Second Annual Sustainability & Future Cities Boot Camp Focuses on NYC’s Local Law 97
With the earliest compliance deadline for New York City’s Climate Mobilization Act (CMA) looming in 2024, Brooklyn Law School held its Second Annual Sustainability & Future Cities Boot Camp, to help educate attorneys and non-attorneys on the new regulations, particularly Local Law 97, and how building owners can comply to avoid potentially hefty fines.
Organized and moderated by Professor of Practice and Adjunct Professor of Law Richard J. Sobelsohn ’98, the April 20 event's keynote speaker was Camille Joseph Varlack ’03, chief of staff to New York City Mayor Eric L. Adams. The Adams administration has pushed forward a climate change agenda that has "created real results" as the city aims to get to "net zero" emission levels by 2050, Varlack said.
"We have launched the Leading the Charge campaign, which is a commitment to build every new school to be 100 percent electric and retrofitting 100 existing schools in low-income, Black and brown communities, historically impacted by respiratory illness," Varlack said. "We have invested $70 million in the Clean Heat for All program to decarbonize NYCHA [New York City Housing Authority] campuses. We have broken ground on a $1.6 billion capital [pollution prevention] project for the Gowanus Canal. And we are creating a road map to citywide composting by 2024."
Since 70 percent of New York City’s emissions comes from its buildings, a pivotal portion of the CMA is Local Law 97, which impacts the city’s 42,000 commercial and residential buildings that are 25,000 square feet or greater in size and have the highest carbon emission levels. The first compliance period for building owners to retrofit their buildings and slash emissions is from 2024 to 2029 and will affect 20 percent of targeted buildings. Even stricter caps on emissions, required by 2030, will affect the other 80 percent. The city is working with building owners to ensure compliance through efforts such as the NYC Accelerator, which provides free technical assistance on Local Law 97.
"We don’t want to fine building owners unless we have to," Varlack said. "We don't want your money. We want your carbon."
Compliance with Local Law 97
The panel featured Laura Popa, deputy commissioner of sustainability for the New York City Department of Buildings, and two attorneys working in sustainable real estate issues: Tyng Patka, partner at Adler & Stachenfeld, and William McCracken, partner at Ganfer Shore Leeds & Zauderer LLP. Compliance to avoid potential penalties, was the hottest topic of the evening, and appropriately so.
"Local Law 97 was intentionally drafted to have very, very huge fines," Popa said. "It's the difference between your emissions limit and your actual emissions times $268. And there are buildings that are potentially facing millions and millions of dollars in fines if they don't reduce their emissions. But as Camille had said, the city's not interested in getting their money through fines. We want building owners to pay for the retrofits."
On May 1, 2025, the city will get compliance reports for affected buildings. The city's Department of Buildings is developing rules to assess if owners have made a “good faith effort” to take significant action to reduce emissions. "It will be super clear and there will be metrics attached," Popa said.
Compliance Levels Vary
McCracken said the new regulations pose unique challenges for his co-op and condo board clients, because they are owner operated. Many clients have worked to comply, but others are procrastinating.
"A big part of my job for the last three or four years has been just educating co-op boards and condo boards as to what Local Law 97 is, why it's important, and why they need to comply," McCracken said. "And it's not just the technical stuff, it's the social issues. Even though it is complicated and tricky for co-ops and condos, they generally do have money or access to funds, and they hire people like us to find it."
On the commercial property side, Class A properties such as the Empire State Building and the World Trade Center were on top of Local Law 97 from the very beginning, but they only represent a small slice of the market, Patka said. Class B and Class C building owners have been slower to act because they have been wrestling with, first, the Housing Stability Tenant Protection Act of 2019, which significantly changed the rent stabilization laws, and then pandemic impacts.
"Only around the beginning of last year did people start really paying attention," Patka said."And early last year, I told clients, 'You still have time.' But now we're eight months away from compliance and I am still encountering owners that are unfamiliar with Local Law 97. And it's concerning."
Since the CMA passed with such fanfare, Patka finds it unlikely that the city will back down from imposing the fines. Some building owners are crunching the numbers to determine if the fines are cheaper than the retrofitting, which may cost millions of dollars more.
McCracken said attorneys are eager for the city to clarify what it means by "good faith efforts," but in the meantime, he is encouraging clients to start retrofitting.
"I haven't had any experience with any building, any client, any property owner that starts doing this stuff and doesn't see the wisdom and benefit of it, just on its own terms, leaving aside compliance, leaving aside potential fines," McCracken said. "These are things that pay for themselves, become cheaper to run over the long term, make your property more resilient and sustainable, and increase the prestige of your building."
Funding Sustainability
McCracken said funding Local Law 97 compliance will be the toughest nut to crack and that Property Assessed Clean Energy (PACE) financing is "great, but we haven’t found a vehicle for property owners to access that capital in an efficient way yet." The federal Inflation Reduction Act (IRA), which includes $370 billion in clean energy and climate investments over the next decade, is also a game changer, but it’s unclear how that financing will get to property owners.
Popa said the city is banking on the IRA money too.
"There is money that Con Ed has and has paid for supported compliance with Local Law 97 and NYSERDA [New York State Energy Research and Development Authority] as well, so that money existed apart from the IRA funding," Popa said. "But we're obviously very much counting on significant IRA funding to help with this going forward."
For the 2030 compliance deadlines, the city wants to incentivize early electrification of businesses, Popa said, adding that an Urban Green Council study found that a "significant number" of buildings could be electrified without overwhelming the grid, as some feared. The city is also looking at renewable energy credits (RECs) and possibly taking their purchase into account for emissions.
The Boot Camp was sponsored by Ganfer Shore Leeds & Zauderer LLP.