Joy Chiu, a resident of the Forest Hills co-op, is uncertain about the financial implications of New York City’s Local Law 97 on her community. With enforcement of this significant climate legislation approaching, she anticipates having to cover fines related to greenhouse gas emissions that could impact her fellow 530 co-op owners.
Residents like Chiu are not only facing uncertainty over potential fines but are already grappling with the costs of emissions analyses and filing requests for reporting extensions. The absence of clear guidelines from the city on how to dispute any incorrect fines has only added to the apprehension among building owners.
Local Law 97 mandates that owners of buildings exceeding 25,000 square feet report their carbon emissions to the city’s Department of Buildings (DOB). By the first compliance period, which spans from 2024 to 2029, landlords are required to achieve a 40% reduction in emissions compared to 2006 levels.
The upcoming deadline for reporting carbon emissions has created a sense of urgency among building owners. The DOB opened its reporting portal in March and provided a deadline of May 1, 2024, for data submission. Notably, a 60-day grace period extended this deadline to June 30 but seemed unclear for many who needed more time to gather accurate data.
In mid-June, the DOB allowed owners to apply for an extension until August 29. Those granted extensions will have until December 31 to submit their emissions reports. However, skepticism has emerged, particularly among smaller property owners, who question the seriousness with which the city will enforce these regulations.
Jimmy Carchietta, CEO of sustainability consultancy The Cotocon Group, noted that misinformation regarding the implementation of the law is prevalent. He has advised some of his clients to prepare for the financial obligations ahead, contrary to the belief that enforcement may not occur.
Those who fail to meet their emissions reduction goals or cannot display a “good faith effort” to comply will face fines of $268 for each metric ton of excess carbon produced. Additionally, owners who miss the reporting deadline will incur late fees of $0.50 per square foot of their buildings.
The DOB asserted that the fundamental aim of Local Law 97 is to reduce harmful greenhouse gas emissions in the city’s built environment. As per their projections, fines may be enacted for nearly 10% of the 50,000 buildings required to submit emissions data.
Despite prior doubts regarding the law’s future resulting from ongoing litigation in New York State Court of Appeals, a recent ruling dismissed the appeal, confirming the law will take effect. This clarity has led to a heightened sense of urgency among landlords like Chiu, who are concerned about facing multiple financial burdens from municipal regulations.
For buildings within a multifamily portfolio managed by Argo Real Estate, small fines are anticipated, although Vice President Jessica Tusing expressed uncertainty about how appeals for fines will be processed. Industry experts predict a potential delay in fine collection, as many owners are likely to file appeals once fines are issued.
As the DOB prepares to begin enforcement in the fall, the slow rollout of their appeal guidelines has been a cause for concern among building owners. Adam Fisher, managing director at JLL’s sustainable brokerage business, indicated that the current system feels like it’s being developed on the fly, suggesting it may take time before fines are actually implemented.
Chiu’s co-op is wrestling with the additional financial strain of complying with Local Law 97 reporting requirements on top of other ongoing expenses. After a recent incident involving a parking garage collapse in the Financial District, city officials began inspecting garages across the city, including her co-op’s parking facility. The board was informed of severe issues requiring immediate repairs, adding more financial pressure at a challenging time.
Chiu expressed frustration at the compounding factors at play, stating, “As we’re trying to figure out financially how to deal with this bigger policy, we’re getting all these other policies and things that are coming on. It’s like death by a thousand cuts, all of these costs just piling up.”
With uncertainties surrounding reporting processes, appeals, and actual fines, Chiu and her co-op remain in a vulnerable position, preparing for an uncertain financial landscape driven by the city’s aggressive climate legislation. Local Law 97 poses significant challenges and financial burdens for many in New York City, raising questions about how compliance will be realistically managed amidst ongoing operational demands and costs.
image source from:bisnow