To combat against the harmful effects of climate change, the New York City Council recently passed the Climate Mobilization Act (CMA)[1] – landmark legislation aimed at reducing New York City greenhouse gas emissions levels by 40% by 2030 and 80% by 2050, which will have major implications for New York City building owners, prospective purchasers, and lenders.

The cornerstone of the CMA is Local Law 97[2], which institutes new caps on greenhouse gas emissions for covered buildings, sets forth a timeline for compliance with the new emissions standards, creates the Office of Building Energy and Emissions Performance within the New York City Department of Buildings (DOB) to implement the law and guide future policymaking, and establishes penalties for non-compliance.  Some of the key aspects of the new law are as follows:

  • Covered Buildings: New York City buildings consisting of greater than 25,000 gross square feet are subject to regulation and are required to comply with the emission standards set forth in Local Law 97 and later established by the Commissioner of the DOB.
  • Greenhouse Gas Emissions Caps: The greenhouse gas emissions cap for a covered building is calculated based on the building’s occupancy group(s) and multiplying an emissions intensity limit set forth in Local Law 97 by the corresponding gross floor area. New York City covered building owners are required to comply with the first emissions cap by January 1, 2024, and the second emissions cap by January 1, 2030.  The emissions caps for years 2035 and 2050 are not set forth in Local Law 97 and will be established by the Commissioner of the DOB by January 1, 2023.
  •  Prescriptive Energy Conservation Measures: By December 31, 2024, New York City covered building owners are required to implement 13 specific energy conservation measures, including adjusting temperature set points for heat and hot water, repairing all heating system leaks and maintaining the heating system, installing individual temperature controls on all radiators, insulating all pipes, upgrading lights, weatherizing and air sealing, and installing timers on exhaust fans.
  • Reporting: By May 1, 2025, and by May 1 of every year thereafter, a compliance report that is certified by a registered design professional must be filed with the DOB indicating whether the covered building is in compliance or out of compliance with the applicable annual emissions limit.
  • Renewable Energy Credits: New York City covered building owners may purchase renewable energy credits to reduce the total reported annual building emissions.
  • Display of Energy Efficiency Grades: Similar to restaurants, at the entrance of the covered building, New York City covered building owners will be required to display an energy efficiency letter grade that the building receives using the United States Environmental Protection Agency’s Energy Star online benchmarking tool.
  • Penalties: An owner of a covered building that is not in compliance will be liable for a maximum civil penalty calculated by taking the difference between the actual annual building emissions and the annual building emissions cap, multiplied by $268.00.
  • Property Assessed Clean Energy (PACE) Financing: New York City covered building owners will be able to obtain financing for the clean energy improvements and building upgrades in an amount up to 100% of the cost of the qualifying improvements. Typically, the financing is structured so the projected energy savings equal or exceed the cost of the improvements.   

New York City owners of covered buildings should conduct a building energy assessment to evaluate the need for clean energy improvements and building upgrades as soon as possible.  Compliance with Local Law 97 will be an emerging due diligence issue to keep an eye out for in purchases and sales of real of property, as well as, financing and refinancing of current debt.


[1] https://council.nyc.gov/data/green/#green-bills

[2] https://www1.nyc.gov/assets/buildings/local_laws/ll97of2019.pdf