Testimony on BEPS Extension in FY26 Budget before Committee of the Whole

Chairman Mendelson and members of the Council: Thank you for the opportunity to testify today. My name is Katalin Peter, and I serve as Vice President of Government Affairs for the Apartment and Office Building Association of Metropolitan Washington’s Residential Portfolio. AOBA represents the owners and managers of more than 115,000 apartment units in the District, as well as over 72 million square feet of commercial office space across the region.

I am testifying in strong support of the Budget Support Act’s subtitle, which institutes a temporary pause in the District’s Building Energy Performance Standards (BEPS) first compliance cycle. We are grateful to the Council and the administration for recognizing that real-world implementation must be rooted in timing, capacity, and infrastructure—not just good intentions.

From our members’ perspective, this pause is not a delay for delay’s sake. It’s a necessary moment of recalibration. The financial exposure our members are facing is significant. Across AOBA’s residential portfolio, properties are collectively looking at approximately one hundred eighty million dollars in potential alternative compliance payments—what many consider fines—payable in 2027.

And I want to be clear: this includes many buildings that have been actively working toward compliance. Owners have retained engineering consultants, initiated upgrades, and engaged the program in good faith. But even with those efforts, the structure of the program, as it currently stands, leaves them exposed due to incomplete guidance and misaligned implementation timelines.

And I want to be clear: this includes many buildings that have been actively working toward compliance. Owners have retained engineering consultants, initiated upgrades, and engaged the program in good faith. But even with those efforts, the structure of the program, as it currently stands, leaves them exposed due to incomplete guidance and misaligned implementation timelines.

While the law itself has been in place for several years, the regulatory and technical infrastructure has lagged behind. The Clean Energy DC Omnibus Act became effective in 2019, and Cycle 1 officially began in 2021. But the final regulations were not published until the end of that year. The primary compliance guidebook didn’t come out until well into 2022. On top of that, utility data—the foundation of any performance-based standard—was not reliably available in most cases until 2023. And even today, individual buildings continue to struggle with data accuracy.

The result is that even the most proactive owners had no clear understanding of how to comply—or what their baseline energy usage was—until a couple of years into the compliance period. Taking a major building retrofit from conception to completion in under four years is a stretch under the best conditions. Doing so while the rules are shifting and the data is unreliable? That’s a setup for failure. The pause gives owners the chance to complete projects that were already in progress but got stuck waiting on stable ground.

There’s also a critical policy gap that’s especially difficult for mission-driven and affordable housing providers: we still do not have clear guidance from DOEE on financial hardship exemptions. For months, housing providers have been asking how to demonstrate financial distress, how their circumstances will be evaluated, and how exemptions will be processed. As of today, there are no clear answers. Without that guidance, responsible budgeting becomes nearly impossible. Providers operating under rent control or affordability covenants cannot simply absorb or pass through major capital costs, and the uncertainty around relief mechanisms puts them in a bind.

Then there’s the issue of financial infrastructure. The District’s climate compliance framework is supposed to be supported by rebates, financing tools, and technical assistance. Those systems are not yet at scale.

What’s more troubling is that this budget proposes to divert tens of millions of dollars from the Sustainable Energy Utility Trust Fund—the fund designed to help buildings meet their BEPS obligations. While we understand that the District is navigating serious budget pressures, but this means the compliance supports we were promised are no longer guaranteed. That makes long-term planning and commitment harder to sustain.

Let me be clear: our members are not asking to walk away from climate progress. Many are leading it. But good-faith actors cannot be expected to execute ambitious retrofits on compressed timelines without clarity, without consistent rules, and without reliable financial and technical support. This pause allows us to close out the current cycle with success stories, stabilize the regulatory infrastructure, and rebuild trust.

Mayor Bowser and her team recognized the weight of these concerns and made the difficult but wise decision to include this temporary pause in the Budget Support Act. We believe it’s a smart, necessary adjustment—one that strengthens, rather than weakens, the long-term integrity of the BEPS program.

We urge the Council to go further by protecting the Sustainable Energy Utility Trust Fund from diversion and ensuring that financial hardship exemption guidance is finalized and released during this pause.

Thank you again for the opportunity to testify.