City Hints at Flexibility on Climate Mobilization Act Carbon Caps and Fines

As thousands of New York City co-op and condo boards grapple with ways to cut their buildings’ carbon emissions enough to avoid fines under the Climate Mobilization Act, an encouraging mantra is emanating from City Hall: “We don’t want your money; we want your carbon.”

In other words, the motivation behind the legislation is to reduce the city’s carbon footprint — not punish residents of co-ops and condos or commercial and residential landlords. And the city government has indicated a willingness to be lenient with building owners who make a sincere effort to reduce their buildings’ carbon output but fail to get it under the caps specified by Local Law 97, which is part of the sweeping Climate Mobilization Act.

This willingness to bend the rules was revealed at a recent hearing before the New York City Council, when Rohit Aggarwala, the city’s Chief Climate Officer and commissioner of the Department of Environmental Protection, testified that the DEP is pursuing "enforcement flexibility.” He added: “There is no benefit to the environment if we levy a fine on a building that is acting in good faith to come into compliance.” Leniency, he said, could come in the form of adjusted emissions caps or lighter fines. The city is still hammering out specific rules for compliance with the law.

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Despite Aggarwala’s encouraging words, many co-op and condo boards remain in a state of high anxiety. Warren Schreiber, president of Bay Terrace Cooperative Section I, a 200-unit garden apartment complex in northeast Queens, tells Crain’s that the co-op, in its current state, is among the 25% of residential properties that are above the 2024 carbon limits, and the 76% that exceed 2030 caps. If no changes are made at the property, according to Schreiber, the cooperative’s shareholders could face an annual penalty of $45,000 starting in 2024, rising to $194,000 in 2030.

One particularly labor-intensive upgrade, according to preliminary figures from contractors, would be to get rid of the property’s six boiler rooms and replace them with electric heat pumps, while upgrading electrical equipment in individual units to accommodate the switch. It would wean the co-op from fossil fuels at a cost of roughly $2 million to $2.5 million. That’s money Bay Terrace simply does not have, Schreiber says, and if that expense has to be passed on to shareholders, monthly maintenance would rise by 15% to 25%.

“Does it make more sense to do the upgrades, go into really substantial debt, impose big maintenance increases on our shareholders?” Schreiber asks. “Or do we pay the penalties — which is counter-productive to what Local Law 97 is supposed to accomplish?” 

The Department of Buildings (DOB) encourages co-op and condo boards concerned with bringing their buildings into compliance to connect with the city’s NYC Accelerator program for free, personalized guidance on near- and long-term retrofit projects, along with information on financing options and incentives.

Buildings account for about two-thirds of New York City’s greenhouse gas emissions. The goal of the Climate Mobilization Act is to reduce emissions from the city’s largest buildings 40% by 2030 and 80% percent by 2050. The DOB is awaiting recommendations from the Local Law 97 Advisory Board that will inform final rulemaking, which must be completed by Jan. 1, 2023. This is, as they say, a developing story.

As he waits for more clarity from the city, Schreiber has a persistent worry: “My concern is that some of (our shareholders) would actually be forced to leave and look for more affordable housing.”