The Real Estate Board of New York warns that over 3,000 buildings—including approximately 2,000 apartment buildings—could face over $200 million per year in fines next year for failing to comply with Local Law 97.
Under the 2019 law, part of the city’s Climate Mobilization Act, buildings 25,000 square feet and larger must limit harmful energy emissions. Starting in 2024, buildings that are not in compliance will face a fine of $268 for every metric ton of carbon dioxide above the building's limit. Stricter limits come into effect in 2030.
The real estate trade association, which represents property owners, management companies, and brokers, among other entities, commissioned a study from Level Infrastructure, an engineering consulting firm, to determine the impact of recently finalized rules to implement Local Law 97.
REBNY says that thousands of properties will likely fail to comply with the law, even if they make significant investments to improve energy efficiency or purchase renewable energy credits. The study found that as soon as next year over 3,700 properties could be out of compliance and confronted with $200 million each year in penalties.
“This study should be a wakeup call that Local Law 97 is not designed to secure the emissions reductions we need,” says Zachary Steinberg, REBNY’s vice president of policy. “We hope the city will take action over the next 12 months to avoid damage to our local economy and unfair penalties to property owners in 2024,” Steinberg says.
Buildings are the leading source of harmful emissions in NYC, which is why reducing them "is critical to push back against the most damaging effects of climate change," says Andrew Rudansky, Department of Buildings press secretary. "That’s why the Adams administration is committed to fully implementing this game-changing sustainability policy with a focus on working with building owners to achieve compliance and reach key targets. We encourage building owners to take advantage of the NYC Accelerator to get the support and guidance they need to make necessary improvements, meet emissions reduction goals, and avoid incurring fines.”
In general, according to a spokesperson, the remedies REBNY wants the city to deploy are:
A tax abatement program for greenhouse gas emissions, similar to a bill recently introduced in the New York State Senate
Additional incentive programs to offset the costs of increasing energy efficiency and electrification
Earmark penalty funds for specific purposes related to sustainability or allow owners to make alternative compliance payments to improve the performance of buildings with below market rate units
Avoid further restrictions on the use of renewable energy credits
Generally the recommendation from these studies is to build up a reserve fund to address capital improvements. You can read more here.
Reducing Energy Emissions is clearly an important goal however it must be done in a way that does not hurt owners and renters financially. We are monitoring this topic closely and will continue to educate. Reach out with any questions.