Geoffrey R. Mazel in Legal/Financial on April 7, 2015
I have seen this issue with many of the co-ops in New York with multiple tax blocks. Local Law 87 was passed with the best of intentions in an effort to reduce greenhouse emissions and to make the city more "green." Unfortunately, the reality of the situation is that implementation of this law has become a bureaucratic nightmare for many co-ops and will end up costing them thousands of dollars in professional fees, not to mention taking up a lot of the board members' and management's time.
By way of background, Local Law 87 became effective in 2009. It states, in part, that building owners (including large co-ops) must ensure that an energy audit is performed by or under the supervision of an energy auditor, and that the results of the audit are filed with the DOB as an energy efficiency report (EER). This will contain information on both the audit and retrocommissioning. Energy audits must include all the base building systems, including building envelope, HVAC, conveying, and electrical and lighting systems. The audit must identify all reasonable measures and capital improvements that would result in energy use or cost reductions, the associated savings, cost of implementation, and simple payback period. Projects with certain savings will then be mandated by law.
The energy efficiency reports are due based on the last digit of their tax block numbers and the dates range from 2013 to 2020. Tax block numbers ending in a "0" year are due 2020; ending in "1" are due 2021; ending in "2" are due 2022; ending in "3" are due 2013; and so on up to "9" on 2019.
As a result, many co-ops with multiple blocks are now forced to complete multiple EERs over the course of the time period from 2013 to 2022. Depending on the number of blocks in a larger co-op, it is conceivable that a co-op could be subject to an audit every year for ten years. As the board member states in the question above, this situation is creating a hardship in time and money for multiple-block co-ops.
Local Law 87 states that the auditing team must include a registered design professional who certifies the audit when it is complete. This person needs to be a professional engineer (PE) or registered architect (RA). The individuals performing the audits must meet certain criteria, too. He or she must be a Flex Tech contractor approved by the New York State Energy Research and Development Authority and a certified energy manager as determined by one of several authorized associations. Obviously, this is a high-level professional energy audit that comes at a substantial cost.
In addition, a further problem with Local Law 87 audits is the high level of scrutiny they are receiving at the New York City DOB. A client of my firm recently received a "Notice of Local Law 87/2009 Objections" from the DOB regarding an audit submitted in 2014. This particular notice contained more than 80 objections from the DOB regarding items each of which was labeled "insufficient information provided." The co-op's engineers have been forced to meet with the DOB on at least three occasions and follow up on this exhaustive list of objections. In addition, this particular co-op has 15 tax blocks and the ultimate costs in time and money will be astronomical. Certainly, this was not the intent of the drafts of Local Law 87 when it was implemented.
What can be done to help co-ops with multiple blocks to avoid this enormous expenditure in time and money? First of all, the DOB Office of Sustainability has been contacted by several co-op representatives, and it has indicated a willingness to consolidate these audits so that they can all be done in a single year to avoid repetition and waste. This could provide significant savings for the affected co-ops.
More significantly, there is possible legislation that could provide a permanent solution to this problem. New York City Counsel Intro 33-A is a draft proposal that would amend Local Law 87 and allow residential co-ops and condos to consolidate required energy efficiency reports. This draft proposal states that "where a cooperative corporation or condominium association shows to the satisfaction of the department that it owns multiple covered buildings located on contiguous tax blocks, such corporation or association may consolidate the energy efficiency reports for each such building into one report." The report would be due on the date that the last report would be due. If passed, Intro 33-A would provide a solution to the issues brought up in the director's question above. I strongly suggest that all directors in this situation contact their councilperson and advocate for the passage of Intro 33-A.
Geoffrey R. Mazel is a partner in the law firm of Hankin & Mazel.
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