The Fine Print of Local Law 97
What NYC Coops and Condos Need to Know
New York City's push towards a more sustainable and environmentally responsible future is taking a big step forward with the implementation of Local Law 97 (LL97), which sets strict carbon emissions limits for large buildings in the city. The law has sent shockwaves through the real estate community, with many coop and condo boards scrambling to understand its requirements and avoid potential costs and penalties. The added costs for not retrofitting their building to reduce its carbon footprint are manyfold and include:
Carbon Emission Fines: LL97 sets a maximum carbon emissions limit for buildings over 25,000 square feet, and the limit decreases every year starting in 2030. Buildings that exceed the emissions limit will be fined, with the amount of the fine increasing each year. For example, in 2024, buildings that exceed the limit will be fined $268 for each metric ton of carbon emissions over the limit. By 2035, the fine will increase to $2,000 per metric ton of emissions.
Misreporting Fines: A majority of New York’s buildings have been misreporting their energy use. Many are only reporting the co-op or condo’s ConEd account(s) for their common areas, but not the electric used by the residents. Other buildings have converted from one heating fuel source to another and never added the extra account in their EnergyStar Portfolio Manager. Buildings that are found to have misreported their energy use can be fined up to $90,000 per quarter. To minimize the risk associated with misreported energy use, boards need to have their Directors & Officers (D&O) or package insurance policies reviewed by their insurance broker to make sure that there are no exclusions for errors.
Cost of Energy: Every day that goes by with excessive energy consumption is a waste of resources and harmful to the environment. It also means lost money that won't be regained. The fines for not complying with LL97's carbon emissions limit will only increase over time, making it crucial for coop and condo boards to take immediate action and reduce their energy use. Not only will this help the environment, but it will also improve the building's financial situation, helped by lower energy bills and increased marketability from improved EnergyStar scores, all of which also increase property values for owners. Don't let another day go by without taking steps to reduce energy waste and secure a more sustainable and responsible future for your building.
To comply with LL97, coop and condo boards must take a multi-pronged approach, which includes reducing total energy consumption (even inside the resident’s apartments), improving building insulation and ventilation, and installing energy-efficient systems. In some cases, buildings may even need to switch to renewable energy sources, such as solar or wind power. The cost of these improvements can be substantial, but the cost of non-compliance is even higher.
For coop and condo boards that are struggling to comply with LL97, there are resources available to help. The city has established NYC Accelerator that provides guidance and assistance to buildings in meeting the requirements of the law. The Folson Group is proud to be a NYC Accelerator Service Provider. Additionally, the property manager should provide the board with the annual EnergyStar and benchmarking report that is completed by a qualified energy auditor.
In conclusion, LL97 is a major step forward in New York City's efforts to combat climate change and improve its ESG score. While the law can be challenging for coop and condo boards, there are resources available to help them comply and avoid penalties. By taking action and reducing their carbon footprint, coop and condo boards can benefit from lower energy bills, increased marketability, and improved ESG scores.
The Folson Group is a building efficiency consultancy that helps boards make their buildings safer, more sustainable, and more affordable. Get The Folson Group’s Energy Efficiency Policy©. It’s the only policy available on the NYC market to address the energy used inside the apartments. Schedule a strategy session with us to talk about how it would work for your building and strategically minimize those fines at the lowest possible cost to your co-op or condo.