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'You're Going To Get Fined,' NYC Sustainability Chief Warns CRE Owners Who Don't Take Climate Action

Mayor Eric Adams' administration is committed to issuing some of the first penalties in the nation to commercial property owners who don't reduce their carbon emissions as part of New York City's Local Law 97, despite moves that have dulled the teeth of the landmark climate policy.

At Bisnow’s National Sustainability Conference Wednesday, Department of Buildings Chief Sustainability Officer Gina Bocra warned dillydalliers to begin work on their decarbonization plans now, before fines kick in next year. 

“If you can only show us that you haven't done anything, you're going to get fined,” Bocra said. “If you don't have a real hurdle, you've procrastinated and haven't done anything, you’ll be fined.”

WatchWire's Andy Anderson, L+M Development Partners' Laura Humphrey, Brightcore Energy's Mike Richter, KSS Architects' Mounir Tawadrous, Code Green Solutions' Chris Cayten and NYC Department of Buildings' Gina Bocra

Property owners were relieved after the city said in September that as long as they can show they are making “good faith efforts” to reduce carbon emissions, they can dodge fines. It seemed that even if owners missed their 2024 targets, a long-term plan would do. 

At the time, the new guidance received backlash from environmental activists who viewed it as a step backward. The fines for the landmark law, which took effect in January, apply to buildings larger than 25K SF.

Landlords will be penalized $268 for every ton of emissions over their limit, and the penalties get harsher in 2030, when properties need to cut emissions by 40% from their 2006 levels.

“That's not a good use of money,” Bocra said at the event, held at a Convene space in Times Square.

Eighty-eight percent of buildings subject to the law are on track to meet the 2024 benchmarks, but just 35% are in line with 2030 limits, according to data from the Urban Green Council. By 2030, an estimated 13,500 of the 50,000 properties required to be compliant won't be, with cumulative fines adding up to $900M a year, according to a study by the Real Estate Board of New York

However, owners fear penalties even if they are compliant. Starting in 2025, owners must submit reports on their building emissions. Failure to submit a report in time will result in a fine of 50 cents per square foot per month.

“That's insane. That is a lot of money,” Code Green Solutions principal Chris ​​Cayten said. “Don't miss that deadline next year.”

Runwise's Lee Hoffman, Ecosystem Energy Services' Adam Shelly, KPF's Carlos Cerezo Davila, AKF Group's Charlie Marino, Empire State Realty Trust's Dana Robbins Schneider and Rudin's Hrisa Gatzoulis

Those penalties may be the only way to motivate some. Throughout the event, consultants, architects, engineers and developers said that owners are more likely to invest in sustainability initiatives if those building upgrades improve the bottom line, either in the short or long term.

Many buildings forced to comply with Local Law 97 are older, meaning it is a pricey and overwhelming challenge to bring them up to today's standards of sustainability. But those upgrades don't have to occur all at once, speakers said. 

“Do a proper study of your building. You're going to understand from that, how old is your equipment now? Is it in good shape now?” said Dana Robbins Schneider, director of energy, sustainability and ESG for Empire State Realty Trust. “You're going to have to do it anyway. Your boilers are going to fail, your chillers are going to fail, there is a time you're going to replace your air handling units. Even your envelope isn’t going to last forever.”

Local Law 97 and affiliated fines also educate property owners who may have ignored sustainability improvements previously. A Bisnow investigation last year found that of the 75 largest institutional real estate investors globally, 32 had no plan to reduce carbon emissions.

Lee Hoffman, president of building control platform Runwise, said before the law was passed in 2019, he would talk to developers about reducing emissions and receive blank stares in return. 

“You would look at the eyes and you can see not a soul in that room ever once thought about their energy usage,” he said. “Now you go in and they know Local Law 97, they know there's a fine, they know this is an issue, they know they're probably using too much energy.”