2-year extensions for Local Law 97 compliance

Local law 97 updates

70% of greenhouse gas emissions in NYC come from its building stock, compared to only 39% of emissions coming from buildings globally. That means NYC real estate produces 75% more emissions than what real estate typically accounts for in other parts of the world. This is likely due to the older building stock in NYC. Due to the sustained high demand for housing in NYC, older buildings remain fully occupied, as opposed to being replaced by newer structures that might be more electrified or energy efficient. In December 2021, former Mayor DeBlasio banned the use of fossil fuels in the development of new buildings starting in 2027. Now, on top of that, there is legislation that would make it more expensive to operate buildings with larger-than-appropriate fossil fuel footprints.

I’m referring to Local Law 97, which I previously described here.

Local law 97 (or LL97) is meant to curb CO₂ emission levels. Each type of building in NYC will have different allowances for the number of emissions allowed (multifamily, warehouses, retail, medical facility etc.), without falling into non-compliance. All residential buildings measuring 25,000 square feet or more are required to comply in NYC. The law works punitively and levies a fine of $268 per ton of Co₂ that is above the allowed amount to owners.

Note: Properties designated for health-care use produce more carbon emissions than manufacturing properties. However, local law 97 is more lenient to health care providers and will allow them to emit nearly 5x the amount of C0₂ that manufacturing properties produce. Source: IotaComm

Some owners of multifamily take issue with LL 97 specifically because their properties are rent stabilized. Rents are capped but expenses are not. Apartment rents are near frozen due to the inability to get compensated for apartment improvements. That means the consequences of changing energy consumption levels and the costs of building a sustainable future (which is a good goal) are being borne out by owners, without the ability to share the burden with tenants.

For owners concerned about the looming 2024 deadline, there is hope. The new set of rules put out by the Department of Buildings calls for a two-year extension for building owners whose properties are not yet ready to meet the emission benchmarks. To be eligible for the extension, landlords must evidence that they have taken “good faith efforts” to create plans for compliance by 2026. It’s unclear when applications for extensions are due or where to submit them, but extension plans should include a decarbonization timeline, some financing plans for larger projects, and permit filings.  Additional things to know about the extension:

• Owners who receive an extension will “enter into a legally binding agreement with the city” for reducing emissions down the road, according to NYC’s Chief Climate Officers Rohit T. Aggarwala.

• Owners who obtain extensions will also not be able to purchase renewable energy credits (RECs, or carbon credits) to offset future overages.

• Environmentalists believe the extension fails to communicate the urgency behind the need to curb carbon emissions.

• Only about 1,500 buildings in NYC are projected to be out of compliance in 2024.

A public hearing will be held on October 24^th, and 11AM, and you can access the meeting at this link here. To present information and be a speaker at the hearing, you can sign up by emailing dobrules@buildings.nyc.gov by 10/17/2023 and including your name and affiliation. 

The new rules for Local Law 97 are available here.

Sources:  Construction Dive, NYT, Crain’s