New York's Cooperative and Condominium Community
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A flurry of new regulations will shape your future.
The year 2019 brought a blizzard of new laws that will change the way co-op and condo boards operate for years – even decades – to come. Everything from carbon emissions to building staffs to roofs will be affected by this legislation. And the time for understanding and complying with these laws is now. Here are some steps boards need to start taking in 2020 – and keep taking in the years ahead.
The Climate Mobilization Act (Local Law 97)
This landmark city law – one of the most ambitious in the world – is probably causing the most anxiety among co-op and condo boards. It sets strict limits for carbon emissions by buildings 25,000 square feet and larger, and it establishes stiff fines for buildings that fail to meet these targets. The limits begin phasing in at the end of 2024, then emissions must be cut 40 percent by 2030 (from a 2005 baseline) and 80 percent by 2050. The good news is that 80 percent of the affected buildings will clear the 2024 hurdle without making any changes. Everyone else needs to get busy. Now. And most buildings will need to take steps to meet the 2030 limits.
“Boards need to go to their property manager and say, ‘Tell us what our carbon emissions are right now. And if we’re above the limits for 2024, help us create a plan for how to close the gap,’” advises Russell Unger, a sustainability consultant who recently stepped down from the nonprofit Urban Green Council, which was instrumental in shaping the Climate Mobilization Act. “A lot of property managers have some capability to do this, but some boards will want to bring in an energy consultant. If I was on a board, I would want to know right now how we’re doing. Can we breathe easy – or do we need to do a lot of work?”
The amount of work boards need to do will vary from building to building, of course, and it could range from something as simple as installing LED lights to something as complex as replacing the boiler. “You have a certain number of options,” Unger says. “You can save energy. You can change the fuel you’re using. You can put solar panels on the roof. You can purchase carbon offsets. Or you can pay the fines.”
An advisory group is working now on a system of “carbon trading” that will allow non-compliant buildings to avoid fines by buying credits from buildings that are under their emission limit.
“Some boards will definitely face major capital work,” Unger says, “but there are a lot of little things that can be done to improve New York City heating and cooling systems.” He advises boards to start asking questions. Are the pipes insulated? Is the heat balanced? Is weather-stripping adequate? Is there insulation behind radiators? The fix could be as simple as switching fuels, since No. 2 oil produces 40 percent more carbon emissions than natural gas. Whether the necessary fixes are minor tweaks or major overhauls, boards need to come up with long-range plans now, then begin figuring out how they’re going to pay for them.
Paul Reale of CUNY’s Building Performance Lab, recently told a forum that the reluctance of co-op and condo boards to spend money on retrofits has been a “huge obstacle” to reducing building emissions, which now account for more than two-thirds of the city’s greenhouse gas emissions. But help is on the way.
PACE Financing (Local Law 96)
The Climate Mobilization Act includes the option for co-ops (though rarely for condos) to pay for energy-efficient retrofits without major upfront cash outlays. Any retrofit that relies on renewable energy sources or reduces the building’s energy consumption could qualify for Property-Assessed Clean Energy (PACE) loans. These are repaid through a line item on property tax bills, spread over the life of the improvement. The program will be administered by the New York City Energy Efficiency Corporation, a nonprofit that helps finance energy-efficient projects.
There are other ways to pay for retrofits, including a smorgasbord of federal, state, and city incentives, which evolve constantly. And Dan Wurtzel, president of FirstService Residential, advises co-op boards to look at when their underlying mortgage is going to expire, and how much money will be needed for energy upgrades in the next 10 years and beyond. The way to make sure enough money is on hand could be a mix of refinancing, secondary financing, and assessments. Some banks provide financing to condo associations, Wurtzel notes, though borrowing usually requires approval of a supermajority of unit-owners.
Green Roofs (Local Laws 92 and 94)
These two measures, which are also part of the Climate Mobilization Act, went into effect November 15 and will have a smaller but still significant impact. The laws require that a green roof, solar panels, or some combination of the two be installed on all newly constructed buildings and on buildings undergoing major roof replacements. Boards replacing their roof membrane or patching their roofs will be exempt. The city is currently (THIS IS DUE SOON, MAKE SURE THIS IS UP TO DATE BEFORE PRINT DEADLINE) working up a precise definition of a green roof and a list of buildings that will be exempt from these two laws.
A green roof is not a conventional roof with some potted plants on it. A green (or living) roof is made of several layers, including a waterproof membrane, a root barrier, a drainage layer, a lightweight growing medium – soil is too heavy – and plants. The larger and deeper the growing medium, the more absorbent – and therefore greener – the roof. Plants can cover the entire roof or a portion of it. While green roofs are more expensive to install than conventional roofs, they pay for themselves in a relatively short time – and they can be a major tool for complying with Local Law 97. The benefits include extending the life of roof structures, reducing cooling costs, and keeping rainwater runoff from overtaxing city sewers while providing a pleasant amenity for building residents.
“And efficient buildings run cheaper,” says Alan Burchell, principal at Urbanstrong, a green building consultancy. “Why not use PACE financing to do this work now so you’ll enjoy the savings – and comply with the law and avoid future fines?”
The Housing Stability and Tenant Protection Act
This sweeping law pushed by tenant advocates sent jitters through the city’s co-ops and condos. One lawyer described co-ops and condos as the “unintentional roadkill” of a law that was designed to protect renters but has serious, and confusing, implications for co-op boards, co-op shareholders, and condo unit-owners.
Those concerns are being addressed in a two-pronged pushback from co-op and condo advocates. On October 9, state Senator John Liu, a Democrat who represents northeast Queens, introduced a bill that would address the “unintended effects” of the Tenant Protection Act by carving co-ops out of this law. The bill would exempt co-ops from the law’s limits on deposits, application fees, late and administrative fees, and a co-op’s ability to recoup attorneys’ fees in summary proceedings against shareholders. The bill has been referred to the Committee on Rules and will be taken up when the legislature reconvenes in January. A companion bill has been introduced in the Assembly by another northeast Queens Democrat, Edward Braunstein.
“The executive committee of the Presidents’ Council of Co-ops and Condos approached Senator Liu last summer,” says Geoffrey Mazel, a member of the law firm Hankin & Mazel. “We explained the negative impact the statute has on co-op shareholders. He understood our concerns and took the lead on drafting this legislation. Shareholders are very excited about this because co-ops need protection from the Tenant Protection Act.”
The other prong of the pushback is a grassroots campaign to get co-op shareholders and condo unit-owners to write to their state legislators. Stuart Saft, an attorney who is chairman of the Council of New York Cooperatives & Condominiums, is spearheading the letter-writing campaign which, he says, has this simple goal: “To amend the law to specifically state that it is not applicable to co-ops and condominiums. I wanted something very simple and very straightforward because we don’t know how the courts are going to interpret this (Section M). I didn’t want to get bogged down in 20 pages of revisions.”
A less flashy but still important flurry of new laws in 2019 focused on how employers, including co-op and condo boards, must treat their employees. These laws touched on sexual harassment in the workplace, retaliation against employees, ethnic hairstyles, religious garb and facial hair, and mandatory time off for voting, reproductive treatments, even lactation.
“There has been a fundamental shift in the environment,” says Andrew I. Bart, an attorney at Borah, Goldstein, Altschuler, Nahins & Goidel who specializes in employment law and real-estate litigation. “We’re now in an environment that’s very tilted toward protecting employees. Given the MeToo movement, New York State and New York City have shifted the burden onto employers, and as a result co-op and condo boards need to be up to date on new regulations and required training.”
Failure to adapt to this new environment is not an option. “Boards need to be aware that it’s easier for employees to claim that they’ve been sexually harassed or that the employer has retaliated or discriminated against them,” Bart says. “The days of co-op and condo boards not thinking of themselves as employers – those days are long gone.”
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