New York’s Local Law 95 Challenge for Building Owners
Posted on February 3rd, 2023
New York City’s Local Law 95 (LL95 of 2019) is part of a larger effort to reduce building emissions. It builds upon the city’s energy benchmarking requirement (LL84 of 2009) and the requirement to post building energy efficiency grades under LL33 of 2018. Ultimately, LL95 requires owners to conspicuously display their building’s “A to F” letter energy efficiency grade at every public entrance. This may seem like a trivial activity; however, the ramifications of a low grade are very real and potentially quite costly.
LL95 Energy Efficiency Grades
Energy efficiency grades under LL95 begin with a building’s annual energy consumption being input into the EPA’s ENERGY STAR Portfolio Manager which produces an efficiency score between 1 and 100. The score theoretically represents how a building compares to buildings of a similar type, size, usage and location. A score of “75” implies that a building is more energy efficient than 75% of similar buildings.
The New York Department of Buildings (DOB) translates ENERGY STAR scores into grades. Scores of 85 to 100 receive an “A”; 70 to 84 is a “B”; 55 to 69 is a “C” and any score 54 and below is a “D”. There is a grade of “F” for buildings not compliant with LL95.
Currently, a grade of “N” is reserved for buildings exempt from LL95 grading due to the shortcomings of the Portfolio Manager. Exempt buildings include those having data centers, television studios and/or trading floors that account for more than ten percent of the gross total floorspace or otherwise do not meet the requirements of the Portfolio Manager program. Buildings receiving an “N” grade are not required to publicly post their grades.
It should be noted that while building grades are prominently displayed in the DOB poster, the ENERGY STAR score for the current and past year are also displayed.
Do Efficiency Grades Matter?
The short answer is, “Absolutely!” Moreover, building energy efficiency grades can impact a building owner’s interests in multiple ways, depending on building type and usage.
Local Law 97 of 2019 which imposes limits on building emissions starting January 1, 2024 and begins issuing fines in 2025 is directly related to building energy efficiency. A low efficiency grade suggests that a building owner may be in jeopardy of paying fines for emissions, however that is not a certainty.
Experts speculate that 75% of all affected buildings in New York City will initially receive grades of “C” or “D”. Even buildings with ENERGY STAR scores less than 10 (“D”), however, may not be subject to LL97 fines in 2025. Buildings that score lowest, however, will likely face substantial fines in 2030 when the building emissions limits tighten significantly.
Beyond fines or potential fines for emissions violations, building efficiency grades can have other financial ramifications for building owners. For example, tenants with a strong corporate sustainability position may avoid renting space in any commercial building with an efficiency grade below “A”. Other tenants may use a building’s “C” or “D” grade as leverage to reduce lease rates or get other concessions. Hotels may be faced with a similar situation where poor efficiency grades may adversely affect occupancy.
Beside operational revenue, energy efficiency grades will ultimately affect asset value. In this regard, efficiency grades become something of a relative measure of the quality and modernity, or lack thereof, of a building. Better grades will serve to increase asset value while lower grades will do just the opposite. Such situations may influence interest rates, lines of credit, etc.
Correcting Poor Energy Efficiency Grades
It seems too often that New York City building owners feel the energy audits and retro-commissioning efforts they conduct under Local Law 87 of 2009 will help improve their efficiency grades and prepare them for LL97. Unfortunately, if their buildings are not already an “A” or “B”, nothing could be further from the truth.
Increasing a building’s ENERGY STAR score from 35 to 75 or an efficiency grade from “D” to “B” is typically a major multi-year task that in some cases may border on the impossible. Significantly improving building energy efficiency involves every part of a building and more: internal and external physical and mechanical building systems, controls and automation, space utilization and occupancy characteristics as well as energy types, uses and consumption. Radical efficiency improvements usually require radical changes in buildings systems and perhaps even use and operations such as switching energy sources and central plant technologies, adding or increasing space monitoring and control and even re-thinking when janitorial and maintenance services are conducted.
For owners of buildings in the “C” and “D” range who may be facing minimal or no LL97 fines in 2025, it is important to recognize that 2030 is not far off when it comes to making significant changes to your buildings. With so many buildings needing efficiency and emissions upgrades prior to 2030, the competition for qualified design and construction resources serving the New York City area will continue to increase as the deadline nears.
About Trystate
Trystate has been providing mechanical construction services to the NYC metro area since its founding in 1976. Today, Trystate is part of a group of more than 600 professionals who design, build and maintain a complete range of mechanical, digital and energy systems. Extensive inhouse technical, fabrication and project capabilities enables Trystate to provide innovative energy, power, project, financing and related solutions of unequaled breadth and value. Perhaps most importantly, Trystate is your single source for engineering, design, construction and commissioning all of your energy, efficiency and emissions-related Local Law needs.