In cities like New York, where buildings account for 70% of greenhouse gas emissions, strategic modernization is key to meeting the challenge of improving energy efficiency, decarbonization, and complying with clean energy mandates. 

The main component of NYC’s Climate Mobilization Act is Local Law 97 (LL97), which was designed to reduce greenhouse gas emissions and improve energy efficiency in most buildings over 25,000 square feet. The law aims for a 40% reduction in emissions by 2030, with the ultimate goal of net-zero emissions by 2050.

Counting Carbon

​LL97 assigns a coefficient to each fuel type based on its carbon content; a building’s annual emissions are then determined by multiplying each fuel type's total energy use by its corresponding carbon coefficient. There are a number of actions a building can take to lower its emissions, including switching to lower-carbon fuels, installing heat pumps, purchasing certificates through the Affordable Housing Reinvestment Fund (AHRF), installing solar arrays or battery storage, and using credits from eligible Renewable Energy Certificates (RECs) to offset electricity emissions.​

Before compliance planning begins however, a building needs to determine which LL97 pathway applies. Many buildings are subject to Article 320 of the law, which sets annual emissions limits, while others—primarily affordable and rent-regulated residential buildings—follow alternative requirements under Article 321. The New York City Department of Buildings’ Building Energy Analysis Manager (BEAM) portal (nyc.beam-portal.org) gives owners, managers, and authorized third-party vendors data and insights on building- or parcel-level energy consumption and compliance status.

​Understanding the Penalties

“New York City imposes a few types of penalties for LL97, such as for non-filing, and for carbon emission non-compliance,” says Rick Elezi, president of Manhattan property management firm R.E.M. Residential. According to the NYC Department of Buildings, the penalty framework for buildings covered by Article 321 includes $10,000 in fines for failing to submit a compliance report on time and for failing to demonstrate compliance through one of its pathways.

For buildings not covered by Article 321, which includes most co-ops and condos, the fines for noncompliance are calculated at $268 per metric ton of carbon equivalent over the given limit. Because these fines are annual, the exposure only grows once the carbon caps tighten in 2030, according to Matt Cebula, Vice President of Energy Management at AKAM, a national real estate management firm specializing in residential communities.

“We also remind boards about a separate penalty, which is triggered by failing to file the annual LL97 report,” he notes. “The fine of $0.50 per square-foot per month is often costlier than the emissions fine itself. On a 100,000 square foot building, that's $50,000 a month just for not filing the required compliance with the DOB.”

A building facing the choice between paying a relatively nominal fine versus undertaking a major capital expense to get compliant might reasonably wonder whether it makes more sense to just pay the fine. But, Cebula cautions, “The caps tighten with each compliance period, and at some point the cumulative fines will exceed the cost of upgrading building systems.​”

Also, Elezi adds, “The NYC DOB and Department of Finance don’t have funds to assist with penalty payments. The New York City Energy Efficiency Corporation (NYCEEC) provides loans only for energy-efficient projects. At this point, the fines will be paid from the buildings’ bank accounts or any other arrangements the boards can work out with the banks.”

Strong Reporting in the First Round

The results of the first emissions reports since LL97 went into effect show strong engagement, with well over 90% of covered NYC buildings filing successfully. “That’s an outstanding result for the first year of a major new law, and a really strong milestone,” says Chris Halfnight, CEO of the Urban Green Council, a NYC non-profit dedicated to decarbonization. “It’s clear that Local Law 97 is off to a strong start.”

Property managers and consultants note that communication and long-range planning were critical to getting everyone on the same page early on and addressing preliminary concerns. “Originally, board members were anxious due to the uncertainty of the process,” says Elezi. “We had multiple meetings with every board, and identified and presented the key issues to address for each building to help set them up for success.”

2030 and Beyond

Many boards, managers, and building owners are now turning their attention to 2030, when LL97’s carbon caps tighten and penalties begin. “The 2030 caps are where the concerns emerge,” says Cebula. “Boards are recognizing the scope of planning and capital work needed to avoid potential penalties.”

Overhauling a prewar mid-rise building’s entire HVAC system is a huge undertaking, no question about it. But the road ahead may not be as daunting as it appears. “There's a lot of casting ahead to the potential challenges to come,” says Halfnight, “but I think it’s important to recognize the success. Nearly 50% of multifamily buildings already meet their 2030 limits, so there are many co-ops out there that are already well-positioned into the mid-2030s.”

The second compliance period, running from 2030 to 2034, introduces significantly tighter greenhouse gas emissions caps. Compared with 2024-2029, the carbon limits drop substantially, aiming to reduce total emissions from covered buildings by 40% by 2030.

​A majority of multifamily buildings, including co-ops, are on a pretty straightforward path to or through 2034. Another quarter or so face a steeper reduction, and those buildings need to take a critical look at their initial emissions reports and plot out a strategic sequence for cost-effective, thoughtful compliance strategies over time, says Halfnight. “To right-size the challenge that co-op boards may be facing, almost half of multifamily buildings aren’t required to do any upgrades until 2035,” he adds. That gives boards in buildings needing significant upgrades or system overhauls several years’ lead time to confer with their legal, financial, and engineering teams to map out a path for funding and executing the needed work in the allotted time. 

A Good Faith Effort 

Of course, sometimes even with judicious planning and prudent financial management, it may simply not be feasible for a building to undertake a major capital project in time to meet the compliance deadline. 

To address this reality, the Good Faith Effort (GFE) component of LL97 was enacted so buildings could demonstrate good faith in taking proper energy efficiency mitigation measures. Instead of immediately levying penalties for noncompliance, the City would lower or pause fines if boards could show they were taking the necessary steps towards compliance. “The Good Faith Effort specifics are important,” says Halfnight, “but maybe more important is the philosophy and principle behind it. The Department of Buildings is really after carbon, not penalties. They’re looking to work with building owners, co-op boards, and any building that is making a serious attempt to pursue compliance over time.”

Previously, buildings seeking GFE status needed to submit a written decarbonization plan. Now, the DOB is enforcing verification, meaning that buildings must show documented proof of physical completion and operational results—for example, construction permits, contract commitments, and Con Edison requests. If they fail to execute their plan, the DOB may revoke mitigation status and assess retroactive penalties.

Cebula notes that the GFE is a penalty mitigation, not an exception. “A Registered Design Professional (a PE or RA) must be retained to file for the GFE,” he says. “It’s important to keep all records of your decarbonization plan, approved permits for planned or ongoing work, and records of annual LL97 reports.”​

Small Upgrades Before Large Overhauls​

The road to LL97 compliance doesn’t necessarily require expensive retrofits or major building overhauls right off the bat. Many low-cost upgrades yield substantive results, and can help buildings run more efficiently. Before committing to capital work, property managers recommend verifying the gross floor area (GFA) used in a building’s initial emissions calculations. An accurate professional measurement helps confirm that baseline numbers are correct. 

From there, industry pros say that buildings can focus on identifying areas for operational improvements, starting with some inexpensive, quick-return fixes that boost energy efficiency, including the following:

Lighting: Replace common area lighting with high-efficiency LED lighting

Water Fixtures: Install low-flow, high-pressure water fixtures

Energy Management Systems (EMS): Add smart sensors to gauge temperature, humidity, pressure, occupancy, motion, system operations, and outputs

Occupancy Sensors: Use motion-activated or smart vacancy switches in hallways, laundry rooms, and garages​

Heating Systems: Modernize older heating plants through master venting, steam trap maintenance, and pipe insulation​

Air Sealing: Seal around air conditioning units, around windows, and upgrade roof insulation​

A Look at Electrification​

Property managers say they are keeping an eye on the road ahead in terms of efficiency options. “Many of our buildings are utilizing their upcoming Local Law 87 audits to identify potential electrification and other projects,” says Cebula. (Local Law 97 sets carbon emissions limits, while Local Law 87 requires buildings to audit energy use and fine tune systems every 10 years.) By replacing appliances that burn fossil fuels with more efficient alternatives that run entirely on electricity, buildings can significantly reduce their carbon footprint—but the process for multifamily buildings can be complex and carry high capital costs upfront.​

Luckily, it’s not all or nothing. “There’s something of a misconception that the law requires all buildings to electrify right away—but it very much does not,” says Halfnight. “It’s intended by design to help buildings put energy efficiency first and pursue electrification in a sequenced strategic fashion over time.”​

“For buildings facing a 20% reduction by 2030, they’re going to want to start looking at deeper measures like rooftop solar or strategic electrification,” he adds. “It is definitely an area where you want to engage the help of a service provider–engineers and energy managers. They’ll help you chart the right pathway.”​

Incentives & Programs​

A fully fleshed out strategic plan includes identifying and fixing smaller, lower-cost repairs and also looking at federal and state-level incentives. “NYSERDA partially subsidizes engineering reports, and offers a prospectus of a building's energy needs over the next 10 years,” says Elezi. “The report prioritizes the tasks needed to improve the building's energy efficiency.”

Another particularly helpful resource the pros point to is the New York City Accelerator. “The Accelerator recently relaunched [at accelerator.nyc],” says Halfnight, “and it’s backed by a really powerful data analysis engine to help building owners and co-op boards get an initial view of how their building is performing. In addition to identifying what measures might be the most effective within a given timeline, the Accelerator is also helpful for connecting service providers to get aligned for the existing incentives and develop decarbonization plans.”​

Overall, the city’s moving in the right direction in terms of thinking about energy use, and success lies in staying ahead of the timeline. By taking proactive steps early on, identifying and addressing low-hanging fruit,  taking advantage of incentives, and keeping an eye on the upcoming tighter carbon caps, buildings can avoid penalties and continue on the road to increased energy efficiency and reduced carbon emissions. 

Kate Mattiace is Associate Editor of CooperatorNews.