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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? 

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:

  1.  Requiring the buildings be properly updated and outfitted by 2024. 
  2. Applying stricter standards to reduce emissions by 40% by 2030. 
  3. 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 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.