New York City’s Local Law 97, part of the Climate Mobilization Act (the “Act”), is a groundbreaking piece of legislation designed to reduce carbon emissions from large buildings, which are significant contributors to the city’s overall emissions.
However, complying with this law is not a straightforward task for building owners and operators. It requires a thorough understanding of the regulation’s requirements, an ability to navigate technical challenges, financial planning, tenant engagement, and often seeking professional guidance. In this guide, we’ll address common challenges encountered when striving to meet Local Law 97 requirements and provide practical solutions to overcome them.
Understanding the Scope of Local Law 97
As we’ve previously covered, Local Law 97 applies to New York City buildings larger than 25,000 square feet. It sets strict limits on buildings’ carbon emissions based on occupancy classifications, with phased deadlines starting in 2024, tightening further by 2030.
Common Challenges and Solutions
While the law represents a major step towards reducing greenhouse gas emissions, it also poses significant challenges for building owners and managers trying to remain compliant:
1. Initial Assessment and Planning
Despite the availability of an advisory board and online resources for guidance, one of the primary challenges building owners face is a lack of clarity on where to begin. The complexity of New York Local Law 97 often leads to misunderstandings and ambiguities. This lack of clarity extends from interpreting the legislation’s technical terms to implementing practical measures needed for compliance.
Moreover, uncertainties revolving around future amendments to the law and market responses to it add further impediments. It can be challenging for stakeholders to plan long-term investments and operations when the regulatory landscape ahead remains unclear.
The Solution
Building owners should start by conducting thorough energy audits to determine current energy usage and emissions. Energy audits will highlight areas of high energy consumption and potential improvements. An energy audit can be conducted by Certified Energy Managers (CEMs) or professionals with a similar specialty.
2. High Costs of Retrofitting Buildings
One of the primary challenges lies in retrofitting older or multifamily buildings to meet the energy efficiency goals of the law. From upfront capital costs for installing renewable energy systems to increased operation expenses for maintaining energy-efficient building operations, the economic impact can indeed be significant.
For instance, retrofit measures might include upgrading heating, ventilation, and cooling (HVAC) systems, optimizing lighting fixtures, or automating energy controls. Each of these measures incurs costs, which might pose financial burdens, particularly on small property owners and those who own affordable housing units.
The Solution
To mitigate retrofitting costs under Local Law 97, owners can seek financial aid through incentive programs through the likes of the New York State Energy Research and Development Authority (NYSERDA), utilize PACE financing for upfront costs, or claim tax benefits like Energy Investment Tax Credits to reduce the economic impact.
3. Limited Availability of Green Energy Resources
The law encourages using renewable energy resources as a means to minimize carbon emissions. However, the limited availability and higher pricing of green resources in comparison to conventional fuel types can complicate efforts toward compliance. This constraint emphasizes the need for innovating new ways to harness renewable energy or enhance existing resources.
The Solution
Building owners could address this issue by working closely with renewable energy providers, incorporating onsite renewable energy generation like solar panels, or participating in community solar programs to access renewable energy at lower costs. Moreover, renewable energy credits (RECs) can be used to offset a portion of the building’s carbon footprint.
4. Technical Complexity
The process of ensuring compliance often involves intricate measures, such as retrofitting older buildings to meet energy efficiency standards.
The Solution
It is recommended to seek assistance from engineering firms or sustainability consultants who specialize in energy efficiency projects. These professionals can propose solutions, such as installing more efficient heating, ventilation, and air conditioning (HVAC) systems, enhancing building insulation or upgrading lighting systems with LED technology. Implementing a Building Management System (BMS) can also help monitor and optimize energy use.
Do you need more information on the complexities of Local Law 97? Read our comprehensive guide on the upcoming changes.
5. Navigating Tenant Engagement and Lease Agreements
Landlords often grapple with the split incentive issue where tenants consume the energy, but landlords are responsible for making capital investments for improvements.
The Solution
One way to manage this is through “green leases,” where energy costs and savings are allocated in a way that incentivizes both parties towards energy efficiency. Engage with tenants early and educate them on the benefits of efficiency measures. Costs and savings can be shared among tenants, creating a community of interest in reducing the building’s carbon footprint.
6. Regulatory Hurdles
Complying with Local Law 97 might involve navigating additional regulations, especially concerning building renovations and historic preservation.
The Solution
Work closely with the New York City Department of Buildings (DOB) to ensure all renovation plans adhere not only to Local Law 97 but also to other relevant building codes and regulations. In cases involving historic buildings, the Landmarks Preservation Commission (LPC) may also need to be consulted.
7. Record-Keeping
Maintaining compliance over time can be daunting, as record-keeping requires diligence and precision in tracking and reporting buildings’ energy use.
The Solution
Invest in reliable energy management software to streamline data collection, energy tracking, and reporting. Automating processes where possible can reduce the risk of human error and help manage the compliance requirements more effectively.
8. Future-Proofing Investment
Considering that Local Law 97’s emission limits will become increasingly stringent, an obstacle for buildings is to not only meet the current standards but also to prepare for future ones.
The Solution
Invest not just in the present but also for the future. When planning upgrades, consider the long-term benefits and choose solutions that can be scaled or adapted as needed. Look beyond the 2024 targets, aiming for the more rigorous 2030 deadlines to stay ahead of the curve.
How Real Estate Lawyers Can Keep You Compliant
Real estate lawyers like the team at Belkin Burden Goldman, LLP prove invaluable to landlords and building owners navigating the complex terrain of Local Law 97. A skilled real estate attorney can assist in reviewing and negotiating contracts for services such as audits, renovations, and energy procurement, ensuring that these contracts are compliant with Local Law 97 and other relevant regulations. They can also help draft and review green lease documents, ensuring that liability and incentives concerning energy efficiency and emissions reductions are properly balanced between owners and tenants.
Lawyers with experience in real estate can provide guidance through the labyrinth of applying for financial incentives, grants, and tax benefits to offset compliance costs. Furthermore, they can represent building owners in any disputes with tenants or service providers regarding the implementation of efficiency measures.
Such legal practitioners are indispensable when it comes to compliance certification, filings, and addressing any violations or penalties. Navigating fines and legal ramifications without professional legal advice could result in unnecessary expenses or legal trouble.
Key Takeaway
In summary, achieving compliance with Local Law 97 necessitates a concerted effort that spans financial, technical, and regulatory challenges. A strategic, informed approach can make the process smoother and more cost-effective.
Consult With Belkin Burden Goldman
You don’t have to navigate the challenges of Local Law 97 compliance alone. Contact Belkin Burden Goldman today for guidance and tailored legal solutions that reflect our core values and help pave the way to a sustainable future.