Co-ops and Condos Address the Climate Mobilization Act
We are approaching the second anniversary of New York City’s passage of the Climate Mobilization Act (CMA). Co-op and condo boards are beginning to understand the challenges they will face in complying with this law. The main goal of the CMA is to reduce overall carbon emissions in New York City by 40% by 2030, and 80% by 2050. In order to meet these emissions targets, some buildings covered by the new law will have to begin demonstrating emissions reductions by 2024, and most buildings by no later than 2030. An interactive map is available online at https://energy.cusp.nyu.edu/#/ showing how a building’s current emissions compare to its anticipated 2024 and 2030 emissions limits. Another requirement under the CMA was the requirement to post energy efficiency “letter grades” beginning in October 2020.
Determining what emissions limits apply to a given building is not always straightforward. At least for the present, buildings smaller than 25,000 square feet do not have to meet the emissions targets. City-owned buildings, houses of worship, and certain public housing developments are also exempted. When the CMA was passed, all buildings containing any rent-regulated units were also exempted, but this excluded many large co-op buildings with a handful of rental units remaining from their conversions. Last year, the City Council mostly closed this loophole by narrowing the exemption to buildings with more than 35% rent-regulated units. For those buildings newly subject to emissions limits as a result of this change, the start of the compliance period was delayed from 2024 to 2026. Other buildings that can demonstrate that they are legally incapable of complying with the limits, such as landmarked buildings or certain high-energy or high-density buildings, may apply for an adjustment to their compliance requirements.
The CMA was to be accompanied by a new financing program to assist in funding energy efficiency projects. The development of this program was delayed by the pandemic, but it is anticipated that it will become available shortly. The pandemic has also delayed the issuance of a study of a potential carbon-trading program that was supposed to have been released by January 2021. Such a program would provide another avenue of compliance for buildings that are unable to sufficiently reduce their emissions through capital improvement projects. We will report on this study and other aspects of the CMA in future issues of the Client Advisory.
Finally, boards and other property owners should be aware that in his state budget proposal submitted in February, Governor Cuomo proposed language that would allow building owners to meet their emissions targets by buying credits for renewable energy produced elsewhere in New York State. Critics of this proposal, including state legislative leaders, have asserted that this proposal, if enacted, would substantially undermine the goals of the CMA. Whether any such legislation will be adopted is not known at this time.