City Council
Report
City Council Meeting: September 9, 2025
Agenda Item: 10.A
1 of 12
To: Mayor and City Council
From: Rick Valte, Public Works Director, Public Works, Office of Sustainability & the Environment
Subject: Introduction and First Reading of an Ordinance Adopting Building Performance Standards to Support Carbon Emissions Reductions from Existing Buildings
Recommended Action
Staff recommends that the City Council:
1. Adopt a finding of categorical exemption pursuant to Section 15308 (Actions by Regulatory Agencies for Protection of the Environment) of the California Environmental Quality Act (CEQA) Guidelines;
2. Introduce for first reading the attached ordinance that amends the Santa Monica Municipal Code (SMMC) by adding chapter 8.39, entitled Building Energy Benchmarking and Building Performance Standards to support carbon emissions reductions from existing buildings.
Summary
The City of Santa Monica is advancing a key strategy from its Climate Action and Adaptation Plan (Attachment B) by proposing a Building Energy Benchmarking and Building Performance Standards (BPS) ordinance (Attachment H) for existing buildings over 20,000 square feet (762 total buildings). While past City codes, such as the 2020 Energy Reach Code, 2022 Zero Emission Building Code, and 2024 Energy Performance Approach Reach Code (Attachments C, D, and F), have focused on reducing emissions from new construction, existing buildings make up most of the City’s building stock and generate approximately 33% of total annual carbon emissions.
Targeting this sector could cut building-related emissions by up to 44%, delivering an
14.5% reduction in citywide emissions.
2 of 12
The proposed ordinance would add Chapter 8.39 to the Santa Monica Municipal Code, requiring covered buildings to:
1. Report annual energy use to the City; and
2. Meet energy efficiency and/or greenhouse gas reduction targets every five years, advancing toward net-zero carbon emissions by 2050.
BPS policies already in place in cities across the U.S. set mandatory performance targets for existing buildings on a defined schedule, independent of building permits.
They drive carbon reduction by encouraging both energy efficiency and electrification, while often lowering operating costs, improving safety, and enhancing indoor air quality for building occupants.
The Santa Monica BPS proposal was shaped through extensive stakeholder engagement, including public workshops, a working group of local building owners and technical experts, and consultation with peer cities such as Denver, Boston, and Washington, D.C. The ordinance framework is supported by technical analysis from Lawrence Berkeley National Laboratory and guidance from national organizations such as the Institute of Market Transformation. Specific performance targets, compliance pathways, and enforcement provisions will be finalized through an administrative regulation process before the June 1, 2026 effective date, with continued input from building owners, industry experts, and community representatives.
Background
To meet the City’s 2030 and 2050 goals — of 80% reduction in carbon emissions below 1990 levels and carbon neutrality, respectively — emissions from the existing building sector must be mitigated. In 2024, the City addressed emissions from newly constructed buildings by adopting the Energy Performance Approach Reach Code, which encourages new buildings to be all-electric. It also addressed embodied carbon by adopting the Low-Carbon Concrete Ordinance (Attachment I). In addition to new 3 of 12
construction, the City has implemented policies and projects geared towards reducing emissions from existing buildings. These include:
• The City’s participation in the Clean Power Alliance, which offers 100% renewable and carbon-free electricity to customers. This began in 2019 and the current overall participation rate in the 100% green power program for Santa Monica is 95.8%.
• The Electrify Santa Monica rebate program, which was launched to incentivize residents and small businesses to install Electric Vehicle (EV) charging stations and convert methane gas appliances to efficient electric alternatives. • The release of the City’s Existing Building Electrification Roadmap (Attachment J), which outlines policy recommendations to electrify Santa Monica’s existing buildings. It emphasizes the need for equitable policy development. To ensure equity in the BPS policy, the City is following the lead of other jurisdictions, such as Denver, CO, to develop an Equity Priority Buildings program (see section on Equity Priority Buildings program below).
• Many energy efficiency-related projects and public EV infrastructure initiatives have been implemented at municipal and private sites. These include parking structure lighting retrofits, full electrification of an affordable multifamily building owned by the Community Corporation of Santa Monica, and ongoing heat pump water heater replacements at critical municipal facilities.
Building Energy Benchmarking
State legislation under AB 802 requires buildings over 50,000 square feet to report annual energy use to the California Energy Commission since 2016. This process is known as “energy benchmarking” and utilizes Energy Star Portfolio Manager (ESPM), an online tool that enables building owners to report energy-use data from their electric and gas bills. Benchmarking allows building owners to compare their energy use to other buildings of similar sizes and types and enables property owners or managers to set performance targets to comply with a BPS.
4 of 12
To set BPS targets for all covered buildings (20,000 to 50,000 square feet) under the proposed BPS policy, a new benchmarking requirement is necessary for buildings under 50,000 square feet that have not previously been subject to reporting requirements under AB 802. Jurisdictions that have implemented BPS, such as Boston, MA, and Denver, CO typically introduce a benchmarking policy prior to Building Performance Standards.
The proposed Building Energy Benchmarking and Building Performance Standards ordinance (Attachment H) sets benchmarking requirements for all buildings larger than 20,000 square feet.
Discussion
The proposed Building Energy Benchmarking and Building Performance Standards (BPS) ordinance targets a major source of Santa Monica’s greenhouse gas emissions:
existing commercial and residential buildings over 20,000 square feet. This sector produces roughly 33% of the city’s total annual emissions, and reducing its impact could cut building-related emissions by up to 44%, lowering citywide emissions by approximately 14.5%. The ordinance framework has been shaped by extensive public engagement, technical analysis, and alignment with peer city policies. Supporting materials that explain the ordinance’s development, such as detailed existing building stock analysis, state and national policy context, stakeholder engagement records, administrative regulations approach, equity program design, and funding structure are included in Attachments N-R. These materials are technical in nature and have been placed in attachments to keep the Discussion section focused on the ordinance’s key policy components.
Santa Monica Building Performance Standards Policy Summary 5 of 12
Santa Monica’s BPS policy is comprised of six main categories: 1) covered buildings, 2) performance metrics, 3) targets and compliance cycles, 4) compliance pathways, 5) enforcement, and 6) exemptions.
1. Covered Buildings
Covered buildings (“Covered Properties” in the ordinance) are those regulated by the BPS policy. Analysis showed that setting the threshold at over 20,000 square feet achieves the largest carbon reductions while involving the fewest buildings. This covers approximately 762 commercial and residential buildings in Santa Monica (Attachment L:
20–50k sq. ft.; Attachment M: over 50k sq. ft.), divided into Phase 1 (over 50,000 sq. ft.) and Phase 2 (20,000–50,000 sq. ft.).
Phase 1 properties are already subject to California’s Building Energy Benchmarking Program (AB 802), which requires annual energy reporting to the California Energy Commission. Because benchmarking data already exists, BPS targets for these buildings can be set sooner, and compliance will begin earlier than for Phase 2 buildings.
Phase 2 properties have not been subject to statewide benchmarking and must first provide annual energy data under the ordinance. This allows time to establish baselines before their BPS targets take effect.
2. Performance Metrics
Performance metrics are the core of a Building Performance Standards (BPS) policy.
They measure a building’s energy performance and form the basis for setting and tracking compliance targets. Under this ordinance, the specific requirements for applying performance metrics will be finalized in the administrative regulations process.
Targets may be based on one or both of the following:
• Metric #1 – Greenhouse Gas Emission Intensity (GHGI): GHGI is defined as a building’s greenhouse gas use expressed as metric tons of CO2e per square foot per year. A building’s GHGI is calculated by dividing the total greenhouse gases 6 of 12
produced by the building in one (1) year (measured in CO2e) by the total gross floor area of the building. This metric highlights emissions from on-site fossil fuel use and supports electrification strategies.
• Metric #2 – Site Energy Use Intensity (Site EUI): Site EUI is defined as a building's weather-normalized site energy use expressed as energy per square foot per year as a function of its size, normalized for weather and other characteristics that are significant drivers of energy performance as feasible with the reporting platform used. A building's EUI is calculated by dividing the total energy consumed by the building in one (1) year (measured in kBtu) by the total gross floor area of the building. This metric emphasizes overall energy efficiency, targeting reductions in both electricity and natural gas use.
Jurisdictions that have implemented BPS policies have chosen either GHGI, Site EUI, or a combination of both metrics depending on regional climate and building characteristics. GHGI is effective for driving electrification or reducing fossil fuel combustion while Site EUI supports broad energy efficiency improvements. When used together, both GHGI and Site EUI can encourage efficient electrification and reduced total energy use — benefiting building owners through lower emissions, improved performance, and often reduced energy bills.
3. Targets & Compliance Cycles
Targets and compliance cycles begin with establishing baseline performance for each covered building type, recognizing that different building types have different energy profiles. Energy Star Portfolio Manager identifies up to 80 different building types, each of which may have distinct baseline values. Baseline performance represents a building’s energy performance in a specific year (it’s annual GHGI and/or Site EUI).
Example: if a building’s 2024 baseline is 5.0 kgCO2e/sf/yr (GHGI) and 100 kBtu/sf/yr (Site EUI), those figures become its starting point for target setting. The detailed process for determining baselines will be finalized during the administrative regulations process.
7 of 12
The BPS ordinance establishes a final target of net-zero carbon emissions by 2050 for all covered buildings. To ensure steady progress, it also requires interim performance targets at 5-year intervals. Buildings must meet each interim target and maintain or improve performance in the subsequent compliance cycle. Interim targets follow a “trajectory approach” (Figure 3): a straight-line reduction path from each building’s baseline to the 2050 net-zero goal. This ensures consistent progress over time while allowing flexibility in how owners achieve reductions.
Figure 3. BPS Trajectory Approach
Source: Institute for Market Transformation, 2023
The interim performance targets for both Phase 1 and Phase 2 properties are as follows:
Phase 1 properties:
• First Interim Performance Target: June 1st, 2031
• Second Interim Performance Target: June 1st, 2036
• Third Interim Performance Target: June 1st, 2041
• Fourth Interim Performance Target: June 1st, 2046
Phase 2 properties:
8 of 12
• First Interim Performance Target: June 1st, 2036
• Second Interim Performance Target: June 1st, 2041
• Third Interim Performance Target: June 1st, 2046
Both Phase 1 and Phase 2 properties would be required to meet the final performance target on June 1st, 2051.
4. Compliance Pathways
Compliance pathways give property owners flexibility in how they meet Building Performance Standards (BPS) requirements. The ordinance provides two options:
1. Performance Pathway: The building meets interim and final performance targets directly, using any combination of behavioral, energy efficiency and/or electrification upgrades. Examples include improved lighting, building envelope enhancements, energy monitoring systems, replacement of water or space heaters, and conversion of gas appliances to electric. This pathway allows owners to select the most cost-effective measures for reducing operational emissions.
2. Building Performance Action Plan (BPAP) Pathway: If unusual circumstances make it unreasonable to meet a target on schedule, the owner may submit a BPAP. This BPAP can extend or adjust targets while keeping the building on track for long-term compliance. This option is useful when aligning upgrades with the natural replacement cycle of major systems (for example, replacing a newly installed gas water heater at the end of its service life rather than immediately).
BPAP requirements and review procedures will be detailed in administrative regulations, and City staff will monitor approved plans to ensure progress.
5. Enforcement
Enforcement provisions, including penalties for non-compliance, will be finalized during the administrative regulation process. The ordinance anticipates using fines paid by property owners in place of meeting required performance or reporting obligations. 9 of 12
Recommendations from the BPS working group support a fine structure that:
• Scales penalties based on the degree of non-compliance (larger gaps from the target result in higher fines).
• Imposes a separate flat fine for failure to submit benchmarking data. • Sets penalty amounts higher than the cost of compliance to incentivize building upgrades rather than payment in lieu.
City staff will refine the fine framework during the administrative regulations process to ensure it is effective, equitable, and consistent with policy goals.
6. Exemptions
Exemptions apply to certain property types and circumstances, with definitions to be finalized in administrative regulations during the administrative regulation drafting process. Based on stakeholder input, examples of exempt property types may include all-electric buildings, federal facilities, and industrial buildings.
Properties not in an exempt category may still qualify for an exemption if:
1. A demolition permit has been issued, or demolition is planned that would prevent meeting the next interim target.
2. The property lacked a certificate of occupancy (or temporary certificate) for all twelve months of the baseline year preceding the compliance schedule.
3. The property is in financial hardship, as defined by the Department of Public Works in consultation with the Community Accountability Working Group.
4. The Department of Public Works determines that strict compliance would cause financial hardship or would not serve the public interest.
BPS Implementation/Management
The Office of Sustainability and the Environment (OSE) staff would manage BPS implementation and ongoing compliance internally with the assistance of a qualified vendor selected through a formal request for proposals. The City would procure software services designed explicitly to track and manage BPS compliance. Funding for this software would come from OSE’s existing operational budget. Ongoing BPS management would include activities such as:
10 of 12
• Setting up a building performance database
• Conducting outreach to covered property owners
• Operationalizing data collection
• Analyzing building data
• Establishing an online resource hub and call center
• Providing ongoing building-owner support, such as educational opportunities and compliance resources
Next Steps
The Building Energy Benchmarking and Building Performance Standards ordinance is presented to Council for adoption.
If approved by Council, the proposed ordinance would undergo additional rulemaking through the administrative regulations process between the adopted date and proposed effective date of June 1, 2026. Staff would continue to engage owners of covered buildings and other industry associations and professionals to develop equitable BPS rules with oversight from the BPS technical committee and Community Accountability Working Group. Public notification of the effective date of the ordinance would be posted on the City’s website, in addition to a suite of information on compliance, reporting and other building owner assistance. After the effective date, Staff would provide ongoing communication with owners of covered building to ensure awareness of and compliance with the new requirements.
Environmental Review
The ordinance is exempt from CEQA pursuant to Section 15308 (Actions by Regulatory Agencies for Protection of the Environment) of the CEQA Guidelines. Section 15308 also provides an exemption for Class 8 projects, which include actions taken by regulatory agencies, as authorized by state or local ordinance, to assure the maintenance, restoration, enhancement, or protection of the environment where the regulatory process involves procedures for the protection of the environment. The ordinance would require that improving building performance over time would reduce 11 of 12
carbon emissions for the protection of the environment. Therefore, the ordinance is categorically exempt from CEQA review under CEQA Guideline section 15308.
Past Council Actions
Meeting Date Description
05/28/2019
(Attachment A)
Adopted the Climate Action & Adaptation Plan
09/10/2019
(Attachment C)
Adopted the Zero Emission Building Code
09/27/2022
(Attachment D)
Adopted the 2020 Energy Reach Code
9/10/2024
(Attachment F)
Adopted the 2024 Energy Performance Reach Code
Financial Impacts and Budget Actions
There is no immediate financial impact or budget action necessary as a result of recommended action. Staff will return to Council if specific budget actions are required in the future.
Prepared By: Nico Predock, Sustainability Analyst
Approved Forwarded to Council
Attachments:
A. May 28, 2019 Staff Report (Web Link)
B. Climate Action & Adaptation Plan (Web Link)
C. September 10, 2019 Staff Report (Web Link)
D. September 27, 2022 Staff Report (Web Link)
E. Bay Area Air Quality Management District zero-NOx gas furnace + water heater requirement (Web Link)
12 of 12
F. September 10, 2024 Staff Report (Web Link)
G. Energy Performance Approach Reach Code
H. Santa Monica Benchmarking & Performance Ordinance
I. Santa Monica Low Carbon Concrete Ordinance
J. Existing Buildings Electrification Roadmap
K. Memo_National_BPS_Cohort_signed 4.24.23
L. Santa Monica Covered Buildings 20-50k Square Feet
M. Santa Monica Covered Buildings >50k Square Feet
N. Santa Monica's Existing Building Stock
O. Background on Building Performance Standards
P. BPS Community & Stakeholder Outreach
Q. BPS Administrative Regulations Process and Community Accountability Working Group
R. Equity Priority Buildings and BPS Fund
S. Written Comments