How the real estate lobby is working to defang New York City’s landmark environmental legislation

By Kelly Waldron August 10, 2023

Over the last four years, a group of well-funded real estate companies and co-op boards have worked to delay and defang landmark environmental legislation aimed at curbing greenhouse gas emissions from buildings across New York City — including those owned by the wealthiest developers in the city.

The group has also circulated literature condemning the law and the penalties it threatens to pose on buildings that don’t comply.

The legislation, known as Local Law 97, sets limits on carbon emissions coming from buildings, which are responsible for nearly 70 percent of the city’s carbon footprint. It’s the first law of its kind in the U.S. and the first to mandate better energy performance at such a vast scale. During a summer that has already seen torrential flood-level rain, sweltering heat and air that caused the city skyline to recede in bright orange smog, the climate agenda has become a political flashpoint.

Buildings account for nearly 70 percent of total greenhouse gas emissions in New York City

Source: NYC Mayor's Office of Climate and Environmental Justice

The Real Estate Board of New York has spent over $723,000 lobbying the city government since the law was passed in 2019, on subject matter that includes this legislation, according to lobbying records. Recent lobbying targets include the Office of the City Clerk, the Office of the Mayor and 32 Council members—including eight who have sponsored a bill to delay the law by seven years; a bill first proposed by Vickie Paladino of Council District 19 in outer Queens.

The real estate lobby is fighting the legislation largely because the infrastructure changes required to be compliant with the new emission caps — overhauling heating and cooling systems, retrofitting insulation, or even changing an entire energy supply — are expensive. So are the penalties that may otherwise be imposed: $268 per ton of CO2 equivalent above the limit.

The lawmakers who designed the bill say building owners are supposed to save money over time, as building upgrades would result in lower utility costs. This does however represent a long-term investment as opposed to upfront financial reward.

“There’s simply no other way to reach our climate goals,” says Amy Turner, the Director of the Cities Climate Law Initiative at Columbia University. Be it at a state, national or international level, experts say slashing emissions from buildings is necessary.

The law was passed under former mayor Bill de Blasio and is set to be implemented by the Adams’ administration and current council members, who did not originally vote on the law.

The law’s proponents are concerned that the administration may yield to the real estate lobby, given Adams’ close ties with some of the industry’s most prominent figures—including some who have injected his most recent campaign with donations.

“When you’re talking about emissions in New York City, you’re talking about buildings. And you’re talking about a law that directly addresses that,” said Shiv Soin, the founder of Treeage, a youth climate group that advocates for environmental regulations in the city. .“What we’re looking at now is a mayor who does not have an interest in doing that and has persistently put roadblocks,” Soin said.

The rules which will determine exactly how the law will be enforced are expected to be announced imminently. Until then, the Adams’ administration has a delicate balancing act: satisfy industry professionals with which the mayor has significant political and economic ties—including some who have recently donated to his election campaign—while reducing the city’s carbon footprint.

The administration also has the challenge of addressing concerns about the cost of compliance from residents. This includes owners in co-ops and residents from vulnerable communities.

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Local Law 97 is designed to target the city’s largest emitters and applies to all buildings larger than 25,000 square feet, which represents around 50,000 buildings. That’s about half the city and includes most apartment buildings with at least 25 units.

When the law goes into effect, about three fifths of those that will need to be retrofitted are commercial and the rest are residential, according to Urban Green, a climate non-profit.

Areas in Manhattan's Midtown and Financial districts in particular are densely packed with buildings subject to the law. While the borough accounts for less than 10 percent of the city’s land, it contains almost half of all the buildings subject to the law.

The emissions caps are set to lower over intervals of five years, with the eventual goal of virtually net zero emissions by 2050. The first deadline in 2024 is five months away.

While much of the ongoing campaigning is focused on the looming deadline, most buildings are in fact on track to meet the first requirements. According to a sustainability report published by the city this year, 81% of commercial office buildings are already compliant with the 2024 limit.

However, only 14% of these office buildings are on track to meet the next deadline in 2030, which means that significant energy and building upgrades will have to be made before then.

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That is what the real estate board and some building owners are fighting against.

REBNY is the largest real estate trade association in the city. Its website directory lists over 13,000 members, representing different stakeholders, from landlords to brokers and legal advisors.

One of the group’s most prominent figures is Douglas Durst, chairman of the Durst Organization, which owns more than 16 million square feet of New York City real estate. In an op-ed published by Crain’s New York, the billionaire publicly criticized the new regulations for failing to adjust emission requirements based on a building’s occupancy rate.

His organization’s Bank of America Tower by Bryant Park, which was once hailed as a model for sustainable building design, now faces potential fines under the first requirements of the law, according to Bloomberg News.

REBNY’s campaigning largely focuses on potential penalties. But the highest penalties are limited to some of the most resource-intensive buildings that use the most energy, and are owned by some of the wealthiest landowners.

According to city estimates, the Bank of America Tower faces a projected penalty of more than $2.9 million in 2024, and $4.2 million in 2030, if it doesn’t come into compliance.

Google’s New York headquarters faces potential fines of more than $6 million in 2024, and the Verizon building, at least $500,000, also according to city estimates.

Surprisingly, some of Manhattan’s older landmark buildings are actually more efficient: the Chrysler, Empire State and Flatiron don’t face any penalties in 2024.

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The real estate lobby has spread literature condemning the law and advertising potential penalties.

REBNY published a study in partnership with a consulting firm called Level Infrastructure earlier this year that estimates possible scenarios in which building owners may have to pay fines, and groups like The Presidents’ Coop and Condo Council and Homeowners for a Stronger New York have circulated the study’s printouts at co-op town hall meetings.

According to Turner, the fact that the law hasn’t been implemented yet makes it very easy for opponents to criticize it, because there is no data yet “to show that the administration is flexible,” she said.

The law has provisions for a ‘good faith effort’ whereby the administration can enforce penalties at its discretion, depending on the measures building owners have attempted to take.

In a related press release, Zachary Steinberg, the Senior Vice President of Policy at REBNY said “the study’s findings demonstrate that even if buildings take meaningful steps to comply and use the tools provided by the law, owners will still be unable to meet the emissions limits and will instead pay hundreds of millions of dollars in annual penalties.”

Another problem with focusing on these penalty estimates is that they are based on energy consumption data from 2019 and often assume no reduction in energy use, which is what the law is designed to incentivize.

But seeing a reduction in energy use requires upfront cost, which is something which some residents are concerned about.

Opposition to the new regulations has also taken hold among co-op residents.

“If you’re tired of the City of New York using co-op and condo communities as its own personal piggy bank, and always putting its hands in your pockets, raise your hand,” said Warren Schreiber, President of the Bay Terrace Cooperative in Queens, at a town hall meeting in late July.

“I know I am,” he continued, looking up to a room of hands in the air.

While Schreiber acknowledged the threats of climate change, he is more concerned about the financial burden the law will impose—and how this will eventually fall onto individual condo owners and affect housing affordability.

The meeting was the fifth organized by the Presidents Co-op & Condo Council on the incoming regulations. In attendance were homeowners, mostly retirees on fixed income, who voiced their concerns of what they say to be crippling costs associated with the energy upgrades they face if they are to avoid expensive penalties.

In some cases, a couple of speakers noted, their co-ops would still face fines despite the upgrades. Though whether they would is still unclear, given that the final rules have yet to be outlined.

At the back of the room next to the packets of chips and candy was a board to sign on the petition to endorse Vickie Paladino’s proposal to delay the law by seven years. The idea of passing this bill is to afford residents more time to address their building infrastructure and avoid fines.

Last year, Shreiber filed a lawsuit against the city’s Department of Buildings accusing the law of “draconian” measures. Schreiber is also alleging that the new regulations are unenforceable because there is already a state law that preempts them: the Climate Leadership and Community Protection Act (CLCPA) which sets emissions reduction targets at the state level.

The city has denied the accusations and asked the court to throw out the lawsuit, which is still pending.

For Schreiber’s co-op, Bay Terrace, the complaint states that the estimated penalties may amount to $50,750 in 2024.

Bay Terrace consists of 14 buildings with about a dozen apartments in each. So the penalties would amount to $362 for the year in 2024. That is less than the monthly maintenance fees residents pay, which is between $550 and $990 per month for fair market tenants.

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A group of about 150 activists—including several city council members—were gathered outside City Hall on July 13 to demand that New York City’s Local Law 97 be fully implemented. It was one of many demonstrations organized by a group of nonprofit groups, including New York Communities for Change, New York Public Interest Research Group and Treeage.

Councilwoman Pierina Sanchez speaks to ctivists on July 13, 2023.

Supporters of the law are aware of the discourse circulating in these meetings—and they’ve become increasingly concerned that the process is dragging.

Rita Joseph, the Council Member for District 40 took to a podium in front of the gathering. “Oh my God we’re here again. We’re here every time and it upsets me,” she said.

Pete Sikora, a senior advisor at NYCC, has been one of the most vocal advocates for the law. He considers the requirements for the city’s largest and most polluting buildings to be reasonable.

“Those are the buildings that have the most ability on a multi-decade level, to plan ahead in a sophisticated way to reach those targets,” he said. As opposed to smaller buildings that don’t have a management board and processes in place to conduct maintenance and building upgrades.

Yet, he said, these resources are instead being directed at trying to gut the law. Sikora said that a lot of this money is pouring into resident groups like Homeowners for a Stronger New York and the Presidents’ Co-op and Condo Council.

“We’re severely severely outgunned here,” he said.