Local Law 97 Fears Meet a Possible Solution at Queens Town Hall

About 450 people — co-op and condo board members, their professionals and several elected officials — packed a Town Hall meeting in Queens on Tuesday night to wrestle with a harrowing question: How can we pay for the retrofits that will enable us to comply with Local Law 97? Beginning next year, that law will require large co-ops and condos to reduce their buildings’ carbon emissions under set caps, or face stiff fines.

The meeting was convened by city councilmember Vickie Paladino (R-Queens), who has introduced a bill seeking to push the enforcement of Local Law 97 back by seven years. Some attendees expressed anxiety that the cost of complying with Local Law 97 will force them to give up their homes.

Among the crowd was Hernan Hurtado, the director of energy solutions at a Philadelphia-based company called Ecosave, which recently opened a New York office.

“I wanted to hear what co-ops are saying,” Hurtado said after the meeting. “People are scared. I wanted to see if there’s an opportunity for us to make this law less painful and keep people in their homes.”

The meeting convinced Hurtado that such an opportunity exists. Ecosave’s business model is built on a premise that’s becoming more common with energy-efficiency providers. For starters, Ecosave engineers conduct a free assessment of all possible energy-conservation measures, then focus on the most promising ones. The company owns and maintains all equipment it installs. The company contractually guarantees a level of energy savings, and its fee is paid out of those savings — meaning there are no up-front costs to the client, and Ecosave has an incentive to produce savings for the duration of the contract.

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Those contracts run for 10 to 20 years, and energy savings of 25% to 50% are common. Scale matters. To justify its upfront costs, Ecosave works only with buildings or portfolios with an annual energy expenditure of $650,000 or more. And the company can’t guarantee that its upgrades will bring buildings into compliance with Local Law 97. Once the contract expires, the client takes over ownership of all equipment.

“Everyone’s scared about Local Law 97,” says Roman Ozimek, vice president of energy solutions at Ecosave. “But rather than trying to overturn the law, why not work with us? With no upfront expense, a co-op or condo board can upgrade the building, save energy, generate cash flow and comply with Local Law 97.”

While Ecosave has not yet worked with any New York co-ops or condos, it has planted a flag in the city. The Hebrew Home at Riverdale, in the Bronx, has entered into a 15-year Services Agreement with Ecosave that will install upgrades valued at $6.1 million, paid for by Ecosave and various grants. Those upgrades include installation of a gas-fired power plant and LED lighting, replacement of 245 fan coil units, improvements to ventilation systems, installation of smart sub-meters and more. The annual energy savings are 32%, or $769,000. Ecosave’s annual service fee is $683,000, meaning the client pockets $86,000 a year — without having to spend a dime.

Another attendee at the Town Hall meeting was Geoffrey Mazel, a partner at the law firm Hankin & Mazel and counsel for the Presidents Co-op and Condo Council. Anxiety and fear weren’t the only emotions he sensed.

“You could feel the energy from the crowd,” Mazel said after the meeting. “This was like the tax revolt a few years ago. People are angry that New York City Housing Authority carbon emissions are OK, but co-op and condo emissions are not. And they’re worried about the costs. People are realizing they can spend and spend and spend, and still get hit with penalties.”

Or, possibly, they could team up with Ecosave and not spend and spend and spend, and still avoid penalties.