
or portion thereof of greenhouse gas emissions emitted by the covered building that exceeds
the applicable standard.
new text end

new text begin (c) This paragraph applies to an owner whose covered building meets the applicable
greenhouse gas emissions standard but fails to meet the applicable energy use intensity
standard. If the covered building has been ranked by the commissioner under section
216C.331, subdivision 9, in the quartile with the highest or second-highest energy
performance score in the covered property's property class, no penalty is assessed. If the
covered building is ranked in the quartile with the lowest or second-lowest energy
performance score quartile, the owner must pay to the commissioner a penalty, as determined
by the commissioner, of up to $0.70 for each 1,000 British Thermal units consumed by the
covered building that exceeds the applicable standard in the year in which the applicable
standard applied. This paragraph expires December 31, 2039.
new text end

new text begin (d) A compliance payment must be made under this subdivision each year a covered
building continues to fail to meet a performance standard.
new text end

new text begin (e) When determining the amount of a compliance payment, the commissioner must
consider:
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new text begin (1) the magnitude of the amount by which the covered building's performance exceeds
the level of the applicable performance standard;
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new text begin (2) the length of time over which the covered building has failed to meet the applicable
performance standard;
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new text begin (3) the assessed value of the covered building; and
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new text begin (4) the total number of performance standards the covered building has failed to meet
over time.
new text end

new text begin Subd. 10. new text end

new text begin Technical and financial assistance hub. new text end

new text begin The department must contract with
a nonprofit organization with extensive experience implementing energy efficiency programs
in buildings to manage a building performance technical and financial assistance hub. The
hub must assist owners to comply with this section by:
new text end

new text begin (1) offering technical assistance directly to owners regarding energy-saving and
greenhouse gas emissions reduction measures and strategies;
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new text begin (2) connecting owners with other sources of technical assistance, including other building
owners who have been successful in reducing energy; and
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new text begin (3) making owners aware of sources of financial assistance, including tax credits, available
to support the implementation of energy-saving measures that are offered by utilities or
available through programs administered by local, state, and federal government entities.
new text end

new text begin Subd. 11. new text end

new text begin Program implementation. new text end

new text begin The commissioner may contract with an
independent third party to implement any or all of the commissioner's duties required under
this section. The commissioner must assist owners to access the technical and financial
assistance hub and the building performance improvement grant program to increase energy
efficiency and reduce greenhouse gas emissions from the owners' covered properties through
outreach and training. The commissioner must begin informing owners of this section's
requirements as part of outreach for the energy benchmarking program under section
216C.331 in 2025.
new text end

new text begin Subd. 12. new text end

new text begin Account established. new text end

new text begin (a) A building energy performance standards program
account is established in the special revenue account in the state treasury. The commissioner
must credit to the account appropriations and transfers made to the account, and penalties
collected under this section. Earnings, including interest, dividends, and any other earnings
arising from assets of the account, must be credited to the account. Money remaining in the
account at the end of a fiscal year does not cancel to the general fund, but remains in the
account. The commissioner must manage the account.
new text end

new text begin (b) Money in the account that is not collected from penalties is appropriated to the
commissioner and may be used only to reimburse the reasonable expenses incurred by the
department to administer the building energy performance standards program under this
section.
new text end

new text begin (c) Money in the account collected from penalties is appropriated to the commissioner
and may only be used to award building performance improvement grants under subdivision
13.
new text end

new text begin Subd. 13. new text end

new text begin Building performance improvement grants. new text end

new text begin (a) A building performance
improvement grant program is established in the department to provide financial assistance
to eligible applicants to make improvements that increase energy efficiency and reduce
greenhouse gas emissions in order to achieve the performance standards established under
this section.
new text end

new text begin (b) An application for a grant under this section must be made to the commissioner on
a form developed by the commissioner. The application must be accompanied by
documentation, as required by the commissioner:
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new text begin (1) that the applicant is the owner or representative of a covered building;
new text end

new text begin (2) that the applicant has had an energy assessment conducted of the covered building
within the last 24 months by a qualified person, as determined by the commissioner,
indicating the energy and greenhouse gas reduction opportunities of the building;
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new text begin (3) indicating the total energy and greenhouse gas emission savings expected from the
proposed improvements; and
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new text begin (4) indicating the total cost to purchase and install the improvements.
new text end

new text begin (c) The commissioner must develop administrative procedures governing the application
and grant award processes.
new text end

new text begin (d) The commissioner may, in consultation with the Building Performance Advisory
Committee, establish preferences for applicants seeking grants for certain building types or
energy-reduction measures.
new text end

new text begin (e) The commissioner must modify program requirements under this section when
necessary to align with comparable federal programs administered by the department under
the federal Inflation Reduction Act of 2022, Public Law 117-189.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day following final enactment.
new text end

Sec. 2. new text begin APPROPRIATION.
new text end

new text begin $....... in fiscal year 2025 is appropriated from the general fund to the commissioner of
commerce to administer and enforce the building energy performance standards program
under Minnesota Statutes, section 216C.332. Of this amount: (1) up to $....... may be used
to award grants to applicants under the building performance improvement grants program
established under Minnesota Statutes, section 216C.332, subdivision 13; and (2) up to $.......
may be used to fund the technical and financial assistance hub established under Minnesota
Statutes, section 216C.332, subdivision 10.
new text end