What Landlords Need to Know About the Council's New Green Bills

LandlordsNY Member

LandlordsNY Member

The New York City Council’s Committee on Environmental Protection unveiled three bills designed to make it easier for the city to achieve an 80 percent reduction in greenhouse gas emissions by 2050. The three bills, Int. 1251-2018, Int. 1252-2018, and Int. 1253-2018, all enjoy wide support in the council, though landlord groups and environmentalists both share concerns about some of the language within the bills—particularly Int 1253-2018.

According to the Council’s description of the bills, “Int. No. 1253 would establish the Office of Building Energy Performance and expand existing retro-commissioning requirements to certain buildings over 25,000 square feet. Int. No. 1252 would establish a sustainable energy loan program to provide certain building owners with funding for the installation of renewable energy systems or energy efficiency improvements. Int. No. 1251 would update the ranges for energy efficiency grades.”

Int. 1251 is self-explanatory and did not give rise to controversy.

Int. 1252, however, is a bit more complicated. The sustainable energy loan program would be funded by grants or credit support from either the federal government or state of New York. With these loans, the agency in charge of the program (the bill does not specify which one) will enter into loan agreements with either individuals or commercial entities located within the five boroughs with some restrictions. Owners would then use these loans to make energy efficiency improvements and systems upgrades to their property. They would have to be repaid “over a term not to exceed the weighted average of the useful life of such systems and improvements” at a fixed rate of interest to be determined at the time the loan is issued.

The size of the loan depends on whether the borrower is a corporate entity or an individual. For corporate entities, the agency overseeing the program has what seems like complete discretion in determining an appropriate limit. For individuals, the principal amount will be less than 10 percent of the estimated appraised value of the property subsequent to the improvements or the actual costs associated with improvements.

Int. 1253 is not only more complicated; it has also seemingly done the impossible: It has united real estate interests and environmentalists. Unfortunately for the bill’s survival, they are united against the legislation.

On the one hand, both groups are critical of how it would calculate efficiency standards. This has been a familiar refrain for owners and environmental groups whenever the city attempts to regulate commercial and residential energy usage, as legislation introduced in the council often measures efficiency by how much energy a building uses, not how judiciously it uses it. In other words, an extremely efficient hospital that operates 24 hours per day might easily end up receiving a similar score as a very wasteful commercial building that sits mostly vacant for more than half the day.

Another controversial part of the bill is that it would require buildings to hit certain benchmarks in 2022 and 2024, ostensibly to make reaching a 40 percent reduction in emissions by 2030 more feasible. Per general counsel and senior vice president of the Real Estate Board of New York, Carl Hum, who provided joint testimony with 32BJ SEIU and the environmental group the Natural Resources Defense Council, “The capital improvements needed to meet the bill’s initial targets require at minimum tow years to be planned, financed, implemented and assessed. We estimate that over 450 million square feet of retrofits would need to be completed during this initial period, overwhelming the available workforce and building owners’ ability to successfully implement the required retrofits within that time frame.”

Of all the elements of the bill, the least controversial was the idea to create a 27-member advisory board (13 chosen by the mayor; 13 chosen by the speaker of the council; 1 chosen by...let's say Flint's very own Question Mark because the bill doesn't specify) to run the Office of Building Energy Performance and to provide guidance on how to better arrive at 80x50.

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