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Greening the Big Apple: LL97 Mandates Energy Efficiency in New York City’s Large Buildings

Starting this month, owners of large New York City buildings have a new responsibility—to comply with Local Law 97 (LL97) in order to reduce greenhouse gas emissions. This new law requires commercial buildings over 25,000 SF to complete energy benchmarks and reduce carbon emissions in 2024 or face significant penalties. The upside: energy efficiency measures in buildings have proven to lower operating costs, increase market value and create a healthier environment.

Building owners concerned about costs will find that there are financing solutions available to make LL97 energy upgrades with minimal or no upfront capital outlay.

LL97 is one of the most ambitious plans for reducing carbon in the nation. The law covers nearly 50,000 buildings; they alone account for nearly two-thirds of New York City’s greenhouse gas emissions. The ultimate goal: cut emissions 40% by 2030 and 100% by 2050.

“Tackling LL97 comes with its complexities, and the penalties are no small matter,” notes Michel’le Forrest Akman, Regional Director – Energy Services at Vanguard Building Solutions, a certified Energy Service Contractor (ESCO).  “To make the necessary energy upgrades, building owners need funds along with technical and managerial know-how. The silver lining is that partners like Vanguard Building Solutions offer end-to-end support, bridging the gap with both financial solutions and the required expertise.”

LL97 compliance for commercial, industrial, and multifamily buildings

Under LL97, there are carbon caps for 60 different property types. Those caps become more stringent over time. Some owners have already made improvements to meet 2024 limits and are proactively working on measures to hit 2030 carbon caps. Many more owners haven’t started. In fact, 63% of large NYC buildings are currently over 2030 limits.

To be in compliance, New York City building owners must demonstrate that building emissions are below LL97 carbon caps by December 31, 2024, and submit a certified annual building emissions report by May 1, 2025. There are some differing requirements for places of worship, affordable housing buildings and structures over 50,000 square feet (SF).

LL97 Penalties

There are three different categories of fines related to LL97. The first is the failure to file a report. That penalty is $0.50 per SF every month. So, for a 25,000 SF building, the report filing fee would be about $12,500 per month. The second penalty is related to how much your building exceeds your CO2 cap. The fine is $268 for each metric ton over the emissions limit. Finally, there is a fine for providing false statements of $500,000.

A new report by the Real Estate Board of New York estimated that 3,700 properties could face over $200MM a year in penalties in 2025 for inaction. By 2030, 13,500 properties could be penalized a total of $900MM a year.

Cost saving and financing ideas

Quite a few buildings have already made investments in energy upgrades and demand response and are finding that their expenses are fully covered by energy cost savings. In other cases, the expenses can be offset by tax refunds, property tax abatements, public utility incentives and other measures.

For example, there is $625MM in federal tax credits and subsidies from the Inflation Reduction Act. There is the J-51 tax abatement to help low-and-moderate income rental buildings. Another $5BB is available in energy efficiency programs for multi-family buildings. There are also city tax incentives on the drawing board and PACE financing. As a ConEd Clean Heat Program (CHP) trade ally and NYC Accelerator service provider, Vanguard Building Solutions is uniquely positioned to connect buildings with flexible funding and financing ideas to meet their budgets.

Making NYC carbon neutral by 2050 is an ambitious ask. But for the city that doesn’t sleep, it’s one that will continue energizing building owners, policy makers and experts like Vanguard Building Solutions. If you own a large building in New York City and are facing the prospect of LL97, contact us today for expert guidance.