Looming Climate Law Has Co-op and Condo Owners Fretting About Funds to Retrofit Buildings

Owners don’t object to the goal of a city law requiring buildings to lower carbon emissions — but they do mind the significant expense.

July 12, 2023 Haidee Chu, The City

Large co-op and condo buildings in Flushing are among those required to adhere to new environmental standards next year. | Ben Fractenberg/THE CITY

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This article was originally published on Jul 5 5:00am EDT by THE CITY

Property owners with lower or fixed incomes are scrambling to fund renovations to comply with a city climate law that requires buildings to reduce their carbon emissions.

They say the city has not provided viable financing options, or explained what mitigating factors could ease potential noncompliance penalties for the law that’s set to take effect in just six months.

Local Law 97, passed in 2019, will apply beginning in January to almost all buildings 25,000 square feet and larger — running the gamut from schools and multi-family homes to hospitals and distribution centers.

The law’s intent is to address climate change by forcing buildings — which are the city’s biggest polluters — to reduce carbon emissions with the goal of lowering them 40% citywide by 2030 and 80% by 2050.

Then-Mayor Bill de Blasio signed the law as part of his “Green New Deal,” calling it “the strongest city policy in the world to cut greenhouse gas emissions from buildings.”

But the administration tasked with implementing the law — under which buildings will have to submit a report on their emissions by May 1, 2025, and then annually — is still working out how to do that.

“There is a big challenge here,” said City Councilmember James Gennaro (D-Queens), who chairs the Committee on Environmental Protection, but was not serving in Council when the bill passed in 2019. The law, he said, “was not well thought through.”

Its financial impact on small-scale homeowners, Gennaro added, had been “left out of their thought process completely” by the lawmakers who wrote and passed it.

But “it’s already law, and we didn’t do it. So we’re trying to deal with it,” he continued. “The Adams administration didn’t do it, and they’re trying to deal with it.”

Councilmember Jim Gennaro attends a City Hall press conference about a budget deal with the mayor. — City Councilmember James Gennaro, pictured at a City Hall budget announcement, chairs the Committee on Environmental Protection, June 29, 2023. | Ben Fractenberg/THE CITY

The initial set of rules the Department of Buildings (DOB) released late last year details the emission limits for different building types. The limits will ratchet down in 2030 and then again in 2050. The law has already set out fines of $268 for every metric ton of emission above the set limit annually.

But DOB, the city agency tasked with rulemaking, has yet to release other key details that concern anxious property owners, including what would constitute a “good faith effort” to retrofit noncompliant buildings, and how such efforts could reduce fines for those building owners.

A city website dedicated to explaining the new law assures visitors that “the Department of Buildings is developing guidance for building owners to help them comply with the law’s mandates.”

Andrew Rudansky, press secretary for the DOB, said a proposed version of the department’s “second major Local Law 97 rule will be released in the near future,” but did not offer a specific timeline.

Rudansky did say that the new rule “will include information about penalties, how ‘Good Faith Effort’ and other mitigating factors will be factored in, more specifics on the prescriptive pathway and penalties for affordable housing and rent-controlled buildings, along with other agency procedures related to implementing the law.”

In the meantime, some Council members have already introduced bills to delay or carve out exceptions to the forthcoming rules.

The Mayor’s Office of Climate and Environmental Justice (MOCEJ) is also expected to release a set of compliance strategies intended to mitigate the impact of the new law some time in July, according to Gennaro, who is also a member of the Sustainability Advisory Board appointed by Mayor Eric Adams in December to help guide the administration’s strategic climate plan, PlaNYC.

The plan, released on Earth Day, outlines three initiatives meant to aid building owners in complying with the law, including a goal to develop financing tools and mechanisms to accelerate compliance by 2030.

“There’s gonna be some rudiments of a plan to do that next month,” Gennaro said. The law is “really going to affect people in a very significant way,” he said, including the many co-op owners in his district covering areas like Kew Gardens Hills, Briarwood and Fresh Meadows. “And so I’m trying to keep my powder dry between now and then.”

Where’s The Money Coming From?

A town hall in Flushing, just north of Gennaro’s district, was hosted by Councilmember Sandra Ung in late June and drew heated commentary from condo and co-op owners concerned about the cost of compliance.

Representatives from the Buildings Department and the NYC Accelerator, a program intended to help property owners transition into compliance, struggled to explain what resources are already available to the roughly 150 angry people in attendance who shouted questions and comments.

“Your sustainable housing is not affordable housing,” one yelled from his seat. “Just! Remove! The law!” another demanded. “We want the law to be changed,” a third person said.

When Tarek Arafat of the DOB’s Bureau of Sustainability said the city is focused on urgent climate goals and “not interested in collecting fines,” the room burst into laughter.

Whatever the city’s focus, attendees were overwhelmingly concerned about the cost of compliance.

“When is the city giving out low-interest loans to get us through compliance?” one person asked.

“Could it be possible that the city, when we get things done, reimburse us those funds?” asked another.

A third cut right to the chase: “Where is the money gonna come from?”

Citing the report released on Earth Day, MOCEJ spokesperson Amy Sohn wrote that the city is currently “working with the State to identify innovative State incentives” and “will continue to help agencies and the private sector leverage Federal and State grants, rebates, and other funding.”

Sohn added that these tools and resources are “geared toward 2030 compliance.” That means they may come too late for homeowners on the clock now to meet their 2024 emissions requirements or else pay the price for falling short.

While 85% of the city’s multi-family residential buildings would be out of compliance by 2030, just 21% are presently out of compliance with the 2024 standards, according to PlaNYC, the city’s strategic climate plan.

Half of those 21% of buildings, moreover, should be able to get into compliance for 2024 through “common sense energy efficiency measures,” as they are currently within 15% excess of their emission limit, according to John Mandyck, CEO of Urban Green Council, a nonprofit aimed at decarbonizing buildings.

“Local Law 97 is tough but doable,” said Mandyck. “We have no choice but to move forward; the climate isn’t waiting for us to act.”

‘We Want to Go Green’

Some owners who spoke to THE CITY after the town hall meeting noted that bills have already begun rolling in, as they’ve had no choice but to turn to a rapidly emerging compliance industry for help.

The city’s Accelerator program is supposed to help with this transition into compliance. According to a presentation by account manager Joseph Staluppi, the program would collect and assess data from a building, review existing energy letter grades, and help determine “applicable energy conservation measures” free of charge.

But Michelle Lee, board president at the 1,200-unit condo complex Sky View Parc in Flushing, said Staluppi clarified to her that the Accelerator could not itself provide an energy audit, and could only refer her to qualified specialists who can do so. Owners would also have to fund the audit, but could apply for grants to help with the financial load, Lee said.

The beige condo building Sky View Parc sat atop a Flushing mall. — At Sky View Parc in Flushing, the board already has raised residents’ common charges to meet the law’s requirements. | Ben Fractenberg/THE CITY

Sohn, the MOCEJ spokesperson, confirmed that the Accelerator “does not perform the work that commercial service providers offer such as inspections and proposals for retrofits.”

“That’s the thing, there’s a lot of misleading information out there about how ‘you get everything for free, you just haven’t reached out to us.’ That’s certainly not true,” Lee told THE CITY. “And we all know that with city agencies, you’d be hard pressed to get a proper response in time. And this law is supposed to kick in next year.”

Already, Lee’s board has spent about $200,000 on an energy consultant to make sure that the complex is compliant through 2029 — and anticipates that it will have to spend more when standards become more stringent in 2030. She said the board has already had to increase common charges to foot the bills. That has concerned many retirees in her building, who fear they will have to sell their homes because they have fixed incomes that don’t go up even if the building’s common charges do.

And even then, energy consultants aren’t always able to identify clear solutions for homeowners like herself, Lee added.

“I tell them, like, ‘Guys, it’s going above my head at this point. I am not a science major. I honestly don’t get it. Just tell me: What do I need to change? What do I need to do?’ And it’s not clear, right? Because they’re not even getting the proper guidelines from the city,” she said.

“And clearly we want to go green. No one’s arguing we want fresh air. But we’ve got to make sense of it.”

‘We Can’t Afford This’

Other homeowners in Queens sued the city last year over what they call an “ill-conceived and unconstitutional municipal law” that subjects them to “millions of dollars of expenses to entirely redo their buildings’ electrical systems and structures.” They argue that the law should be struck down because the “draconian” fines that come as a result of the civil penalties would violate due process.

The court has yet to make a preliminary decision on that suit.

“It really is not about denying climate change and all that,” said Bob Freidrich, president of Glen Oaks Village Owners Inc., which is a plaintiff in the lawsuit and an organization representing 134 low-rise buildings including 3,000 co-op units built as affordable housing for WWII veterans. “It’s about maintaining affordable housing, and doing things in a manner where the laws make sense. And you could do things over a period of time where co-ops like ours would naturally transition.”

While the DOB’s Rudansky said Local Law 97 includes specific provisions for “alternative compliance pathways” for rent-regulated and some affordable housing buildings including HDFC co-ops and Mitchell-Lama buildings, other affordable co-ops that fall outside of the scope of these programs are mostly left to their own devices.

Glen Oaks Village, for example, has spent $100,000 so far on an energy consultant, Freidrich said, who advised that co-op owners there would have to scrape together $24.5 million — a little more than $8,100 per household — to replace boilers to get them up to code for 2024.

But that still wouldn’t meet 2030 standards, he added, when homeowners would be collectively subject to an estimated fine of about $1 million each year, increasing their maintenance fees by about 7% to 10%. Homeowners in the community typically pay about $700 in monthly maintenance fees before these adjustments, he said.

NYC Accelerator has partnered with outside commercial lenders to provide “long-term, fixed-rate financing, covering up to 100% of project costs with no cash up-front from the owner.” But while the Accelerator expects that “annual energy savings may be greater than financing repayments,” Friedrich worried that these loans would do nothing more than to create more debt for co-ops that are “just barely surviving.”

“If this is a condo that’s on Fifth Avenue, where each condo sells for nine, or four, or six or $17 million, I’m not really all that concerned about the individuals who own that because, obviously, they can afford whatever,” said Friedrich, who argued that fines should take into account the income of the community. “You can’t imagine how many letters I get that say ‘We’re on a fixed income, we can’t afford this.’”

Dealing With It

At least two bills seeking to amend Local Law 97 are before City Council at the moment.

Councilmember Vickie Paladino (R-Queens), who represents the northeastern parts of the borough including Bayside and College Point, introduced a bill in February to delay all requirements and penalties of Local Law 97 by seven years, so that the first rounds of enforcement would not go into effect until 2031.

Councilmember Linda Lee (D-Queens), who represents Glen Oaks Village, also introduced a bill in May to exempt garden apartments in campus-like co-ops from the law.

But Gennaro said the appetite among the Council and the administration for “significantly changing Local Law 97 is zero.

“Not one member has come to me and said, ‘I need you as the chair of the environmental committee to figure out a way to do a Local Law 97 version 2.0 that’s not as draconian,’” Gennaro told THE CITY.

A dive into changing the law would be a “Pandora’s box,” he said, adding that it likely would make regulations “more strict, not less strict,” as this Council is “more progressive” than the last.

And while he also noted that the Adams administration “does not want to create a lot of financial distress” and “is certainly on the side of figuring out how compliance can be as painless as possible,” that leniency, too, comes with its limitations.

Rudansky said DOB is “committed to working with building owners who are making a concerted effort towards complying with the law” — but that the department strongly recommends that property owners do not wait until the publication of the second set of rules to make upgrades.

Owners are “already armed with the information they need to tell how much emissions their buildings produce, and what their emission limits will be under Local Law 97,” he said.

Several buildings across the city already have taken steps to comply with the regulations.

“What they will not tolerate — and they shouldn’t — are buildings … that just say, ‘I don’t want to do it. I don’t want to hear about it. I don’t want to put forward any good faith efforts to try to comply … I just want it all to go away. I want it to be delayed,” Gennaro said. “It’s just not in the cards. And that is just a stone fact.”

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