Real Estate Industry Seeing Red Over City’s Green Initiative

One day after Earth Day, the real estate industry is already in full pushback mode over the city council’s passage of the ambitious Climate Mobilization Act, which will require buildings larger than 25,000 square feet, including many co-ops and condos, to sharply reduce their buildings’ greenhouse gas emissions, beginning in 2024 and continuing until the middle of the century. Buildings now account for two-thirds of the New York City’s carbon emissions, and the new law is believed to be the most ambitious of its kind in the world. 

"Unfortunately, [the legislation] does not take a comprehensive, citywide approach needed to solve this complex issue," John Banks, president of the Real Estate Board of New York (REBNY), said in a prepared statement reported by Crain’s.

 REBNY and other real estate interests are particularly upset that the new law exempts or sets more lenient targets for buildings with rent-regulated apartments, houses of worship, single-family homes, hospitals, certain low- and middle- income cooperatives, New York City Housing Authority complexes, public edifices, and power plants. That means the brunt of the law falls on commercial buildings and market-rate condominiums and co-ops. Real estate interests are also upset that, under the new law’s formulas, energy-efficient One Bryant Park tower could face millions of dollars in fines because of its intensity and density – it’s open 24 hours a day and hosts 11,000 workers. 

But John Mandyck, chief executive of the nonprofit Urban Green Council and a major advocate of the Climate Mobilization Act, pushes back against the industry’s pushback. “We get that it's tough and that billions of dollars will need to be spent to reduce carbon emissions,” Mandyck says. “But new technology and new business models will be invented to help buildings get there." 

So will new sources of financing. One is Property-Assessed Clean Energy (PACE) loans, which will allow building owners to get inexpensive, long-term financing for projects that reduce their building’s carbon output. The nonprofit New York City Energy Efficiency Corp. will administer the city’s PACE financing program, which was activated locally by the Climate Mobilization Act and is currently available in 33 states. 

Joining the pushback against the real estate industry is Corey Johnson, speaker of the city council. “That is a sad argument,” he says of the industry’s concerns over the looming cost of reducing building emissions. “You can't put a price tag on life on Earth.”