In less than four years, some New York City building owners will have to meet carbon emissions standards set by Local Law 97 of 2019, forcing them to reduce their emissions or pay a heavy fine.
Blasio’s administration began creating the mechanisms to enforce the landmark law, which was passed in May 2019.
However, building owners have not yet been able to calculate the total costs and time required to implement the necessary energy efficient renovations in their buildings, as Blasio’s administration is just starting to conduct studies on the means by which building owners can meet the emission standards that have been set.
Requests for financial assistance for the renovations have also been delayed as the city continues to deal with COVID-19. Meanwhile, some building owners fear that the standards set by local Law 97 do not take into account the economic hardships some building owners may face as a result of the pandemic.
Working groups and functioning of key offices
Local Law 97 was one of 10 bills passed by City Council and Mayor Bill de Blasio in April 2019 as part of the Climate Mobilization Act. With New York City buildings responsible for two-thirds of the city’s annual carbon emissions, Local Law 97 aims to help the city meet its goals of reducing carbon emissions by 40% by 2030, then 80% by 2050.
The tough cap on carbon emissions will begin in 2024, affecting more than 50,000 buildings in New York City that are 25,000 square feet or larger. Rent-regulated buildings, social housing, NYCHA buildings and places of worship are exempt from the strict ceiling of local law 97 *.
Local Law 97 also included provisions to create a building emissions unit within the New York Department of Buildings (DOB) to manage the day-to-day tasks of implementing the emissions cap and monitoring buildings. . The unit has been operational since March.
In April, DOB also created eight climate working groups: Building Technologies and Pathways (multi-family buildings), Building Technologies and Pathways (commercial buildings), carbon accounting, energy grid, economic impact, hospitals, communications and implementation. .
The groups, which began meeting virtually in May, were created to help DOB and the NYC Climate Advisory Board conduct studies that would examine renovations, strategies and technologies that building owners can use to become more energy efficient. They are also developing recommendations on the best way for the city to implement and monitor the emissions reduction law. Members of the climate working groups were chosen from a wide range of stakeholders and experts in their fields.
DOB spokesperson Grace Munns said the task forces and the climate advisory committee will release a report of their recommendation to city council and the mayor by Jan. 1, 2023. Munns also said they would work in close collaboration with building owners. to help them understand the requirements and recommendations so that they can meet the standards set by local law 97.
Difficult to predict costs
Landowner advocates say the process of modernizing a multi-unit building is not fast, with the planning, financing and approval process predating what can be a lengthy construction job.
Susan Golden, a partner at the law firm Venable LLP, said that due to COVID-19, some building owners fear they will not be able to afford renovation costs if they are not eligible for a financial aid.
“Building owners are now facing the repercussions and all the economic hardships associated with COVID-19,” Golden said. “The closure, the tenants not necessarily being up to date with the rent [retrofitting] is an additional cost. Whatever the cost, it’s an additional cost they’re considering, at a time when they might not always have the money to spend. “
To help some building owners cover costs, Local Law 97 implemented a Property-Rated Clean Energy Finance Loan (PACE). This will allow owners of qualifying commercial and multi-family buildings to take out a low-cost, long-term loan * to finance energy efficiency and clean energy retrofits needed to reduce their carbon emissions. The loans are approved by the New York City Energy Efficiency Corporation (NYCEEC) and are repaid through the building’s property tax bill, so the loan is tied to the building, not the owner.
Peter Erwin, associate director of programs at NYCEEC, said the loan is intended to ensure building owners can financially access the upgrades needed to be in compliance.
“By law, PACE would be able to fund 100% of all measures related to reducing the site’s energy consumption. And that includes energy auditing, feasibility studies, and architectural or engineering work required to design a system like this.
However, COVID-19 has delayed the launch of PACE as a city council and the mayor has yet to set the loan eligibility criteria as well as the criteria of which third-party lender can fund the loan.
Hilary Atzrott, partner at Venable LLP, said some of her clients fear that delays in making the loan available to building owners could lead to a rush of demands from homeowners hoping to meet standards and avoid fines. .
“Right now, everyone’s main concern is of course the impact of COVID, but 2024 is fast approaching and these [retrofits] are not changes that can happen overnight for a building, ”says Atzrott. “So I think if this doesn’t remain a priority for people, there is a concern that there will be a rush at the end of trying to apply.”
Erwin said that despite the delays, the criteria should be adopted by the end of the summer so that NYCEEC can start the online application process before the end of 2020.
Currently, buildings with one or more rent-regulated units and other types of affordable housing are exempt from the more stringent standards under local law 97. Instead, exempt buildings will have a separate set of guidelines, of standards and dates they must follow in order to be in compliance with local law 97. * This separate treatment was intended to ensure that renovation costs would not be passed on to tenants through the Major Improvement Program of fixed assets, which would allow landlords to increase the rent by 6% if they made certain updates to the building.
However, in June 2019, the New York State Legislature changed the Major Capital Improvement Program, now allowing landlords to raise rent by 2% only if they make any changes.
On May 28, Costa Constantinides, the chairman of the Environmental Protection Committee, introduced a bill that would expand local law 97 to include buildings where 35 percent or less of the units are rent-regulated. The extension of Local Law 97 is supposed to help ensure every New Yorker has the right to cleaner air.
Frank Ricci, spokesperson for the Rent Stabilization Association, which represents owners of rent stabilized buildings, said any expansion of the bill would be a disaster as the cash flows of those buildings are constrained due to regulations. rents.
“There is no financial room in these buildings to make major improvements,” Ricci said. “It just won’t happen. So, you are going to have a generalized non-respect, if they were to change this law, you would have a generalized non-respect of the local law 97. ”
Residential buildings contribute almost a third of the city’s carbon footprint, and rent-stabilized apartments represent 44% of the city’s rental stock.
* This story has been updated to clarify that it is not yet clear what the financing options will look like, and that LL97 exempts some buildings from its strictest rules but not all regulations.