How Will Co-ops and Condos Pay for Greener Buildings?

At a packed hearing last week, the New York City Council opened debate on a controversial new bill called Intro 1253 that has major implications for most co-op and condo boards in the city. The bill, sponsored by councilman Costa Constantinides, a Queens Democrat, proposes new carbon emissions caps and energy performance requirements for large buildings starting in 2022. Its goal is to reduce carbon emissions from buildings, the city’s worst polluters, by 40 percent (from 2005 levels) by the year 2030. The elephant in the room is this: how will co-op and condo boards pay for retrofits the bill would require? 

“The goals are ambitious and noble,” says attorney Geoffrey Mazel, a partner at Hankin & Mazel who also advises the Presidents Co-op & Condo Council, an organization representing more than 100,000 units, mostly in Queens. “But this is an unfunded mandate. It means that co-ops and condos have to pay for it, and the bill doesn’t provide any relief from the city or any incentive program. The city council will have to address the economics of this bill.”

Intro 1253 is designed to jump-start the city’s ambitious “80x50” mandate – that building emissions be cut 80 percent (again, from 2005 levels) by the year 2050. Buildings now account for 70 percent of the city’s greenhouse gas emissions. To meet the bill’s proposed carbon emission caps, some boards would have to perform major upgrades to their building’s heating and ventilation systems, as well as hot water, electrical and lighting systems, possibly the building envelope. Other buildings might need minor upgrades, or none at all. The bill offers loans, and it exempts buildings undergoing economic hardships or with rent-regulated apartments. Mazel contends that few of these provisions will benefit the majority of co-ops or condos. The bill would also create a new Office of Building Efficiency Performance within the Department of Buildings, where energy-usage reports will be filed.

Intro 1253 grew out of the nonprofit Urban Green Council’s (UGC) Blueprint for Efficiency, the product of nearly a year of meetings between 70 stakeholders who will be affected by stricter energy-efficiency requirements. Russell Unger, UGC’s chief strategy officer, is confident that Mazel’s concerns about funding will be addressed. “There will be a growth in already existing incentive programs, and there will be new programs,” Unger says. “For instance, the NYC Retrofit Accelerator will have a major expansion. There is a broad understanding that buildings do need help.”

Though supportive of certain parts of Intro 1253, UGC, like many stakeholders, has reservations. (The Real Estate Board of New York, which represents landlords, has declared the bill’s demands “overwhelming.”) The UGC is dismayed that buildings with rent-regulated apartments would be exempted – a provision designed to protect tenants from rent hikes after landlords perform required retrofits. “We recommended that all buildings are treated equally,” Unger says. 

The bill incorporates the Blueprint’s recommendation to form a committee to develop a performance metric that works for all facets of the city’s varied building stock. “The bill doesn’t make a distinction between a densely occupied residential building and one where there is a lot more square footage per person,” Unger says. “We need a new metric system. Once you have a basis to compare the buildings, then you could set up the requirements.” 

John Mandyck, UGC’s chief executive, adds, “This bill was just introduced, and there will be many more consultations between the bill drafters, the council, the mayor’s office, and stakeholders over the next weeks and months. The actual passing of this major legislation is still several months down the road.” 

But the time for co-op and condo boards to get informed – and involved – is now.