Fines or Retrofits?

Is there one burning issue on the minds of co-op and condo boards these days?

For buildings that are above a certain square footage, the big issue is reducing their energy consumption enough to comply with Local Law 97 beginning in 2024 so they can avoid paying big fines. I do understand why some boards are fearful if the current schedule of enforcing the law stays the way it is. But I believe that it will be pushed back a little bit because the costs are too great and the projects are just too large.

What are some of your boards’ strategies for reducing their carbon emissions?

Well, we’ve done a few studies that show electric boilers are the way to go, because the No. 1 culprit in carbon emissions is fossil-fuel consumption. But the costs of switching to an electric boiler or installing heat pumps are significant. There are cheaper alternatives. Most of our properties have converted to LED lighting or installed green roofs, new windows and doorways, and better controls for their current boilers. But those measures don’t really reduce the fines, and that is ultimately what we’re concerned about.

Are any of your buildings in a situation where avoiding fines would be much more expensive than paying them?

More than half. But I would not advise them to go ahead and pay them. First, I would tell them to do the study, gather all the information, and get a few engineers to review what you’re facing. And then from there, figure out: Does this pay for itself? What is the return on this? Currently, as I said, more than 50% are leaning toward just paying the fine, which is pretty interesting.

I have a mechanical engineering degree, which I have used to reach out to engineering firms. They discover what the building’s issues are — whether you have commercial space, whether you have a tall building with a lot of glass, whatever the case is. From there they give us a report that tells us where the problems are and what they, as an engineering firm, think we should do. These reports are funded by NYSERDA (the New York State Energy Research and Development Authority), so boards are not paying the full cost of these massive reports. I, of course, cross-reference that report and speak to the board. The boards are very intelligent today, and they understand these systems.

You mentioned NYSERDA. There’s a lot of money out there right now — city, state, federal, the Inflation Reduction Act. Are you tapping into that money?

We’ve tapped into that money already. The engineers process the applications to get those funds for us. Part of the reason you’re hiring an engineer is for him to do this work.

Any final words of advice for boards as they get into this world of complying with Local Law 97?

Sit down with your property manager. This should be on the top of your agenda. If you have a fine that’s substantial, you need to start working on your budget to figure out how much you’re going to allocate to do the work and what the solutions should be — based on discussions with your manager and an engineer. Also, let the shareholders or unit-owners know what the challenges are for the board. As a board member — and I’m a board member myself — you’re in a position where you have to do something, or else it just looks bad all around. People don’t want to pay a fine every year without completely understanding why.