Commercial Property Owner or Landlord in California?
Here’s What You Need to Know About Electric Vehicle Charging Stations
With office and other commercial vacancies on the rise, finding and retaining good, timely paying tenants is becoming more and more difficult each year. Add in the fact that many companies, having enjoyed the savings associated with COVID-imposed restrictions that have made telecommuting a long-term reality, it is going to take creative strategies to attract commercial tenants. Failing to offer amenities that “sweeten the deal” may mean property owners have an extensive amount of commercial square footage sitting empty.
More eyes, more buys – right? Make upgrades to you building that help your building stand out from the others in the region and you will likely engage a wider audience.
Here is a great idea! Enhance your commercial property and make it more attractive to potential tenants by installing electric vehicle (EV) charging stations on your property.
Potential tenants are looking for buildings that have been modernized and offer amenities that help them attract top-quality employees. Your modest investment today in the installation of EV charging stations will give you the advantage in this highly competitive commercial rental real estate market.
While many states are enacting laws of their own, California already has a well-established civil code for the installation of EV charging stations on commercial property. Whether you already have current tenants who have already requested permission to install EV charging stations, or you are taking the initiative to improve your property by installing one or more, commercial property owners/landlords should familiarize themselves with the related laws in California.
California EV Charging Station Code states: “For commercial leases executed, renewed, or extended after January 1, 2015, a landlord may not prohibit or unreasonably restrict the installation or use of an electric vehicle charging station in a parking space on the property. Any lease provision that conflicts with this prohibition is void and unenforceable (California Civ. Code § 1952.7.)
Plainly stated, if your tenant wants to install an EV charging station on your commercial property, the law requires you to allow them to do so – at their cost. Further, you are not permitted to impose restrictions that “significantly increase the cost of the electric vehicle charging station or its installation, or significantly decrease the charging station’s efficiency or specified performance.”
When Can a Landlord Prohibit the Installation of EV Charging Stations?
You can deny a tenant request to install an EV Charging Station if your building has:
- Fewer than fifty (50 parking spaces; OR
- There already exists at least two charging stations for every one hundred (100) parking spaces.
The Commercial Landlord Advantage
Before you throw up your hands and get upset about California’s EV charging station laws, you may want to see the upside of the equation. First, as we mentioned, EV charging stations are absolutely an amenity for tenants. Additionally, you may have just found a way to increase revenue and make your tenants happy, too.
It may seem like commercial tenants have the upper hand in this scenario, but commercial landlords have rights, too! The following EV charging station provisions apply to commercial leases:
- Your tenant may not install a charging station or stations in more parking spaces than are allotted or provided in their lease agreement. In other words, if a tenant has 15 marked spaces, they are not permitted to install EV charging stations at any unmarked spots.
- If the tenant has no parking spots allotted to their company, you, the property owner or landlord, may absolutely charge the tenant a monthly rental fee for any space they want to “reserve” for EV charging. (Installing an EV charging station is the equivalent of reserving a parking space for EV owners.)
- You as the landlord also have the discretion to create a new parking space where one did not previously exist, to facilitate the installation of an EV charging station. This means the EV charging area may not be the most convenient of spots for some tenants.
Does Your Tenant Have to Ask Permission?
Great question, and one that should be easy to answer, after careful examination of the lease you have negotiated with your tenant. In some instances, tenants are permitted to make some modifications or enhancements to the exterior of a building, but this is not always the case.
If a tenant requests approval for the installation of an EV charging station, the application for approval must not be willfully avoided or delayed by the landlord. Your tenant’s request for approval should be in writing. And, in turn, as the landlord, you must provide the approval or denial in writing.
Also, commercial tenants who want to install EV charging stations must:
- Comply with the landlord’s “reasonable standards” for installation
- Hire a licensed contractor to install the charging station at the tenant’s expense
- Provide a certificate of insurance naming the landlord as an additional insured under the tenant’s insurance policy in the amount of $1,000,000. This must be provided to you within 14 days of your approval notice to the tenant.
There are also financial requirements that the tenants must pay for; these rules are definitely in the property owner’s favor.
- Tenants must pay for any property damage costs that result from the installation, maintenance, repair, removal or replacement of the charging station.
- The tenants, NOT the landlord or property owner, must pay to maintain, repair or replace the EV charging station in the event of a breakdown.
- It’s the tenant’s responsibility to make sure that all charging stations meet applicable health and safety standards and requirements imposed by applicable state and local authorities, including zoning, land use or other ordinance or land use permit requirements.
- Most importantly, however, is the fact that California law says the tenants must pay for electricity accessed by the charging station.
The Tenants Have to Pay for Electricity? Tell me more!
More than likely, your first question as a commercial property owner or landlord will be about how the electricity consumed at an EV charging station will be paid for, because you certainly don’t want to foot the bill for a tenant’s electric charge up any more than you would want to pay for a full tank at a gas station.
What if you as the landlord could create an added stream of revenue and meet California codes relating to the installation of EV charging stations for commercial tenants. Further, this is an especially useful solution if you manage a multi-tenant commercial property.
Introducing ShinePay! ShinePay is a cashless system that can be installed onto the EV charging station (at the time the station is installed or at any time after it is installed.) The landlord and tenants each download the ShinePay app (tenant on a smartphone) and create accounts. The tenant links a credit card to the ShinePay app.
When it’s time to charge their car, the EV owner parks in the parking spot next to the charging station, scans the QR code on the ShinePay device at the EV charging station with their smartphone and electricity flows. The tenant’s credit card is charged at the time that the electricity is dispensed. (This is a particularly good solution when the EV charging station will be used by multiple EV owners in non-reserved parking spots.)
The landlord has access to a dashboard on the ShinePay app where you will be able to check usage and easily move accrued funds into your bank account to cover the electric bill when it comes due. And, as the landlord, you control the price for electricity using ShinePay’s Access Control feature.
If the parking lot or parking garage is shared by multiple tenants, you will want to control who has access to the EV charging station (and how much they pay for electricity!) Using ShinePay’s access control, the EV charging station can be made accessible only to those who have been granted permission to use it. Further, you can set it so visitors, for example, pay a surcharge to use the station.
You may even want to consider installing EV charging stations and promote their existence as a building amenity to tenants. By making a modest investment in EV charging stations on your commercial property, you’ve taken the initiative to make California greener, AND you’ve added a true, value-added amenity to your commercial building that your current and future tenants will appreciate. While supporting California’s strong green initiatives you’re making the sensible decision to invest in sound infrastructure that positions your property well, for the future.