What are the odds?

Will your building face fines as part of Local Law 97?

When it comes to LL97 and energy efficiency scores, NYC coop & condo boards have a lot of questions. What are the fines for not meeting greenhouse gas and carbon emission limits as part of the Local Law 97 regulations? How do you improve your building's energy efficiency score?

There's a lot of media buzz about the fact that the energy efficiency scores have nothing to do with the Local Law 97 fines. Even if this technically is true, the likelihood of a D-rated building facing fines in 2030 is statistically 80%, but realistically it is closer to 100%. In this blog post, we'll talk about the statistical probability side of things.

As it stands now, slightly more than 50% of NYC buildings have an energy efficiency score of a D or worse, with the other half having an A, B or C. We have evaluated the entire database of the 18,639 multifamily buildings 25,000 square feet and above. The Local Law 84 database is available to the public on the NYC Open Data website. For the 2021 data set, search for Energy and Water Data Disclosure for Local Law 84.

Most New York City buildings that have an A or B are, in our judgement, misreporting their energy use. If you got an A or B and think that you’re out of the woods, think again.

For example, we see many buildings that have converted from oil to gas and are only reporting their cooking gas. How do we know that? Cooking gas accounts for approximately 3% of most buildings’ total energy use. Many buildings that converted from oil to gas are not reporting their new and additional ConEd account which lists their heating gas that should have been added. Only time will tell if NYC does anything about this.

Shouldn’t every building have the same opportunity to get a B or C?

80% of buildings are expected to be fined based on their 2030 energy use and greenhouse gas emissions, with only 20% of buildings being able to avoid the fines as currently reported.

Habitat Magazine got it right in their recent Week by Week article “What Your Letter Grade Doesn’t Score”. The article highlights that buildings with higher energy efficiency grades are not out of the woods and might be fined.

Our argument is that the probability that your building will be fined is large. No matter how you slice it, both the energy efficiency scores, and the Local Law 97 fines are based on energy use that is reported in the EPA’s Energy Star Portfolio Manager and New York City’s Local Law 84.

If 80% of NYC’s buildings are expected to be fined based on their energy use and emissions, the likelihood that a D-building will be fined is in theory 80%, but realistically it is most likely 100%. With only 20% of NYC buildings currently standing to avoid fines, the probability for a building that has an energy efficiency rating of A or B to being fined in 2030 is approximately 3% each.

The Probability of Being Fined

 Grade   Likelihood x Distribution =  Probability

D            40%       X            50%       =            20%

C            20%       X            17%       =            3%

B            20%       X            17%       =            3%

A            20%       X            17%       =            3%

How to avoid the fines:

Most of the buildings’ energy use is not used by the building itself. It’s the energy used inside the apartments, which accounts for approximately 70% of your building’s energy use. For those buildings with commercial spaces, their energy use can be higher. Commercial spaces are killing their building’s energy efficiency scores and the Local Law 97 fines can for many buildings be blamed on the commercial tenants. So where do NYC boards need to focus their energy efficiency efforts? In our opinion, inside the apartments!

We hope that this clarified some of your questions about the recent media buzz about how some feel that the NYC energy efficiency letter grades have nothing to do with your building’s Local Law 97 fines.

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.