Cleveland Chamber Launches Innovative Leasing Program

As the small business arm of the Cleveland Partnership—one of the largest metropolitan chambers of commerce in the nation—the Council of Small Enterprises (COSE) has long recognized the value of helping its member businesses save money through energy efficiency.

Since 1999, COSE has helped companies reduce their energy consumption, negotiate lower energy rates, and improve their bottom lines. In 2014 alone, it helped member businesses save $4 million through utility rebates and reduce overall energy use by 54 million kilowatt hours.

Now COSE is taking another great leap forward in helping local businesses maximize the economic development opportunities of energy efficiency. In collaboration with the Institute for Market Transformation and Cleveland 2030, COSE has introduced a novel leasing program that increases smart commercial lease solutions for building owners and tenants to invest in—and benefit from—energy efficiency in the City of Cleveland.

“Our ultimate goal is to transform our downtown and offer both landlords and tenants a positive return on energy efficient investment,” said Nicole Stika, COSE’s Senior Director of Energy Services. “This is a critically important conversation, and it needs to start somewhere. The chamber is the ideal place to do that.”

COSE introduced this new high performance lease program in November at a roundtable discussion that focused on how to use leasing terms to encourage behaviors that reduce energy use in buildings and save money for owners and tenants.

It is a breakthrough solution for the lack of mutually beneficial incentives for building owners and tenants to reduce energy use. If a tenant pays for energy use, the landlord has little incentive to invest in efficient equipment. At the same time, since the tenant does not own the lighting, heating, cooling and ventilation systems, they have no incentive (or ability) to invest in efficiency upgrades. The result is that neither party takes the initiative to perform energy-saving improvements. In commercial rental properties, this “split incentive” problem and lack of tenant engagement strategies frequently limits the adoption of energy efficiency solutions.

In what could be a model for the nation, energy aligned leases overcome this obstacle by establishing incentives, fostering information sharing, and encouraging landlords and tenants to collaborate on the efficient use of energy and other resources.