Will a New Mayoral Administration Impact Local Law 97?

3 min

In 2019, New York City enacted Local Law 97 (LL 97), which requires building owners to drastically reduce greenhouse gas emissions by 2024 or face hefty fines. Since LL 97 was enacted, the world has changed dramatically, with the impacts of COVID-19 rippling throughout NYC's real estate market.

Former NYC Mayor Bill de Blasio was adamant that implementation of LL 97 would not be impacted by COVID-19. New Mayor Eric Adams has expressed support for the law, but his administration is addressing questions about how LL 97 will be implemented and enforced. Mayor Adams' chief climate officer, Rohit Aggarwala, testified to the New York City Council that additional exemptions may be needed for certain uses and penalties modified for building owners who make best efforts at compliance.

Even prior to the Adams administration, there were some clarifications of and updates to LL 97:

  • Commercial Property Assessed Clean Energy (C-PACE) financing is available: The City's Department of Finance issued rules for the C-PACE financing program, which provides low-interest, long-term options for borrowers to finance energy-efficient retrofits. To date, only a handful of C-PACE transactions have closed.
  • Affordable housing does not have a blanket compliance exemption: Previously, buildings containing one or more rent-regulated units could install prescribed energy conservation measures in lieu of meeting carbon emission caps. This alternative is now available only to buildings in which more than 35% of units are rent-regulated. These buildings have until 2026 (rather than 2024) to achieve compliance.

With a new mayor in office, questions still exist on how enforcement of LL 97 will ultimately be implemented:

  • Penalties: Currently, fines for failure to comply with LL 97 will be calculated as $268 multiplied by the per metric ton over the compliance limit, with fines being aggregated into a general fund. Mayor Adams has proposed alternatives to penalties, such as providing retrofits to low-income housing. The Adams administration is also considering exemptions for owners who are showing genuine efforts at compliance. Preliminary details were provided at an April 13, 2022 City Council hearing and may be expanded upon in the coming months.
  • Revised Standards for Certain Uses: The Adams administration has indicated the potential for exemptions or modified standards for crucial high-energy uses, such as certain manufacturing operations and 24/7 local retail uses. Furthermore, additional adjustments may be made for financial hardship and physical constraints.
  • Staffing of Office of Building Energy and Emissions Performance (the OBEEP): OBEEP is tasked with ultimate implementation and enforcement of LL 97. While OBEEP has been created within the Department of Buildings, it has been staffed with only six employees. Moreover, Adams' preliminary budget has not earmarked funding for additional staff, but rather earmarked $4 billion for general "resiliency and energy efficiency." This has resulted in questions over the mayor's commitment to LL 97.
  • Carbon trading study released: LL 97 provides for a variety of compliance options in lieu of building retrofits. One option being considered is carbon trading, which permits building owners to trade emissions credits among building portfolios or throughout the City. A City report on carbon trading was published in November 2021. Recent City Council testimony indicates carbon trading is off the table – at least for now – but a final determination is still pending.

Though changes to LL 97 are possible, the mayor has indicated support for the intent of the law and made it clear that LL 97 will ultimately be implemented. Check out "DC and Virginia Localities Expand Efforts to Promote Building Electrification" to see what other jurisdictions are considering. We will continue to keep you updated as additional developments occur. Please contact Venable if you have any questions regarding this update.