Paula Chin in Green Ideas on September 7, 2023
Co-op and condo boards in New York City are under the gun. Beginning in 2024, Local Law 97 will require buildings larger than 25,000 square feet to reduce their carbon emissions under specified caps or face stiff fines. The caps get more stringent and the fines get more severe in 2030. But many boards are wondering how they're going to pay for the retrofits that will bring them in compliance with the law.
Help might be on the way in the form a recently introduced bill in the state Assembly (A5050), which would replace the stick with a carrot. Instead of threatening boards with fines, it could would give a property tax abatement to co-ops and condos pegged to the scale of their carbon emissions reductions.
“There’s no question that the implementation of Local Law 97 is going to present co-ops and condos with a huge financial burden,” says Assemblyman Edward Braunstein (D-Queens), who sponsored the bill. “Offering financial relief in the form of a tax abatement will help them offset the costs of the work they need to do.”
The proposed legislation ties a reduction in carbon emissions to a 10-year property tax abatement. Based on a sliding scale, the abatements would start at 5% of the cost of energy-efficiency projects that result in an emissions reduction of between 2% and 5%, up to a 9.5% abatement for an emissions reduction of between 25% to 29%. Buildings that cut their greenhouse-gas emissions 30% or more would receive a tax abatement of up to 20 years.
The baseline used for calculating your building’s emission reduction will be your energy benchmarking report, which buildings larger than 25,000 square feet are required to submit annually to the Department of Buildings under Local Law 84. Eligible project costs include a wide range of building work that result in greenhouse gas reductions, including the technical analysis work required before investments are made. Additionally, any increases to your building’s assessed valuation resulting from these improvements would be exempt from taxation for 20 years.
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Theoretically at least, the numbers can quickly add up to significant savings. For example, a board that spends $100,000 to install solar panels and cuts its building’s carbon emissions by 2% would receive a $5,000 abatement annually for 10 years totaling $50,000 — half of its investment. A building that spends $1 million to replace its oil-fueled burners with a cogen system for heat and hot water and achieves an emissions reduction of 25% would receive a $95,000 annual abatement, recouping a grand total of $950,000 over 10 years.
A5050 lays out carbon-emission reduction goals, but the question remains: How realistic are they and can boards reasonably expect to achieve them? “It all depends on the building, but certainly a 30% reduction would require aggressive retrofits,” says Mark Balsam, the president of ReDocs, an energy compliance consultant. “But low-hanging fruit type improvements, like boiler or chiller optimizations, could get you in the 10% to 15% range.”
The prospect of offering carrots as opposed to sticks couldn’t come too soon. “We've been advising our boards for a couple of years on LL97 compliance, getting analyses and proposal costs for potential energy projects they could do,” says Dennis DePaola, the executive vice president at the management company Orsid New York. “We’ve been trying to get people to modify their long-term capital plans. But costs keep escalating and spiraling, and there just isn’t sufficient payback for boards to invest in these projects without financial incentives. With this bill, there could be.”
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