Local Law 97 and Its Impact on Co-op and Condo Boards

It is a common excuse with lawmakers “we started with the best of intentions.” In 2019, Local Law 97 was introduced as an amendment to the New York City Administrative Code—one that has ambitious plans and wide-ranging effects of reshaping energy efficiency and greenhouse standards. Laudatory goals, no doubt, but who is picking up the tab?

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What is Local Law 97?

The law, among other things, would require most buildings over 25,000 square feet to lower greenhouse emissions and meet three waves of successively stricter standards. Namely, the city aims to reduce emissions by:

Requiring the buildings be properly updated and outfitted by 2024.
Applying stricter standards to reduce emissions by 40% by 2030.
By 2050, buildings must again meet even stricter standards to reduce emissions by 80%.

The ultimate goal is to support the “City’s Green New Deal” and to reach carbon neutrality.

Pushback on Local Law 97

The city and its building owners are currently only 16 months from the deadline to meet the first emission reduction threshold, and still, over 2,700 buildings need to perform updates or face substantial fines. In the face of such penalties, building owners have sought to overturn Local Law 97, and litigation is currently pending

Property owners have challenged the burdensome requirements in the case of Glen Oaks Village Owners, Inc. v. City of New York, alleging that Local Law 97 (i) is preempted by the New York State Climate Leadership and Community Protection Act of 2019; (ii) violates due process because it levies excessive penalties against property owners, is retroactive and is impermissibly vague; and (iii) constitutes an unauthorized tax, contrary to state constitutional and statutory provisions.

Local Law 97 and Its Impact on Co-op and Condo Boards

Beyond the legal questions to be decided as a result of this litigation, the scene around Local Law 97 and this case says something about how city regulation can be—and the concomitant expectation of compliance—a bigger lift, depending on how big of a player you are in the market. As it turns out, green requires a good deal of green; co-op and condominium boards are feeling the strain.

As Woods Lonergan partner James F. Woods explains, “While many of the larger real estate groups are on track for compliance, much of the burden of Local Law 97 falls on private owners and condo and co-op boards who now have to navigate funding a major capital project they did not expect by a fast-approaching deadline.”

The results could be disastrous for smaller co-op boards and their residents, who may not have the same resources as real estate mega-corporations. Price surges have already been experienced throughout the city as it continues to recover from the COVID-19 pandemic, and Local Law 97 could add to those increased costs.

“Compliance work, or alternatively, substantial penalties for failure to comply with Local Law 97 might result in unanticipated assessments or increases in monthly charges for condo and co-op owners throughout the city as their boards attempt to manage budgeting under the pressure of Local Law 97.”

Ultimately, the court’s opinion on Glen Oaks Village Owners surrounding Local Law 97 is one with substantial and widespread consequence among the co-op and condominium boards of New York City—and is, therefore, a case to keep an eye on.

If you have questions about Local Law 97 and how it may impact your New York condo or co-op board contact Woods Lonergan today.

About the Author

James F. Woods is Founder and Managing Partner of Woods Lonergan. He has tried more than 60 jury cases to verdict as first-chair trial counsel, beginning his career as a prosecutor, and resolves complex commercial and real estate disputes valued at $1M to $100M+ for business owners, principals, and middle-market enterprises across the New York metro area. He appears regularly in the New York Commercial Division and in the federal district courts for the Southern and Eastern Districts of New York, and has argued appeals in the Appellate Division and the Second Circuit.

His practice covers complex commercial litigation, real estate and asset litigation, partnership and shareholder disputes, fiduciary breach and corporate fraud, and cooperative and condominium governance. He counsels corporate and cooperative boards throughout New York.

The Legal 500 United States ranks James in its New York Elite rankings for Commercial Disputes, and his peers have recognized him with Martindale-Hubbell's AV Preeminent rating. Woods Lonergan is ranked in Chambers USA: Spotlight New York for Litigation: General Commercial and Real Estate. James serves on the Commercial & Business Litigation Committee and the Business Torts & Unfair Competition Committee of the American Bar Association Section of Litigation, and on the Cooperative & Condominium Law Committee of the New York City Bar Association. His commentary on New York commercial and real estate disputes has been quoted in The New York Times, The Washington Post, Bloomberg Law, Law360, and Forbes.