New Guide Clarifies Carbon Emissions Reporting for Large Residential Buildings

It’s the clarification boards have been waiting for: a new guide is out for large residential buildings, including co-ops and condos, on how to calculate and report carbon emissions in order to comply with Local Law 97. The 98-page document from the Department of Buildings (DOB) also explains how properties designated under Article 320 — the compliance bracket for most large co-ops and condos — can challenge that status and request an extension for carbon emission reporting. “The commentary is a new effort to synthesize the existing rules and laws in a way to guide behavior,” says William D. McCracken, an attorney at Moritt Hock & Hamroff.

The clock is ticking. Buildings that are 25,000 square feet or more and market rate properties with fewer than 35% rent-regulated units must meet increasingly stringent emissions limits and file annual reports starting May 1, 2025. However, some co-ops and condos face challenges in determining their carbon-emission penalty exposure, especially if they have multiple buildings on a lot or are uncertain if they meet the size threshold for compliance.

The guide provides clarity on how disputes around Article 320 designation can be resolved with evidence presented to the Department of Finance or DOB, typically with the help of an attorney and a design professional. “This is a good example of how they’ve consolidated information,” McCracken says, adding: “This is going to be the document everyone needs to have.”

The window for extensions. Also outlined in the guide is information about compliance pathways and how to request deadline extensions. Extensions can be requested starting April 1, with a 30-day grace period after the May 1 reporting deadline. There’s also information on possible deductions from “beneficial electrification” — a credit applied to future compliance periods for the early adoption of electric alternatives to fossil fuels. “The DOB is trying really hard to push people to electrify, even if today it’s not the cleanest option,” McCracken says.

To that point, a graph within the guide shows how emission coefficients — the number used in calculations to determine carbon emissions and penalties — decrease for both electricity and district steam between the first and second compliance periods. The reason these coefficients decrease is the DOB’s commitment to generate this power using cleaner methods like solar and wind, as well as an effort to decarbonize district steam. 

Still to come. Missing from the guide, however, is information on hardship applications, whereby building owners can claim they cannot reasonably achieve compliance due to legal, financial or physical constraints. McCracken says this is by far “the most eagerly anticipated part of the law,” but the delay suggests it isn’t easy for the DOB to come up with the right wording. “How do you characterize a reasonable financial return for a co-op that runs on a not-for-profit basis?” he asks. 

Without an answer to that, the guide encourages buildings “to prepare documentation” ahead of further guidance. This might include gathering financial statements, evidence of reserve fund spending and proof of capital improvements over the past three to six years. McCracken suggests there may be some overlap between the hardship rule and the guidance — which has been released — on penalty mitigation. This is where buildings have failed to meet the targets but can lower fines through a good faith effort and a decarbonization plan. “To me hardship and penalty mitigation are two sides of the same coin,” McCracken says.