Denial Is Not an Option for Co-op and Condo Boards as Carbon Caps Loom

Caps on building carbon emissions will kick in just over a year from now under Local Law 97 of the Climate Mobilization Act — along with stiff fines for buildings that fail to meet their prescribed caps — yet a sizable number of co-op and condo boards are still stuck in a state of denial about the need to act.

“Some boards are choosing to ignore it and don’t believe it’s going to happen,” Jessica Tusing, director of compliance at Argo Real Estate, tells The City. “The majority of the boards are worried about it, and many of them are being proactive, but many of them are just waiting for the updates on Local Law 97.”

She's referring to the draft rules for compliance which the city recently released. Those rules are expected to be finalized in early 2023.

Some co-op and condo boards are just starting out in exploratory phases, while others have projects in the works. But confusion about how the law works and uncertainty over next steps — including how to pay for upgrades — has been the experience so far of many boards. But confusion is not an excuse for inaction.

“These regulations are coming down the road," says Jeffrey Weber, the president of Weber Realty Management. "You’re going to have to do it. It’s not going to be a choice. [Should we] close a blind eye to it and say, ‘Wait?' No!" The right questions, according to Weber, are: "What are we going to do? How are we going to do this?”

A 50-unit co-op Weber manages in Morningside Heights is in line for fines under stricter emission caps that begin in 2030. The co-op board is currently preparing for that not-so-distant day. “We’re putting off certain cosmetic repairs that we would like to do today,” Weber says. “This particular building is not upper-class, where [they say], ‘Here’s a check, we can pay for it.’…I’d rather now slowly but surely do 3% maintenance increases, build up a reserve fund, so that it’s not a shock.” 

Citywide, about 70% of buildings that fall under the law are expected to meet their initial carbon caps in 2024 without making repairs or retrofits, according to a November report from the city comptroller. But the story changes for many of those same buildings starting in 2030, when emissions limits ratchet down. At that point, only 30% of buildings will already be in compliance, according to the report.

The city has indicated that if boards make a "good faith effort" to comply with a law but come up short, there will be some leniency in the levying of fines. But the Department of Buildings has not yet defined what constitutes a good faith effort, and the city has loudly discouraged boards from viewing this as a get-out-of-jail card. 

“Any building owner right now who thinks that they’re going to get away with a good faith effort claim but is not, right now in 2022, doing a lot of work is going to be, I think, sorely disappointed,” city Department of Environmental Protection Commissioner Rohit Aggarwala said at a November event hosted by the nonprofit Citizens Budget Commission.

Not all boards are in a state of denial or banking on a get-out-of-jail card.

“For our clients right now, the vast majority are in a planning or study-heavy phase,” says Cathal Gleeson, building system director at Steven Winter Associates, an engineering consulting firm. “At a minimum, I think buildings need to do a study to kind of inform things like, what are they really spending on the system right now versus how much would it cost to go over to a new system?”

To that end, Steven Winter Associates has produced compliance roadmaps for its clients and put together retrofit packages mostly focused on ridding buildings of fossil fuels through electrification. It's not a blueprint, but it's a start. Other boards need to follow suit.