Local Law 97: A Wake-Up Call for NYC Property Owners

As cities worldwide push toward more sustainable developments, stringent regulations to curb carbon emissions have rolled out in New York City. Recent warnings from the Department of Buildings’ chief sustainability officer have put property owners on high alert: compliance is no longer optional; it’s imperative.

Understanding Local Law 97

At the heart of New York’s sustainability push is Local Law 97 (LL97), a critical component of the Climate Mobilization Act. Enacted in 2019, Local Law 97 mandates that most buildings over 25,000 square feet significantly reduce their greenhouse gas emissions. Buildings account for nearly 70% of New York City’s carbon footprint. The goal of LL97 is to reach a citywide emissions reduction of 40% by 2030 and 80% by 2050 compared to 2006 baseline levels.

The law sets ambitious targets, with initial compliance requirements that kicked in January 2024. These requirements will progressively become more stringent through 2050. Buildings that fail to meet standards face hefty fines, creating a sense of urgency among property owners and managers.

Properties that surpass their carbon emissions limits will face fines based on the level of excess emissions, potentially resulting in annual fines amounting to millions of dollars. With a minimum criterion of 25,000 square feet for covered buildings, financial penalties for noncompliance start at $12,500 per month. In a highly competitive real estate market, these extra costs could have a substantial impact on profitability and property values.

Proactive Steps to Avoid Fines and Ensure Compliance

For many properties, the immediate focus is avoiding fines, but the broader implications of Local Law 97 extend beyond financial penalties. Non-compliance could potentially damage a property’s reputation, making it less attractive to tenants and investors who increasingly prioritize sustainability.

To navigate these challenges, NYC property owners will need to adopt a proactive approach. Key steps to consider may include:

1. Comprehensive energy audits: Understanding your building’s current energy consumption is the first step toward reducing emissions. An energy audit will identify areas for improvement and provide a roadmap for compliance.
2. Energy-efficient upgrades: From LED lighting to advanced HVAC systems, there are many upgrades that can significantly reduce a building’s carbon footprint. These investments often pay for themselves through lower utility bills and increased property value.
3. Renewable energy sources: Incorporating solar panels or other renewable energy sources can further decrease emissions and provide a hedge against rising energy costs.
4. Stakeholder engagement: Effective sustainability initiatives require buy-in from all stakeholders, including tenants, investors and employees. Regular communication and education can foster a culture of sustainability and ensure alignment.
5. Monitored progress: Implementing robust monitoring and reporting systems will help track progress toward compliance and identify any areas needing additional attention.

New York’s Local Law 97 stands as a leading model for building performance standards, setting the stage for similar regulations across the nation. The National Building Performance Coalition, with commitments from over ten other jurisdictions, is working to expand the adoption of these standards. This initiative is further strengthened by the Department of Energy’s introduction of a standardized definition for net-zero buildings, designed to provide clarity and drive sustainability in the built environment.

New York’s push for sustainability is a call to action for property owners to embrace environmental responsibility. By proactively improving energy efficiency and cutting emissions, property owners can avoid significant fines, increase property value and contribute to broader sustainability goals.

Weaver’s ESG & Sustainability Services team is dedicated to supporting property owners with decarbonization strategies, emissions reporting and data assurance, all of which are essential to proactively navigate the complexities of Local Law 97 and other regulations. For more information on how Weaver can support your sustainability initiatives, please contact us.

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