A Look at Local Law 97 Compliance

New York City's Local Law 97 has put in place strict regulations aimed at reducing carbon emissions from buildings greater than 25,000 ft². While this is a positive move towards a more sustainable future, it also means that building owners are at risk of significant fines for non-compliance. As a result, many building owners are considering remeasuring their properties to avoid penalties. However, the decision to remeasure is not straightforward and requires careful consideration of several factors.

One of the potential downsides of remeasuring a building is that it may result in increased real estate taxes per square foot. This is because if a building is remeasured and found to be larger than currently recorded, it will reduce its Local Law 97 fines, but increase its real estate taxes.

Our data shows that real estate taxes in many Manhattan neighborhoods are approximately $10/ft², whereas the LL97 fines for the same buildings are approximately $1/ft². For larger buildings, remeasuring the building, which takes time and money, might not be the best course of action. Instead, reducing energy use is clearly the best course of action to minimize the fines.

For instance, a board with a 200,000 ft² building needs to consider whether the Local Law 97 fines in various instances will be higher or lower than the real estate taxes for the same increase or decrease in the building’s square footage. This creates complications that may make it easier for boards to leave it as is. Whenever the building is significantly over the limit, remeasuring may not be the best option, and the focus should be on finding ways to reduce emissions and achieve compliance.

The only time that it is clear that a coop or condo board should consider remeasuring is when their building is 25,001 ft²or slightly larger. In this case, the potential fines for non-compliance with Local Law 97 are significant, and remeasuring can be a cost-effective way to avoid them. This will exempt it from Local Law 97 compliance altogether. If the building is 25,001 square feet, remeasuring it down to 24,999 can help avoid compliance, and the increase in real estate tax dues will be minimal. Remeasuring may thus be a cost-effective way to bring it below the threshold and avoid the law's penalties.

The decision to remeasure a building to comply with Local Law 97 should be made on a case-by-case basis, considering factors such as the building's size, potential fines, and real estate taxes per square foot. While remeasuring can be a cost-effective way to avoid Local Law 97 penalties, it may not always be the best option. Building owners should carefully weigh the pros and cons before making a decision, and seek professional advice to ensure compliance with all relevant laws and regulations.

To summarize, remeasuring a building to reduce Local Law 97 fines should only be done after carefully weighing the costs and benefits of the decision. While it can be an effective solution for smaller buildings or those just over the size threshold, it may not always be the best choice for larger buildings with significant real estate taxes per square foot. Ultimately, building owners should prioritize reducing energy use and achieving compliance with Local Law 97 through other means, such as retrofitting or improving energy efficiency, rather than relying solely on remeasurement.

The Folson Group is a NYC energy efficiency consultant, helping buildings with all their Environmental, Social, and Governance (ESG)-related policies. Services cover the entire process, from planning to implementation and completion, and clients have achieved energy reductions of up to 40%. If you are interested in making your building more energy efficient and environmentally friendly, consider reaching out to The Folson Group to schedule a consultation.