Building Performance Standards 2025 Update: Financial Risk Tiers and Policy Developments
FD is pleased to share the following insightful information from our guest contributor, Chang Liu, Head of Market Research & Innovation at RE Tech Advisors. RE Tech Advisors tracks and researches the development of ordinances covering energy and water benchmarking, audits, implementation of efficiency measures and building performance standards.
As more jurisdictions adopt Building Performance Standards (BPS), building owners and operators face growing pressure to meet energy performance and emissions reduction targets. While the intent of these policies is consistent—driving efficiency and sustainability—the financial implications vary widely. This summary outlines the tiers of financial impact across existing BPS policies and highlights recent legislative updates shaping the compliance landscape.
Tiers of Financial Impact Across BPS Policies
BPS policies is the name given to a class of policies at the local jurisdiction level and are defined by three key features:
- Prescriptive: The policy sets an objective energy/emissions performance target for eligible buildings to meet in order to remain in compliance.
- Prolonged: The policy extends well into the future – from 10 years all the way to 2050 targets – with interim performance periods that grow stricter over time.
- Payments for Compliance: The policy represents significant risk of payment for compliance.
Those criteria that define BPS policies of course vary by jurisdiction. The most impactful deviation by jurisdiction is, of course, the potential financial risk posed by compliance payments. We have categorized three “Tiers” of the existing BPS policies to articulate the risk they pose from highest to lowest:
| Tier 1: Bldg Specific Cost | Tier 2: Universal Rate | Tier 3: “Immaterial” for BPS |
| Custom payments are assessed at the building-level based on a target-reduction formula. The fines can extend into the millions of dollars. State Level: Maryland City/County Level: Boston, MA; Cambridge, MA; Denver, CO; New York City, NY; Washington, DC | The target is generalized across all property types with a set fine amount and binary compliance criteria. The fines typically do not exceed $100k per period. State Level: Colorado; Oregon; Washington City/County Level: Montgomery Co., MD; Seattle, WA | Technically “performance based” policies that offer performing exemptions similar to audits/RCx policies. The fines range from $500-$5000. City/County Level: Austin, TX; Brisbane, CA; Chula Vista, CA; San Jose, CA; St. Louis, MO; Reno, NV |
New Policies & Policy Updates
Cambridge, MA: Building Energy Use Disclosure Ordinance (BEUDO) Phase 2 Regulations and Procedures
Phase 2 of the regulations provides optional flexibility mechanisms for multi-building and mixed-use properties, alternative baselines and ownership designation. Phase 2 details use of on-site solar, sets grid emission factors and specifies third-party verification and renovation definitions.
The ordinance defines the property at the parcel level rather than building level; parcels can have more than one building and the regulations allow owners to apply for alternate configurations at the parcel level. For example, if a building on the parcel is less than the 25,000 sq. ft. threshold, it must be grouped with another building over the threshold; if buildings share a meter, they must be grouped together.
State of Colorado: House Bill 25-1269
The bill waives enforcement of the 2026-2029 performance standards, amends the 2030 performance penalty structure to $2,300 for the first violation and $5,800 for subsequent violations, allows use of a 2019 baseline, allows buildings to comply with the state requirements if they are in compliance with a local program and creates a Building Decarbonization Enterprise to provide technical and financial support.
The bill also institutes an annual building decarbonization fee of $400 in addition to the $100 submission fee, changes the state benchmarking deadline to November 1 and requires operators to submit benchmarking data if owners are unable to collect aggregate data.
State of Maryland: House Bill 49
The legislation waives requirements for buildings covered by a county-level building energy performance standards program. The bill also grants counties the ability to impose alternative compliance fees up to the same amount allowed by the state. The updated regulations came into effect October 1, 2025.
State of Washington: House Bill 1543
The regulation refines the Clean Building Performance Standard by granting the state the authority to create and adopt alternative compliance pathways and metrics, introduces timeline extensions and clarifies additional exemption categories. The bill also prevents owners from passing penalties incurred from noncompliance to tenants and lowers the utility aggregation threshold to a single tenant.
Ordinances Under Development
Beyond Benchmarking & Building Performance Standards
The following jurisdictions have proposed beyond benchmarking ordinances or are in the process of rulemaking and/or stakeholder engagement. “Beyond benchmarking” ordinances are jurisdictional requirements designed to improve building efficiency and reduce emissions, including, but not limited to, building performance standards (BPS), energy audits and/or retrofits and data verification requirements.
Seattle, WA Building Energy Performance Standards – Draft Directors Rule
The Seattle Building Energy Performance Standards (BEPs) draft Director’s rule was released in June 2025 and clarifies requirements to the BEPs standards and processes, including:
- Occupancy types are established by Seattle Building Code and are distinct from property types in ENERGY STAR Portfolio Manager.
- All electric buildings may be exempt from meeting the greenhouse gas intensity targets (GHGITs) but must meet the benchmarking and data verification requirements. Buildings that use only electric energy except for allowed end use deductions (e.g., fossil fuel cooking equipment or emergency fossil fuel generators) are not eligible for this exemption and must comply with all requirements.
- Clarifies alternative compliance options for owners with more than one building, specifies private sector building portfolios are not eligible to use alternate GHGITs, and provides information on alternative compliance payments and multifamily prescriptive options.
Three additional building type GHGITs were added: data center, medical office, and museum.
Under Development
The following jurisdictions are in the process of developing their BPS policies:
| Jurisdiction | Requirements | Property Types | Gross Floor Area | Proposed Timeline |
| Aspen, CO | Building Performance Standards | Not Released | Not Released | Delayed |
| State of California | Building Performance Standards | Non-residential, Multi-family | ≥50,000 sq. ft. | Policy developed by summer 2026 |
| Chicago, IL | Building Performance Standards | Non-residential, Multi-family | ≥50,000 sq. ft. | Not Released |
| Columbus, OH | Building Performance Standards | Not Released | Not Released | Not Released |
| Fort Collins, CO | Building Performance Standards | Non-residential, Multi-family | ≥5,000 sq. ft. | Delayed |
| Kansas City, MO | Building Performance Standards | Not Released | Not Released | Not Released |
| Lakewood, CO | Building Performance Standards | Not Released | ≥10,000 sq. ft. | Policy developed through 2026 |
| Los Angeles County, CA | Building Performance Standards | Non-residential, Multi-family | ≥20,000 sq. ft. | Not Released |
| State of Massachusetts | Building Performance Standards | Non-residential, Multi-family | ≥20,000 sq. ft. | Not Released |
| Minneapolis, MN | Building Performance Standards | Not Released | Not Released | Not Released |
| New Orleans, LA | Building Performance Standards | Not Released | Not Released | Not Released |
| State of New York Québec Province, CAN | Display Score Building Performance Standards, Display Score | Non-residential, Multi-family | ≥25,000 sq. ft. | Not Released Not Released |
| Not Released | Not Released | |||
| State of Rhode Island | Benchmarking, Building Performance Standards | Non-residential, Multi-family | ≥25,000 sq. ft. | Not Released |
| Sacramento, CA | Building Performance Standards, Upgrades | Non-residential, Multi-family | ≥50,000 sq. ft. | Policy developed by 2026 |
| Santa Monica, CA | Building Performance Standards, Verification | Non-residential, Multi-family | ≥20,000 sq. ft. | Policy developed through 2025 |
| Toronto, ON, CAN | Building Performance Standards | Not Released | Not Released | Policy developed through 2025 |
| Vancouver, BC, CAN | Expanded Building Performance Standards | Non-residential, Multi-family | Multiple | Policy developed through 2025 |
| Watertown, MA | Building Performance Standards | Not Released | ≥20,000 sq. ft. | Delayed |
| West Hollywood, CA | Building Performance Standards, Verification | Non-residential, Multi-family | ≥20,000 sq. ft. | Policy developed through 2025 |
Frazier & Deeter and RE Tech Advisors are monitoring how BPS policies continue to evolve nationwide.
To discuss how these changes may affect your organization, contact our teams for further insights.
Contributors
Chang Liu, Head of Market Research & Innovation, RE Tech Advisors
Kelli Gillis, Partner, Frazier & Deeter, LLC
Partner, Frazier & Deeter Advisory, LLC
Bryce Nations, Partner, Frazier & Deeter Advisory, LLC
Explore related insights
-
Medicare’s 2026 Physician Fee Schedule: What Changed and What to Do Next
Read more: Medicare’s 2026 Physician Fee Schedule: What Changed and What to Do Next
-
New USPS Postmarking Rules Could Affect Tax Deadlines This Season
Read more: New USPS Postmarking Rules Could Affect Tax Deadlines This Season