Energize Denver Costs and Your 2027 Property Value
Energize Denver is a 2027 property tax issue, not just a 2029 penalty issue. Every Denver building of 25,000 square feet or more carries an energy target, a penalty schedule and a disclosure duty on sale. A buyer on June 30, 2026, the date Colorado’s 2027 values reflect, priced the retrofit or the penalties into the offer. The county’s model did not, and it will not unless the owner brings the numbers.
What Energize Denver requires of building owners
The Building Performance Policy covers commercial and multifamily buildings of 5,000 square feet or more. Buildings of 25,000 square feet or more carry a building-specific energy-use target, set from their 2019 use, with the final targets fixed so that the covered stock cuts site energy 30%. Hotels carry a flat 30% reduction. The rules in force today took effect August 27, 2026, after City Council amended the ordinance in May. The default checkpoints in the rule text are 2025, 2027 and 2030; the extension offered with the 2025 benchmarking submission moved buildings to one checkpoint in 2028 and a final target in 2032, and the city’s guidance treats 2026/2030 and 2028/2032 as the two common paths.
| Situation | Penalty | When |
|---|---|---|
| Building with three target years (2025, 2027, 2030) | $0.15 per kBtu short | Each target year, then every year after 2030 until met |
| Building with two target years (2026/2030 or 2028/2032) | $0.23 per kBtu short | Each target year, then annually until met |
| Building with one target year (after a timeline extension) | $0.35 per kBtu short | The target year set in the extension notice, then annually |
| Timeline extension requested after the target year closed | $0.10 per kBtu added | On top of the rates above |
| Never benchmarked, or no verified submission for the target year | $5.00 per square foot | Per target year, on the assessor’s square footage |
| Met the final target, then slipped | $0.05 to $0.15 per kBtu | Annually, by how far the building slipped |
The city’s guidance adds two things the table does not show: penalty rates were cut in half in April 2025, and no penalties will be levied until late 2029. Its own example is a 100,000 square foot office that misses its target by 10 kBtu per square foot, which owes $350,000 for one measurement period at the one-year rate. Smaller buildings (5,000 to 24,999 square feet) follow prescriptive lists instead, with deadlines of December 31, 2026 for 20,000 to 24,999 square feet and one year later for each smaller tier. Sellers must disclose a building’s compliance status, targets and any penalties to every prospective buyer and in all sale advertising (Rules Section 6).
Where the challenge stands
The Colorado Apartment Association, the Apartment Association of Metro Denver, the Colorado Hotel and Lodging Association and NAIOP Colorado sued the state and the city in April 2024, arguing that Energize Denver and the state’s Regulation 28 are preempted by the federal Energy Policy and Conservation Act because meeting the targets means pulling out gas equipment that already meets the federal standard. The court dismissed the case for lack of standing in March 2025 and revived it that August on an amended complaint built on the members’ own ASHRAE Level II audits, which put compliance at hundreds of thousands to millions of dollars per building. On September 15, 2026 the U.S. Justice Department filed a statement of interest saying the programs are plausibly preempted.
On September 30, 2026, Judge Regina Rodriguez threw out the claims aimed at the city’s appliance rules as filed too late and let the challenge to the building-wide targets go forward. That is a ruling on what stays in the case, not a stay of enforcement. Nothing is enjoined, nobody has asked for an injunction, and the remaining claims are headed into discovery with an appeal to follow whichever way it goes. The rules will be in force through the 2027 notices either way. A separate suit over Denver’s new-construction energy code was dismissed in August and is on appeal.
Why the cost belongs in the 2027 value
Colorado’s 2027 values reflect the market on June 30, 2026 (C.R.S. § 39-1-104(10.2)), and the values hold for 2027 and 2028. On that date every large Denver building had a published target, a measured gap and a penalty schedule, and the seller of any building had to hand the compliance file to every prospective buyer. A buyer did what buyers do with a known, dated obligation: priced the retrofit, or the penalty stream, into what they would pay. The owner groups’ court filings put the retrofits at hundreds of thousands to millions of dollars per building, and $23 million for the Sheraton Denver Downtown.
The assessor’s mass-appraisal model carries none of that. It values an office or an apartment building on market rents, typical expenses and a capitalization rate, or on sales adjusted for size and age, and no county model has a line for a building-specific retrofit. The result is a 2027 value that assumes a compliant building for a building that is not one. The assessor is required to consider the cost, market and income approaches (C.R.S. § 39-1-103(5)(a)); a dated, quantified obligation is evidence under all three, and under the income approach it is a capital item a buyer deducts before paying anything for the income.
The city says 44% of large buildings already meet their final target, up from 15% in 2022. That leaves 56% that do not, and for those buildings the question for 2027 is not whether the obligation exists but what it costs. The county will not deduct it on its own.
The gap, in dollars
Take the city’s own example: a 100,000 square foot office that misses its target by 10 kBtu per square foot. The penalty exposure is $350,000 for a measurement period at the one-year rate, repeated annually after the final year until the building complies. Suppose an ASHRAE Level II audit prices the fix at $1.5 million. A buyer on June 30, 2026 deducts that from the price, and a 2027 value that does the same, at the 25% rate and Denver’s levy of about 80 mills, is $30,000 a year less tax, in each year of the cycle.
How to bring it to the county
The argument only lands with the building’s own numbers. The county will call a general reference to Energize Denver speculative, and while the lawsuit runs it will say so twice. What it cannot dismiss is a dated obligation with a dated price:
- The target gap. The building’s Denver Building ID, its assigned target and its latest reported energy use intensity, which together give the kBtu per square foot the building has to find.
- The price of closing it. An ASHRAE Level II audit, contractor bids or the compliance plan filed with a timeline extension, dated as close to June 30, 2026 as possible. The audits the owner groups commissioned for the lawsuit are exactly this evidence.
- The penalty math. Gap times square footage times the rate for the building’s path, per the schedule above, as the alternative a buyer weighs against the retrofit.
- The sale record. Because sellers must disclose compliance status in the marketing package, sales of buildings at their target and sales of buildings far from it are now distinguishable comparables. A sale the assessor relies on must be adjusted for it.
- The timing. Notices of value mail by May 1, 2027 and protests are due June 1, 2027. The evidence should exist before the notice does.
Presented that way it is a cost-to-cure argument like deferred maintenance or a brand-mandated renovation, and it belongs in the income approach as a capital deduction and in the sales approach as an adjustment. For hotels, where the target is a flat 30% reduction and the court filings put one downtown property’s cost at $23 million, it sits alongside the Rushmore deductions on the hotel page. The rest of the 2027 calendar is on the 2027 reappraisal page.
Common questions
- City and County of Denver, Rules and Regulations Governing Energize Denver Building Energy Performance Requirements, effective August 27, 2026 (Sections 4.1, 4.7.E, 6 and 7.6.B).
- City and County of Denver, Technical Guidance for Large Buildings, September 1, 2026 (Sections 1.3.4 and 10.2.1.2).
- City and County of Denver, Energize Denver Adopts Updated Rules, Improves Supports for Buildings, September 2, 2026 (compliance figures).
- Colorado Apartment Association v. Ryan, No. 1:24-cv-01093-RMR (D. Colo.): complaint, amended complaint and orders; coverage by the Denver Gazette (September 28, 2026), BusinessDen (August 27, 2025, the Sheraton figure), BusinessDen (October 2, 2026) and the Denver Post (October 2, 2026).
- C.R.S. § 39-1-104(10.2) (level of value) and § 39-1-103(5)(a) (approaches to value).
Put your building’s gap in dollars
Send the address, or the notice of value when it arrives, and the building’s latest benchmarking report if you have it. The Initial Consultation ends in a written memo: the target gap, what it costs to close, what the county’s value assumes, and the exact fee. If there is no case, the memo says so.
Related: Denver appeals · the 2027 reappraisal · hotel appeals · Colorado appeal guide