NYC Local Law 97: What you need to know about interpreting and complying for commercial businesses

Phoenix Energy: May 18, 2020

Thanks for taking the time to visit our website. So you’re wanting to learn about local law 97? This article will answer any questions you may have. 

Local Law 97

NYC Local law 97 is a subset of the Climate Mobilization Act (CMA) that was passed by the New York City council in April 2019. The law is an ambitious green policy mandate intended to reduce carbon emissions within New York City by New York City building owners. The law will apply to both commercial and residential buildings. The law goes into effect beginning in 2024 and has three different time stages. Each time stage of implementation has a different amount of carbon emissions that are tolerated. The law will apply to both new and existing buildings.

Each building within New York City has a different zoning designation. This designation, in turn, determines what emissions level are permissible (see table below for more information). These emissions caps are intended for buildings that are larger than 25,000 square feet in space. Any building less than 25,000 square feet in space is exempt from the law. This law will apply to over 50,000 buildings within New York City.  

Carbon emissions must be reduced by up to 40% by 2030 and up to 80% by 2050.

Building owners must make energy efficiency upgrades to their buildings and/or decarbonize their energy supply. Among the options New York lawmakers are considering is allowing a cap and trade scheme so building owners can add to, or offset, these emissions targets. At the time of this writing the cap and trade policy has not been concluded but New York City lawmakers hope to have further guidance by the start of 2021. In 2009 New York City passed Local Law 84 (LL84) which mandated buildings over 50,000 square feet have to provide New York City with detailed benchmarking data on energy and water usage for their buildings. 

To comply with LL84, perform an annual analysis of your annual energy use. This then must be submitted to the authorities under the Benchmarking report. According to the Local Law 84 guide, you are required to submit this report by May 1st. Failure to file is a $500.00 penalty. There is also Local Law 87. Local Law 87 requires New York City buildings over 50,000 square feet to undergo periodic energy audits and undergo retro-commissioning measures. 

Due to these measures city officials are well aware of a building’s emissions usage and output.

With the passing of Local Law 97 the city has put forward a compliance grid that mandates different levels of emissions based on the occupancy classification the building has. The table below summarizes the different limits based on building:

Occupancy Classification	Emissions Limit (KgCO2e/sf) 2024-2029	Emissions Limit (KgCO2e/sf) 2030-2024
A – Assembly: Non-residential space used to gather for civic, social, recreational, and religious functions	10.74	4.2
B – Business: Space used for business offices	8.46	4.53
B (Business Subset): Civic Administrative H – High Hazard: Structures used for processing, generating or storing hazardous materials I-2 – Ambulatory Health Facilities: Medical offices, hospitals, and spaces other used for surgical, psychiatric, nursing or other personal care I-3 – Restrained Housing: Jails, detention centers, mental hospitals	23.81	11.93
E – Educational I-4 – Custodial Care Facilities	7.58	3.44
I-1 Adult Homes, Enriched Housing Facilities	11.38	5.98
F – Factory and Industrial	5.74	1.67
M – Mercantile: Space used for display and/or sale of merchandise including retail, wholesale, and showrooms	11.81	4.03
R-1 – Transient Residential: Spaces generally occupied for less than one month including hotels, motels, and vacation time shares	9.87	5.26
R-2 – Residential	6.75	4.07
S – Storage: Storage facilities U – Utility: Utility structures such as carports	4.26	1.10

Source:https://lucidconnects.com/library/blog/the-impact-of-new-york-s-local-law-97

As you can see from the chart above some building types have more permissible carbon outputs than others. 

 

What happens if I am non-compliant with the law?

Local law 97 will impose harsh financial penalties for building owners that are not compliant with the law. The penalty is $268 per metric ton over the allotted limit. Let’s use an example and say a building is zoned R-2 residential and it has an annual limit of 6.75 tons of allowed permissions (during 2024-2029). If the building were 10 tons over the allotted limit and utilizes 16.75 tons carbon emissions, the penalty would be $2,680 dollars. Let’s assume it is 2030 and the building still did not make efforts to reduce its carbon footprint and is still utilizing the same amount of emissions (16.75 tons) annually the penalty would then be $3,216 dollars. As in 2030, the building emissions targets are expected to increase even more so the financial burden would become greater to ensure compliance with the law. Due to this, it is imperative to start making plans to reduce your carbon footprint and ensure compliance with the law as soon as possible. 

How will I make my building compliant with Local Law 97?

There are different ways to modernize buildings to help prepare them for the upcoming law. Among the several different things building owners can do to modernize their energy efficiency is to:

 

1. Have conversions to heat pumps for both gas and water
2. Implement carbon-free power systems. These include investments into solar panels to utilize solar energy. 
3. Purchase new or upgrade existing HVAC equipment.
4. Install new windows; have better insulation for the building, have new air and moisture barriers. 
5. Inspect exterior doors, facades, consider changes to the roofing system to enhance insulation and prevent energy leaks. 

This seems expensive, how will I pay for this?

There is no doubt that to comply with the new Local Law 97 regulations it can potentially be very expensive to upgrade your buildings to the level necessary to achieve the aggressive mandated reduction in emissions schedule. One incentive the New York City council passed were property tax abatements for having green roofs. The previous amounts were $5.23 per square foot but they have been nearly tripled to $15 per square foot and these tax breaks have been extended until 2024. There is a per property maximum of up to $200,000 per year in property tax relief. To comply with the green roof tax relief plan, 80% of the roof must be covered with vegetation. 

Phoenix Energy Group can help maneuver pricing and ROI of this project with your building to plan your compliance strategy.

 

There are several benefits of having green roofs. 

1. They help provide building insulation which lowers building energy emissions and lowers related heating and cooling costs
2. The extra insulation protects the roof from needing to be replaced. The extra soil and vegetation act as another layer of insulation and help to enhance the life of the roof.
3. Pleasing to tenants. Many tenants consider a green roof as a desirable building amenity and appreciate being able to be in a building that offers the benefit of having a lush green roof in their building.