Understanding Local Law 97 (LL 97): Frequently Asked Questions and Answers

What is LL 97? 

New York City’s LL 97 is part of a package of laws referred to as the Climate Mobilization Act, intended to be New York City’s own “Green New Deal.” At its core, LL 97 caps the amount of greenhouse gas emissions that certain buildings can emit in any given year, beginning in 2024. The emissions caps will be further reduced in 2030.

Is my building subject to LL 97? 

The following buildings are subject to the requirements of LL 97: buildings that exceed 25,000 gross square feet; two or more buildings on the same tax lot that together exceed 50,000 gross square feet; and two or more buildings held in condominium ownership that are governed by the same board of managers and that together exceed 50,000 gross square feet. Certain buildings, including City-owned buildings, classified religious places of worship, nonprofit hospitals and healthcare facilities, and buildings with a certain threshold of rent-regulated dwellings, may be exempt. Buildings owned by cooperative corporations that meet the above criteria are subject to the requirements of LL 97. 

What is the first step building owners, condominium and cooperative boards, and managing agents should take regarding LL 97? 

Building owners, condominium and cooperative board, and managing agents can start by reviewing the building’s classification and other relevant information to determine if the building is subject to LL 97. If the building is subject to LL 97, the next step would be to retain an energy auditor and commission a performance study to benchmark the building’s current emissions output and identify whether, based on the building’s current performance, it is anticipated that the building will be in violation of LL 97 in 2024 and thereafter.

What if my building’s emissions exceed the limits set forth in LL 97? 

The building’s greenhouse gas emissions will need to be reduced below the cap or an alternate path to legal compliance will need to be pursued. Typically, reductions in greenhouse gas emissions may be achieved through improvements and retrofits such as adding solar panels as a source of energy, retrofitting HVAC systems, converting building systems from gas to electric, changing lighting fixtures to LED lighting, and installing energy efficient windows. Failure to comply with the emissions caps or otherwise satisfy the requirements of LL 97 will result in annual violations and fines commencing as early as 2024. Violations and fines are based on the amount that a building emits over the allowable cap, and fine amounts increase over time.

Are there programs to help pay for or finance improvements and retrofits? 

There are rebate, tax incentive, and grant programs available for qualified building owners. In addition, the Climate Mobilization Act enabled C-PACE (Commercial Property Assessed Clean Energy) loans, which are loans available to cooperatives and other building owners to finance energy-efficient improvements and retrofits. Generally, the loans are long term, low interest, fixed rate loans, and are tied to the useful life of the improvements and retrofits being financed. In certain cases, the annual cost of these loans can be offset, at least in part, by the annual savings in energy costs. C-PACE loans are repaid through an assessment on a building’s property tax bill and cannot be accelerated, making them even more valuable in rising interest rate and operating cost environments. The New York City Mayor’s Office of Climate & Environmental Justice and the New York City Energy Efficiency Corp. recently released updates to the Core Program Documents for C-PACE loans. The updates include additional details on costs, certification requirements, building and improvement eligibility, the usefulness of energy audits, and existing lender consent requirements, all of which should be considered by cooperatives and building owners in determining whether to pursue C-PACE financing. Currently, condominiums are not eligible for C-PACE loans.

How can Seyfarth help with LL 97? 

Seyfarth assists condominium and cooperative boards, managing agents, and building owners in formulating comprehensive plans to achieve compliance with LL 97 and the Climate Mobilization Act, and in executing those plans. Seyfarth works with its clients and energy auditors to determine whether a building is covered by LL 97, benchmark the building’s current performance, and assess whether the building can reasonably anticipate being subject to violations and fines in the coming years. Seyfarth also is able to help boards, managing agents, and building owners secure financing (including by negotiating loan applications, commitment letters and loan documents, and closing loans), and prepare and negotiate construction contracts for building improvements and retrofits entered. In addition, Seyfarth can provide board governance guidance to ensure boards satisfy all necessary legal requirements and actions, including reviewing by-laws and other governing documents; drafting board resolutions to authorize actions of the board; identifying any shareholder/unit owner consent requirements or other limitations in governing documents and any existing loan documents for borrowing funds, retaining energy auditors and other professionals, and taking any other related actions; and preparing the documents necessary to amend governing documents, if required.