Local Law 97 mandates that New York City buildings exceeding 25,000 gross square feet or multiple buildings on the same lot totaling over 50,000 gross square feet must submit an annual emissions report. The inaugural report is due on May 1, 2025, and will cover emissions accumulated during the 2024 calendar year.
For property owners and condominium or cooperative board managers, the first step is to verify whether their buildings fall under the category of covered properties as outlined by the NYC Department of Finance. This is crucial in identifying compliance obligations early on.
If your building is confirmed to be part of the covered list, the next recommended step is to hire a licensed architect to provide an accurate calculation of your property’s gross square footage. If the computed figure differs from the records maintained by the Department of Finance, property owners may initiate a dispute process to rectify any discrepancies.
Subsequently, it is essential to determine whether any exceptions apply to your building. Certain types of buildings, including specific city and New York City Housing Authority properties, may be exempt from Local Law 97. Affordable housing and religious institutions, for instance, can qualify for alternative compliance measures. Rent-regulated buildings have a filing deadline of May 2027 for their first report, while properties with income-restricted units must comply by May 2036.
Should no exemptions apply, it is imperative for the building owner or the condominium/co-op board to file an annual emissions report reflecting the building’s performance in the preceding year, with May 1, 2025, as the initial deadline. Non-compliance with this requirement can result in significant penalties. If a report is not submitted within 60 days of the deadline, property owners will face civil penalties calculated at $0.50 for each square foot of gross floor area for every month the report is late. This penalty can accumulate swiftly; for example, a building with a gross area of 30,000 square feet could incur penalties of $15,000 each month.
Within the report, property owners must detail the maximum allowable greenhouse gas emissions and the actual emissions generated in the previous year. If the actual emissions are lower than the set limits, there are no compliance issues to address. The emissions limits are tailored according to the type of building usage and are designed to become progressively stringent, aiming for substantial emission reductions by the year 2050.
Buildings that exceed their emissions limits are given the opportunity to rectify the situation, provided they are actively pursuing compliance and can present supporting documentation. In such cases, the NYC Department of Finance may negotiate a resolution instead of imposing an immediate penalty. This contract stipulates firm commitments and future actions required from the property owner to lower emissions. Failure to meet the terms of this agreement could lead to retroactive penalties.
As a real estate attorney representing businesses in New York City, I recognize that landlords often seek to transfer financial burdens associated with emissions compliance onto tenants through increased rent or added fees. Therefore, it is vital for businesses to take a proactive approach in understanding their building’s energy efficiency, as well as any initiatives the property owner has undertaken to enhance it.
Business tenants should not hesitate to request energy audits or review previous energy performance reports and compliance records. This clarity can provide valuable insights and prevent unwelcome surprises in the future. It is also prudent to negotiate lease terms that address potential emissions penalties. Tenants may propose lease clauses designed to shield them from unduly burdening exposure to these penalties or suggest mechanisms for cost-sharing in building upgrades that boost energy efficiency.
Furthermore, cultivating knowledge about available government incentives or rebates for incorporating renewable energy practices can prove advantageous. Encouraging property owners to explore these options is beneficial not just for reducing emissions but also for potentially lowering operational costs.
By taking these proactive steps, businesses in New York City can effectively mitigate risks associated with emissions penalties, contribute positively to environmental sustainability efforts, and safeguard their financial interests throughout the lease term. It is crucial that building owners and tenants alike recognize the responsibilities imposed by Local Law 97 and collaborate to ensure compliance while fostering a greener urban environment.
Michele Cea is a founding member of the firm. Mr. Cea graduated from Catholic University School of Law in Milan, Italy (J.D., 2009, with honors), and Fordham University School of Law in New York (LL.M., 2011, Cum Laude).
Prior to completing his LL.M at Fordham Law School in 2011, Mr. Cea worked in a boutique Italian corporate law firm, where he was primarily dealing with shareholder agreements and various business transactions. In New York, Mr. Cea collaborated as a foreign attorney with a preeminent white-collar law firm in matters related to financial frauds, securities regulation and corporate compliance, among others. Mr. Cea was also employed as an Associate in the New York office of an International law firm, where he represented European clients operating in the U.S. In this position, he gained a valuable experience in the business law and real estate practice area, including corporate formation and dissolution, commercial transactions, residential and commercial real estate, trademark registration and business immigration.
Mr. Cea founded his own practice focused on representing foreign nationals and companies operating in the United States. He has extensive experience with international corporate matters, real estate transactions and non-immigrant visa petitions, such as extraordinary ability and investor visas.
Mr. Cea is licensed to practice in New York (2013) and in Italy (2012). Mr. Cea is fluent in Italian and conversational in Spanish. Mr. Cea is a member of the New York City Bar Association, the New York State Bar Association.
Learn more at https://cealegal.com/.
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