September 8, 2025

New Energize Denver Rules and Regulations

In 2023, the City and County of Denver (the “City”) adopted its first set of rules and regulations related to the City’s goal of reaching net-zero greenhouse gas emissions by 2040.  Since 2023, the City’s “Energize Denver” program has been significantly reworked through several redrafts of the rules and regulations (the “Rules and Regulations”) governing Energize Denver by the Office of Climate Action, Sustainability and Resiliency (“CASR”).  The most recent (and substantial) redraft of the Rules and Regulations was passed in April 2025.  This Alert focuses on the major updates in the Rules and Regulations most relevant to building owners in Denver.

BASICS OF ENERGIZE DENVER:

The Energize Denver Program Applies only to “Covered Buildings”

Energize Denver focuses on reducing the Energy Use Intensity (“EUI”) of “Covered Buildings.”  Covered Buildings are commercial or multifamily buildings in the City and County of Denver, excluding the following:

• A building that was not occupied and did not have a certificate of occupancy or temporary certificate of occupancy for all 12 months of the calendar year in which “Benchmarking” (discussed below) is required;
• A building that was not occupied, due to renovation, for all 12 months of the calendar year for which Benchmarking is required;
• A building for which a demolition permit for the entire building has been issued and for which demolition work has been commenced on or before the date a Benchmarking report is due;
• A building that is presently experiencing a “qualifying financial distress” (discussed below);
• A stand-alone parking garage; or
• A building that is used for the generation of power produced and sold commercially to other parties and that meets the definition of the “Energy/Power Station” building type (defined further in the Rules and Regulations).¹

Energize Denver Requirements Depend on Covered Building Size

Covered Buildings between 5,000 to 24,999 square feet are included in Energize Denver, but compliance requirements for these smaller buildings are distinct from larger buildings.  Covered Buildings that are 25,000 square feet or larger are the focus of this Alert.  These larger buildings are required to accurately report energy performance information for the previous year in accordance with the Rules and Regulations.²  The Rules and Regulations require these “Benchmark” submittals to be delivered annually using the ENERGY STAR Portfolio Manager tool on or before June 1 of each year.  Then, CASR uses the information contained in a Covered Building’s Benchmarking report to determine whether such Covered Building’s benchmarking data demonstrates a reduction in EUI.  Each Covered Building in the City is classified by “building type,” and each “building type” is required to demonstrate a certain level of EUI on each of the “target deadlines” set by the Rules and Regulations.  Under the new set of Rules and Regulations, no Covered Building is required to reduce its EUI by more than 42%.³

For more background information on Energize Denver, how the program works, and the basic requirements for Covered Buildings over 25,000, see Otten Johnson’s July 2023 Alert.  The remainder of this Client Alert focuses on recent major updates to the Energize Denver program.

UPDATES TO ENERGIZE DENVER

Since the original Rules and Regulations were passed, CASR, in conjunction with building owners, professional organizations, and other consultants, has redrawn a substantial portion of the Energize Denver program.  Here are a few key updates:

Adjusted Timeline and Target EUIs

Owners of Covered Buildings now have more options available when requesting an adjustment to either the amount of EUI a Covered Building has to save or the timing for which Covered Building owners have to demonstrate EUI target compliance. There are three new compliance alternatives that are especially noteworthy.

First, when submitting benchmarking data or exemption requests in the 2025 reporting year, owners had the option to request and receive a timeline adjustment for any Covered Building experiencing “compliance challenges” (which is not a defined term in the Rules and Regulations).  Owners did this by simply “opting in” to this exception by checking a box on their benchmarking submittal report.  The resulting adjustment, if granted, will allow for more time before Covered Building owners have to start demonstrating compliance with EUI targets.  More specifically, this exemption shifts the 2024 target to 2028, eliminates the 2027 interim targets, and shifts the 2030 target to 2032.  Parties looking to purchase Covered Buildings after June 1, 2025 should confirm with the seller whether this adjustment was successfully obtained.  This can be done in the representations and warranties section of the purchase agreement or through a commercially reasonable due diligence period.

Second, a homeowners association of a Covered Building may apply for an adjustment to the timeline in which a Covered Building has to demonstrate compliance with EUI targets if extra time is needed to raise funding through dues or special assessments, or other similar reasons.  The Rules and Regulations also specify that if the capital reserves fund of such association is less than 30% of the Covered Building’s capital reserve study, then an adjustment is available.  To apply for this adjustment, the Owner of a Covered Building must submit an application addressing each of the following components:

• An Energy Audit that meets CASR-defined minimum requirements,
• A compliance plan indicating how improvements to the Covered Building will be made to help meet the Covered Building’s EUI targets,
• An operations and maintenance program,
• A plan and timeline for how the association will raise the funds needed, and
• Other supporting documentation that validates the reason for requesting the timeline adjustment.

Third, the owner of Covered Buildings may apply for a 24-month delay in demonstrating compliance with EUI targets due to temporary circumstances that make reaching a target EUI by the prescribed deadline difficult.  During this 24-month period, penalties will not be assessed.  Circumstances allowing for this delay include:

• Qualifying financial distress;
  • This means any of the following: the Covered Building is the subject of a qualified tax lien sale or public auction due to property tax arrearages, the Covered Building is controlled by a court-appointed receiver, or the Covered Building has been acquired by a deed in lieu of foreclosure.
• Financial solvency concerns;
  • This includes circumstances which could reduce the debt-service coverage ratio to less than 1.5, such as vacancies, non-renewal of a tenant, costs to renew a tenant, costs of finding a replacement tenant, loan maturities, interest rate resets, capitalization rate movement and/or insurance rate changes.
  • Financial solvency concerns may also be found where the Covered Building doesn’t currently meet the definition of “Qualifying Financial Distress,” but compliance with Energize Denver (such as capital improvements to increase a Covered Building’s energy efficiency) would cause such Covered Building to go into qualifying financial distress.
• Lease termination timing;
• Redevelopment plans;
• Demolition; or
• Change of Covered Building ownership.

To apply for the interim compliance hold, the Owner must submit an application addressing the reason for the delay and any supporting documentation.  On an annual basis, from the time of approval, the owner of the Covered Building must provide CASR with updated documentation that proves circumstances still exist for the remaining 12 months.  If the circumstances still exist at the end of the 24-month period, the Owner will have an opportunity to apply for another 12-month extension.

Penalty Rates and Enforcement Timing

Compliance with EUI targets is demonstrated through CASR’s review of the benchmarking data submitted by Covered Building owners.  The schedule of when EUI targets must be met and when CASR will review benchmarking data to determine EUI target compliance has been prolonged since the first set of Rules and Regulations.  In turn, the timing for when penalties related to non-compliance with EUI targets has also been extended.  In fact, penalties for Covered Building owners that cannot demonstrate compliance with EUI targets will now not start to be levied until late 2029 (assuming no other adjustments are provided to a Covered Building owner).⁴

CASR has also reassessed the penalty rate structure itself.  In the early iterations of the Rules and Regulations, minimum penalties for failing to meet EUI targets were 50% higher than they are today.  Further, in the past, EUI target penalties could be levied against Covered Building owners three times (two interim targets and the final target).  Now, there are only two target measurement periods (assuming no timeline extension or other adjustment is applicable) for which penalties could be assessed.⁵

Landmark Preservation

One item that is noticeably absent from the 2025 Rules and Regulations is an alternative compliance option for Covered Buildings that are also part of Denver’s Landmark Preservation program.  Owners of Covered Buildings that are also a Historic Landmark or that are in a Landmark District may find that the improvements needed to meet EUI targets are not permitted by Landmark Denver.  For example, if a Covered Building needs to replace its windows in order to meet EUI targets, Landmark Denver, in some situations, may not easily allow the owner to replace windows.  Otten Johnson has been told by the City of Denver that additional guidance on this topic is being drafted.

MORE NOTES ON DENVER’S AND COLORADO’S CLEAN ENERGY STANDARDS

1. Rules and Regulations, Section 2.10. 2025 Rules and Regulations.
2. Covered Building Owners must complete the steps listed in Section 3.2 of the Rules and Regulations.
3. See CASR’s updated Technical Guidance (the “Technical Guidance”), Section 1.1.3.
4. See Technical Guidance, Table 11.
5. See Technical Guidance, Table 15.