REBNY Estimates Potential Fines Under Local Law 97

To hear the Real Estate Board of New York tell it, the sky is about to fall on the city’s co-ops and condos. REBNY recently commissioned the engineering consultancy Level Infrastructure to estimate the fines building owners, including co-op and condo boards, will face if they fail to meet the carbon-emission caps for their buildings under Local Law 97, which goes into effect next year.

The study’s findings, based on energy benchmarking data from 2019, are enough to scare the feathers off Chicken Little: in 2024, 3,780 buildings that do not add any energy-efficiency retrofits could face fines up to $213 million; in 2030, 13,544 such buildings could face fines up to $902 million; and in 2040, 15,832 such buildings could face fines up to $1.3 billion.

“This study shows that compliance with Local Law 97 is not going to be easy,” Daniel Avery, REBNY’s director of policy, tells Habitat. “And the residential side is going to get hit a lot harder than the commercial side because it does heating and cooling and domestic hot water onsite.” More than 60% of all buildings out of compliance in 2024 are projected to be residential. The number will climb to nearly 66% in 2030.

The study neglects to mention that few co-op or condo boards are sitting idly and doing nothing in the face of looming carbon caps and fines. Nor does the study mention estimates by the city’s Department of Buildings (DOB) that roughly 80% of buildings will be in compliance with 2024 carbon caps without any retrofits. That number is expected to flip by 2030, when only 20% of buildings will be in compliance without any retrofits.

“I think it’s still pretty astounding when you look at the pure numbers,” Avery says. “If a building cuts its emissions by 30% — which is very ambitious — it’s still going to be fined in 2030.” According to the study, even if every building were to reduce its energy consumption by 30% by 2030, more than 8,000 buildings will be facing penalties totaling in excess of $300 million each year.

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The DOB released its “final” rules on possible roads to compliance with Local Law 97 late last year — rules that will be tweaked in the course of 2023. One rule states that a valued compliance tool, Renewable Energy Credits (RECs), can be used only to reduce fines incurred from electricity.

“Co-op and condo boards are going to need as many tools as possible,” Avery says, “and we don’t want further limits on RECs. Beyond that, at the state level, we’re supporting a bill before the state Senate that would tie property tax abatements to reductions in greenhouse gas emissions.” Another push by REBNY is to change the destination of the money collected in fines under Local Law 97. It’s now earmarked to go into the city’s general fund; Avery says REBNY is pushing to redirect that money into energy-efficiency programs.

Buildings are by far the city’s largest producer of greenhouse gas emissions, accounting for about two-thirds of the city total. Local Law 97’s goal is to reduce those emissions 40% by 2030 and 80% by 2050.

One highly touted method to reach those goals is electrification — getting rid of fossil fuels and powering buildings, transportation and other infrastructure with electricity from renewable sources, including wind, solar and geothermal. But the greening of the electric grid is a work in progress with an unknown completion date.

“Electrification is going to take a tremendous effort to get there,” Avery says. “What we’re pushing back against is the idea that all of this is going to be easy.”