Pros and cons of remeasuring your building

New York City co-ops and condos are facing staggering annual fines as part of Local Law 97 of the Climate Mobilization Act if they do not reduce their energy use and carbon emissions. Retrofitting your building to make it greener and more sustainable is a huge and expensive project. When you hear that you can remeasure the building at a very reasonable price tag, this naturally sounds very appealing. The question is, do the benefits outweigh the risks?

When your building was built, whether that’s prewar, during the Manhattan building boom of 1950s-1970s, or even later, the developer filed the building plans with its total square feet. Whenever your building was built, it adhered to the building and construction codes at the time. Since then, there have been revisions to those construction codes to incorporate certain areas that weren’t included before.

For commercial buildings, which rely on income based on square footage, having accurate measurements maximize the owners’ rentable square footage. Because of this, there are several architectural or engineering firms that measure commercial building according to The Building Owners and Managers Association International (BOMA) sets the standards, including but not limited to Buildings Data Labs.

For co-op and condos, many boards haven’t bothered remeasuring their building as boards are busy as it is. Why spend extra money that belongs to the owners or shareholders either from reserves, common charges, maintenance fees, or assessments.

With Local Law 97, this has changed as it calculates total carbon emissions or Greenhouse Gas (GHG) per square foot. Let’s say that your building’s total energy use is 100 million Btu, and your building is 100,000 square feet, your GHG is 1,000/square feet. If your building is remeasured by 20%, to 120,000 sq ft, your GHG per share feet is reduced to 833, 16% less. Presumably, the LL97 fines will be reduced by 16% as well.

This sounds like an easy decision, right? Let’s remeasure the building!

Hold that thought! NYC Finance imposes your co-op or condo’s building’s real estate taxes based on square footage as well. Your building’s real estate taxes are based on the rental income from a selection of rental buildings that NYC Finance deems comparable to your building. That total rent collected per square foot for those buildings is then applied to your building, per share foot. It therefore follows that the smaller your building is, the smaller the real estate tax bill will be.

Many Manhattan coop and condo buildings are compared to some of the Glennwood luxury apartment buildings that have pools, roof decks, gyms, huge laundry facilities, community rooms, and even parks that do not even remotely resemble the coops and condos that they are compared to. Yet, that’s how NYC Finance determines your real estate taxes.

We heard, although this has not been deeply researched and may or may not be the case, that the city will not share the square footage for the LL97 fine calculations with NYC Finance. Although do you really trust that this will be the case? If so, is it worth the risk of remeasuring your building?

This leaves co-op and condo boards with needing to do a cost benefit analysis of the estimated fines versus the estimated real estate taxes. Alternatively, NYC boards can just leave the square footage as is and concentrate on retrofitting the building to reduce its energy use and greenhouse gas emissions.

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.