Local Law 97 aims to reduce greenhouse gas emissions 40 percent by 2030 and 80 percent by 2050. New York City buildings are mandated to hit aggressive emission limit targets to meet deadlines beginning in 2024.
Navigating the complex landscape of climate legislation can be overwhelming for building owners and managers, especially when it comes to meeting the ambitious greenhouse gas emissions limits set by New York City. However, having a thorough understanding of the requirements of Local Law 97 can help owners and managers develop a strategic plan for compliance that not only ensures legal compliance, but also promotes energy efficiency, reduces operational costs, and contributes to a more sustainable future for New York City.
What is Local Law 97 of 2019?
Background
Local Law 97 of 2019 is a key component of the Climate Mobilization Act (CMA), a set of laws that New York City passed in 2019 to address climate change and align with the Paris Agreement's objectives. The primary goal of the CMA is to limit the global average temperature increase to 1.5°C and achieve net-zero emissions by 2050. Local Law 97 sets strict emissions caps on large residential and commercial buildings that become increasingly stringent over time to achieve citywide greenhouse gas emissions reductions of 40% by 2030 and 80% by 2050, relative to 2005 levels. Building on this legislation, Local Law 147 of 2019 amends Local Law 97 to provide building owners with more flexibility in meeting emissions reduction requirements, including additional exemptions and compliance options. New York City Department of Buildings (DOB) Rule 103-14, adopted in 2023, establishes procedures for determining building energy performance and provides guidelines for complying with Local Law 97.
Who Does Local Law 97 Impact?
Local Law 97 impacts properties that meet the following criteria:
- Buildings over 25,000 gross square feet
- Two or more buildings on the same tax lot that together exceed 50,000 gross square feet
- Two or more condominium buildings governed by the same board of managers that together exceed 50,000 gross square feet
For a full list of covered buildings, please see Covered Buildings on the NYC Sustainable Buildings website: https://www.nyc.gov/site/sustainablebuildings/requirements/covered-buildings.page
Who is Exempt from Compliance?
Local Law 97 exempts certain types of buildings from its compliance requirements. These include industrial facilities that primarily generate electric power or steam, as well as detached or semi-detached buildings that are no more than three stories tall, where each owner owns and maintains their own HVAC and hot water systems that serve spaces of 25,000 square feet or less.
How Can Owners Comply?
Emissions Limits
Starting in 2024, certain buildings are subject to annual emissions intensity limits (defined in units of tCO2e/sf, or metric tons of carbon dioxide equivalent per square foot) based on property type in Energy Star Portfolio Manager. Mixed-use building targets will be based on a weighted average of the different occupancy spaces applicable to the building. The registered design professional preparing the building emissions report is responsible for making this determination.
There are two initial compliance periods from 2024-2029 and 2030-2034, with future compliance requirements through 2050 to be determined by the City. The emissions intensity limits become more stringent each compliance period, so building owners must take steps to reduce their building’s carbon emissions over time to comply with the law.
Compliance
The primary approach to comply with Local Law 97 involves implementing energy-saving measures that reduce greenhouse gas emissions. This can include investing in electrification options and adopting more efficient operations and maintenance programs.
Building owners also have several alternative options to meet their emissions targets, including purchasing greenhouse gas offsets or renewable energy credits, or generating or storing clean distributed energy resources. However, these alternative compliance options are still being finalized. Once available, building owners will be able to request deductions to their building's emissions limits. Further details on these deductions will be provided at a later date. For more information, visit https://www.nyc.gov/site/sustainablebuildings/requirements/deductions.page.
Annual Reporting
The first compliance report is due by May 1, 2025, with annual filings due every year thereafter. The report must be certified by a registered design professional, indicating whether the building was in compliance and, if not, listing the exceeded amount. Extensions may be granted for good faith efforts.
Who Qualifies For Alternative Compliance Paths?
Recognizing the challenges faced by meeting these ambitious targets, the law provides a number of alternative compliance pathways for certain covered building owners. Eligible buildings include:
- An industrial facility primarily used for the generation of electric power or steam.
- Multifamily residences which do not exceed three stories, which are owned and maintained by each individual dwelling unit owner, with no central HVAC system or hot water heating system serving more than 25,000 Square Feet.
- New York City government owned buildings.
- A housing development or building on land owned by the New York City Housing Authority (NYCHA).
- Rent regulated accommodations with more than 35% rent-regulated dwelling units.
- A building whose main use or dominant occupancy is classified as occupancy group A-3 religious house of worship.
- Buildings owned by a housing development fund company.
- Buildings that participate in a project-based Federal housing program.
Prescriptive Energy Conservation Measures
Owners of certain buildings (including houses of worship, hospitals, and residential buildings with at least 35% rent regulated units) who cannot comply with the emissions limits may instead implement a prescriptive list of energy-saving measures by December 31, 2024, such as insulating pipes, upgrading lighting systems, and installing heating system sensors and boiler controls.
Affordable Housing
Buildings that include affordable and rent-regulated housing are not exempt, but are treated differently under the law, and may follow alternate compliance pathways depending on their status. For more information on how affordable housing buildings can comply with Local Law 97, please visit the Local Law 97 Guidance For Affordable Housing on the NYC Sustainable Buildings website.
What are the Penalties for Non-Compliance?
The fines for non-compliance are steep, and purposely designed to incentivize owners to comply:
- Fines for exceeding annual emissions limits are calculated based on the difference between reported emissions and the annual limit, multiplied by $268.
- Failure to file the required annual report within 60 days of the deadline results in a violation with a penalty of $0.50 per square foot of gross floor area per month.
- Making a false statement on a report is a misdemeanor, carrying a penalty of $500,000 and/or imprisonment.
Building Energy Exchange offers a useful LL97 Carbon Emissions Calculator that can generate carbon thresholds, potential penalties, and utility cost metrics across each compliance period for building owners to assess their compliance status.
For a 200,000-square-foot residential building and the same sized office building that exceeds 15% of its allowable emissions, the annual fines are substantial and will be ratcheted up each compliance period. Examples below.
Image courtesy of Building Energy Exchange's LL97 Carbon Emissions Calculator.
Image courtesy of Building Energy Exchange’s LL97 Carbon Emissions Calculator.
Is Financial Support Available?
Many tax credits, grants, and green funding incentives are available at the federal, state, and local levels to assist in financing energy conservation measures for Local Law 97 compliance.
PACE Financing
Property Assessed Clean Energy (PACE) such as NYC Accelerator’s Program offers up to 100% long-term, fixed-rate financing for energy efficiency and renewable energy projects for commercial, industrial, and multifamily building owners, as well as buildings owned by non-profit institutions like hospitals, universities, or museums that are typically exempt from property taxes.
NYCEEC Loans
Cooperatives and condominiums interested in financing clean energy installations and upgrades, such as HVAC systems, solar panels, electrification and heat pumps, and fuel conversion, may be eligible for the following New York City Energy Efficiency Corporation (NYCEEC) loans. Eligible project costs can be financed by NYCEEC up to 90%, and for affordable multifamily buildings, up to 100% of such costs may be financed:
Incentives from NY State and Utility Companies
Certain cooperatives, condominiums, and multifamily buildings may be eligible for credits or cash rebates through specific programs such as:
Con Edison Multifamily Energy Efficiency Program
Con Edison Multifamily Buildings Neighborhood Program (Brooklyn and Queens only)
Con Edison New York State Affordable Multifamily Energy Efficiency Program
Related Energy Laws
The CMA builds on previous sustainability initiatives, including the New York City Benchmarking Law (Local Laws 84 of 2009 and 133 of 2016) and Energy Audits & Retro-commissioning rule (Local Law 87 of 2009). Currently, these laws are separate from the CMA, but are expected to be consolidated in the future. For now, building owners need to comply as follows:
NYC Benchmarking Laws
NYC Benchmarking Law mandates that owners of mid-sized and large buildings measuring over 25,000 square feet must annually report their energy consumption, including electricity, gas, fuel oil or steam, and water, using the Environmental Protection Agency’s Energy Star Portfolio Manager. The aim is to provide building owners with a comparative analysis of their energy and water usage against similar buildings and to assist in energy efficiency planning. The deadline for submitting benchmarking data is May 1st every year. Failure to comply with this requirement incurs a penalty of $500 per quarter, up to a maximum of $2,000 per year.
Energy Audits & Retro-commissioning
The Energy Audits & Retro-commissioning rule requires buildings over 50,000 square feet to undergo an energy audit every ten years, along with retro-commissioning to evaluate and analyze their energy consumption, identify cost-effective measures and capital improvements for energy reduction, and optimize the building's existing systems to enhance energy efficiency.
Building owners must submit Energy Efficiency Reports by December 31 of the year they are due to file (filings are due in the calendar year with a final digit that is the same as the last digit of the building's tax block number). Non-compliance penalties start at $3,000 in the first year and increase to $5,000 for every subsequent year.
Ways to Reduce Carbon Emissions
Implementing the following measures can help building owners reduce their carbon emissions:
- Choose a professional with expertise in local law compliance.
- Conduct an energy audit to identify areas of inefficiency and develop an energy-saving plan.
- Perform energy and water benchmarking annually.
- Install energy-efficient lighting and HVAC systems.
- Perform regular maintenance of HVAC equipment.
- Use occupancy sensors and timers to control lighting and HVAC systems.
- Improve insulation and air sealing to reduce heating and cooling losses.
- Implement water-saving measures to reduce water consumption and associated energy usage.
- Install renewable energy systems such as solar panels or wind turbines to generate clean energy.
- Encourage tenants to adopt sustainable behaviors, such as reducing waste and recycling, and using natural lighting to reduce the use of artificial light.
Recommendations for Moving Forward
Beginning the compliance process may seem daunting, but working with a registered design professional to develop short- and long-term energy and carbon reduction strategies is an essential first step to avoid penalties and meet Local Law 97 requirements.
To kick start the compliance process, RAND’s first step is to review and analyze the building's energy bills to establish its current energy use and emissions. Next, we conduct an energy audit to identify feasible energy reduction or sustainability measures and create a roadmap to reach the targeted emissions reductions required for 2024, 2030, and 2050. The audit will include recommendations on energy conservation measures, preliminary budget projections, and a preliminary timeline for implementation.
The first year your building must hit its target emissions level is 2024. Identifying and implementing energy upgrades (which may require major capital improvements) is a multi-year process, so it is crucial to act now to avoid steep penalties. Achieving compliance not only promotes environmental sustainability but can also provide financial benefits such as reduced utility expenses, and increased property values.
For more information on Local Law 97 and related laws, please refer to the following links:
Local Law 97 of 2019: http://bit.ly/locallaw97
Local Law 147 of 2019: https://www.nyc.gov/assets/buildings/local_laws/ll147of2019.pdf
DOB Rule 103-14: https://www.nyc.gov/assets/buildings/rules/1_RCNY_103-14_prom_details_date.pdf
Contact RAND
RAND's MEP & Energy Team specializes in helping building owners comply with Local Law 97. RAND works with owners to develop energy and greenhouse gas reduction strategies, identify practical energy-saving measures, and create a roadmap to achieve emissions reductions in line with Local Law 97. Our comprehensive approach balances legal compliance, building performance optimization, and resident and tenant comfort, while efficiently managing operational costs. By providing tailored strategies and recommendations, we support long-term sustainability and improved living environments. For more information on how RAND can support your compliance efforts, contact RAND at 212-675-8844 or info@randpc.com.
