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Perspectives

Climate Change Legislation Affects Owners of at Least 50,000 New York City Properties

New York City recently adopted a package of nine local laws collectively known as the “Climate Mobilization Act” or New York City’s “Green New Deal.” The legislation primarily affects the City’s 50,000 largest buildings, including many cooperatives and condominiums, which account for 5% of the City’s properties but 50% of its energy consumption. The most significant of the new laws sets maximum limits of carbon emissions on residential and commercial buildings over 25,000 square feet commencing in 2022. It seeks to reduce these buildings’ collective carbon emissions by 40 percent by 2030 and 80 percent by 2050.

Emissions compliance will be important for New York City cooperatives and condominiums for the foreseeable future. The first step for any affected building is for the board to undertake an energy audit to determine whether the building is over the mandated emissions limits and to assess energy usage going forward. If the building is or will be over the emissions limits, the board will need to identify and install energy conservation improvements and/or purchase or install renewable energy sources. Buildings will have to consider changes to their mechanical (heating, cooling, and lighting) systems and/or to their exteriors (windows and façades), all of which can be expensive and time-consuming. However, the penalties for noncompliance could reach into the seven figures annually, depending on the size of the building and the amount of energy consumed.

Many properties are currently exempted from the emissions program. Buildings containing any rent-stabilized apartments are currently exempt, so as not to trigger capital improvement charges that could be passed on to tenants under current State law. However, the State Legislature is expected to modify the law regulating capital improvement costs, at which time the City Council has indicated that it will incorporate these buildings into the new emissions regime. In the meantime, such buildings will be required to perform energy-saving upgrades that do not qualify as major capital improvements.

In addition to the emissions bill, the City (i) has created a new financing program (known as a PACE program) to provide funding for energy efficiency retrofits and renewable energy projects; (ii) now requires green roofs or solar panels on certain new construction or buildings undergoing major renovations; and (iii) has modified the energy grading system under which buildings submit annual data on energy and water usage.

Given the scale of the legislative mandate and the significance of the changes that may be required, all affected building owners, including cooperative and condominium boards, should reach out to counsel and qualified professional engineers promptly.