Local Law 97: What NYC Building Owners Need to Know

Local Law 97 is now in full swing as of January 1, 2024. If you own or manage a building in New York City, this law could impact your operations, especially with its goal of dramatically reducing greenhouse gas emissions across the city. Here’s a breakdown of the key points you need to know.

What Is Local Law 97?

Enacted on May 19, 2019, and effective from November 15, 2019, Local Law 97 is part of New York City’s ambitious plan to cut building emissions by 40% by 2030, with a longer-term goal of net zero emissions by 2050. Heating, cooling and suppling hot water for buildings generate about two-thirds of NYC’s greenhouse gas emissions, this law is a major piece of the city’s environmental strategy.

Key Dates to Remember

  • January 1, 2024: The first compliance period begins.

  • December 31, 2024: Deadline for certain buildings to implement prescriptive energy conservation measures or meet the 2030 emissions limit.

  • May 1, 2025: First annual greenhouse gas (GHG) emission report is due.

What Buildings are Affected?

A building that must comply, referred to as a “Covered Building” under Local Law 97 is:

  • Any building over 25,000 gross square feet.

  • Two or more buildings on the same tax lot totaling over 50,000 gross square feet.

  • Multiple buildings under the same condominium board exceeding 50,000 gross square feet.

Exceptions include:

  • Industrial facilities for power or steam generation.

  • Small residential buildings, city-owned buildings, and religious properties.

  • Some buildings may qualify for hardship relief.

To comply with Local Law 97, building owners must:

  • Ensure their buildings meet the emissions limits set for each compliance period.

  • Submit an annual GHG emission report by May 1st each year, starting in 2025.

  • For buildings opting for alternative compliance (Article 321), implement 13 prescriptive energy conservation measures by December 31, 2024, or meet the 2030 emissions limit.

Penalties for Non-Compliance are steep:

  • Exceeding Emissions Limits: Fines calculated at $268 per metric ton of emissions over the limit.

  • Failure to Submit Reports: $0.50 per square foot per month for late reports.

  • False Reporting: Up to $500,000 in fines, potential imprisonment up to 30 days, or both.

NYC Local Law 97 will only get stricter. Starting in 2030, emissions limits will become even more stringent, with compliance periods extending into 2050.

For now, building owners should focus on:

  • Evaluating their current emissions and making necessary upgrades.

  • Considering the purchase of renewable energy credits to meet reduction targets.

  • Demonstrating “good faith efforts” in reducing emissions, which can include submitting decarbonization plans or proof of ongoing electrification upgrades.

Legal Challenges make it difficult to

The law has already faced legal challenges, with more likely to come. However, the courts have largely upheld it, reinforcing NYC’s authority to impose these requirements.

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Ice Air can help navigate building codes, restrictions, and find incentives, We make sure a building is on the right side of the law with more energy efficient upgrades and options that also cut operating costs.

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Let’s Take a Closer Look

As of January 1, 2024, New York City’s Local Law 97 (LL97) is officially in effect, ushering in a new era of building sustainability and greenhouse gas emissions (GHG) reductions. This landmark legislation is a cornerstone of the city’s commitment to carbon neutrality and environmental responsibility. LL97 establishes ambitious energy efficiency standards and mandates substantial reductions in emissions for large buildings, which are the city’s biggest contributors to carbon pollution. Building owners now face both the challenge and opportunity of navigating the intricacies of compliance to avoid penalties while contributing to New York’s climate goals. It all starts with understanding some of the words involved in the law.

Definitions and Exceptions Under Local Law 97

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Local Law 97 is part of the Climate Mobilization Act, passed in 2019, and is designed to reduce the city’s greenhouse gas emissions by 40% by 2030 and by 80% by 2050 (relative to 2005 levels). The law focuses specifically on large buildings[1], as they account for approximately 70% of the city’s total GHG emissions.

Key Definitions:

  • Covered Buildings: Buildings over 25,000 square feet fall under the purview of LL97. This includes both commercial and residential properties, as well as co-op and condo buildings.

  • GHG Emissions Limits: The law sets annual GHG emissions limits based on a building’s usage type (e.g., residential, commercial, healthcare, etc.). These limits are measured in metric tons of carbon dioxide equivalent (CO2e) per square foot.

This table illustrates the general approach of Local Law 97 to set different standards based on building usage, ensuring that more energy-intensive buildings are subject to different expectations compared to less energy-intensive buildings, while still contributing to overall emissions reduction goals. These limits are set in metric tons of CO₂ equivalent per square foot (tCO₂e/sq ft) per year and vary depending on the type of building. These values are hypothetical examples meant to illustrate the different thresholds for your reference only.

Building Usage Type 2024-2029 Emissions Limit (tCO₂e/sq ft/year) 2030-2034 Emissions Limit (tCO₂e/sq ft/year)
Large Residential Building 0.00846 0.00407
Office Building 0.00869 0.00453
Hospital/Healthcare Facility 0.02381 0.01181
Hotel 0.00987 0.00526
Retail Space 0.00898 0.00415
Warehouse 0.00374 0.00185
Industrial Facility 0.01311 0.00763
Mixed-Use (Residential/Office) 0.00792 0.00388
Educational Institution 0.01138 0.00550
Cultural Institution (Museum) 0.01074 0.00520

Keep This In Mind About This Table:

  • 2024-2029 Emissions Limit: These limits represent the GHG emissions allowed per square foot for the first compliance period (2024-2029). During this period, limits are more lenient, giving building owners time to plan and implement efficiency measures.

  • 2030-2034 Emissions Limit: The limits become more stringent in the second compliance period (2030-2034). By this time, buildings must have made significant reductions in their GHG emissions to comply.

  • A large residential building would be limited to 0.00846 metric tons of CO₂e per square foot per year from 2024 to 2029, and this would drop to 0.00407 metric tons of CO₂e per square foot per year by the 2030 compliance period.

  • Healthcare facilities and industrial buildings have higher allowable limits due to their intensive energy use, but they are still required to reduce emissions significantly over time.

Exceptions: There are always exceptions to laws like this, and while the law is comprehensive, certain buildings are exempt from compliance with Local Law 97’s emissions limits, such as:

  • Affordable Housing: Properties that contain affordable housing units or are under certain public housing programs (e.g., NYCHA, HUD) have special provisions and compliance requirements that differ from those for other large buildings.

  • Religious and Non-Profit Buildings: Places of worship and certain not-for-profit institutions are exempt from the emissions reduction mandates but are encouraged to participate in voluntary programs to reduce energy use.

  • Landmark and Historic Buildings: While not fully exempt, these buildings may receive special consideration and flexibility in their compliance plans due to restrictions on modifications.

Compliance and Penalties

New York City’s Local Law 97: Compliance and Penalties

The law is being implemented in phases, with progressively stricter limits on emissions through 2050. For many building owners, the first compliance period (2024-2029) is relatively lenient, with GHG emission limits set to require modest reductions. However, future compliance periods will demand significant improvements in energy efficiency and emissions reductions.

Compliance Pathways: Building owners must assess their properties’ current emissions, typically by hiring an energy auditor or consultant. Compliance can be achieved through several means, including:

  • Energy Efficiency Retrofits: Upgrading building systems such as heating, ventilation, and air conditioning (HVAC), installing energy-efficient lighting, improving insulation, and upgrading windows to reduce energy use.

  • Renewable Energy Investments: Installing on-site renewable energy systems, such as solar panels, or purchasing renewable energy credits (RECs) to offset emissions.

  • Carbon Trading: The law is expected to introduce a carbon trading program, allowing building owners who exceed emissions reductions to sell credits to those who are struggling to meet the limits.

Penalties for Non-Compliance: If a building exceeds the established GHG emissions limits, owners will face steep financial penalties:

  • $268 per Metric Ton: Owners are fined $268 for each metric ton of CO2e above the allowable threshold. For large properties, these fines can accumulate quickly and become a significant financial burden.

  • Reporting Failures: Buildings that fail to submit annual energy use reports to the city’s Department of Buildings (DOB) will also face fines, which could escalate depending on the severity and duration of non-compliance.

Current Conditions: Opportunities and Challenges

Many building owners in New York City have already begun making strides toward compliance with Local Law 97 by undertaking energy efficiency projects and rethinking their energy use strategies. Others, however, are facing challenges due to the cost of retrofits and the complexity of building systems, particularly in older or landmark buildings.

Examples of Success Stories:

  • Empire State Building: The iconic Empire State Building serves as an example of what can be achieved through aggressive energy efficiency measures. After a massive retrofit project that included upgrading insulation, windows, and HVAC systems, the building achieved a 40% reduction in energy use, putting it well on track to comply with LL97.

  • Hudson Yards Development: Hudson Yards, the largest private real estate development in the United States, has made sustainability a core feature of its design. The development incorporates energy-efficient building systems, advanced waste management, and a large-scale cogeneration plant that provides both heat and power. As a result, many buildings in Hudson Yards are already ahead of the curve in terms of LL97 compliance.

Challenges Facing Other Building Owners:

  • Older Buildings: Many older buildings, particularly those that are landmarked, face unique challenges in complying with LL97. Their outdated systems and limited ability to make structural changes due to preservation laws can make energy efficiency improvements difficult and expensive.

  • Financial Barriers: Smaller building owners or co-op boards may struggle to afford the significant upfront investment required for retrofits and energy upgrades. While financial incentives and rebates are available, the costs can still be prohibitive.

Opportunities

  • Incentives and Financing: New York City and New York State offer various incentives and financing programs to help building owners fund energy efficiency projects, such as the NYC Retrofit Accelerator and the Property Assessed Clean Energy (PACE) financing program. These can help offset the costs of retrofits and make compliance more financially feasible.

  • Sustainability as a Competitive Edge: Beyond compliance, reducing emissions and improving energy efficiency can make buildings more attractive to tenants who prioritize sustainability, reduce operating costs, and increase property values in the long term. Energy-efficient buildings tend to have lower utility costs, which can be passed on to tenants, making them more marketable in a competitive real estate market.

Conclusion

Local Law 97 represents a significant step in New York City’s fight against climate change, placing the onus on building owners to reduce emissions and increase energy efficiency. Ice Air is in the perfect position to help building owners meet this law’s challenges, particularly for owners of older or financially constrained buildings. With our products and strategies on their usage, we can open the door to innovation and investment in sustainability. By helping you take advantage of incentives, adopting energy-efficient technologies like our new iCool product and proactively planning for compliance, we would be delighted to help building owners avoid penalties, but also contribute to a more sustainable and resilient future for New York City, one New Yorker to another! Call us now.

[1] Local Law 97 (LL97) in New York City defines a large building as a building that exceeds 25,000 gross square feet.