Letter Grades for Buildings

Restaurants have had to do it for years. So why shouldn’t large co-ops, condos, and rental buildings be required to post their letter grade – not for compliance with health rules, but for their level of energy efficiency? That’s the thinking behind Intro 1632, a bill passed by the city council in one of its last acts of 2017. The legislation requires larger buildings to post their energy-efficiency ratings, which are derived from their annual benchmarking data on energy and water use, as mandated by Local Law 84. Under Intro 1632, buildings larger than 25,000 square feet will be awarded a letter grade – similar to restaurants’ sanitation grades – which boards will have to post near the building’s public entrances. That way, all residents and potential apartment buyers – and brokers – will know how energy-efficient the building is. A high grade of A or B could be a major selling point.

The new law has the enthusiastic support of Danielle Spiegel-Feld, executive director of the Frank J. Guarini Center on Environmental, Energy and Land Use Law at New York University Law School. Writing in The New York Times, Spiegel-Feld noted that the European Union adopted such a law in 2010. As a result, energy-efficient buildings have enjoyed a significant increase in value. “Since that law was enacted, studies of various property markets in the union have found that buildings with higher energy grades command price premiums,” Spiegel-Feld wrote. “In Denmark, for instance, properties with high grades have sold for an average of 10.1 percent more than low-rated properties.”