Landlords fear Covid’s impact on climate law

Filtration systems to stop virus could trigger penalties for energy use

New York /
Aug.August 17, 2020 07:00 AM
(iStock)

(iStock)

As office landlords install hospital-grade air filters to lure tenants back, some worry they are putting the city’s emissions targets out of reach.

The building emission reductions required under Local Law 97 — the centerpiece of a May 2019 legislative package known as the Climate Mobilization Act — could conflict with owners’ efforts to keep their buildings virus-free.

“The more outside air you bring in, the higher rated your filter is, the more energy you use,” said Jordan Barowitz, a spokesperson for the Durst Organization. “This is a fundamental problem with Local Law 97, that a higher level of filtering and a greater rate of replacement of indoor air are discouraged by the bill.”

Local Law 97 calls for a 40 percent reduction in citywide greenhouse-gas emissions by 2030 and 80 percent by 2050. Most properties larger than 25,000 square feet face heavy fines if they do not meet emissions thresholds based on building type and size. Buildings are by far the city’s largest source of greenhouse gases.

Property owners have criticized the measure for failing to take into account buildings’ hours and how many people work in them, and for severely limiting their options for offsetting emissions with renewable energy credits. The law only counts energy credits from power generated in the city — as if the five boroughs have solar and wind farms. The pandemic has further complicated this equation for some building owners.

“So far we haven’t seen the city take any action to adjust expectations,” said Raymond Pomeroy, an environmental attorney with Stroock & Stroock & Lavan.

The pandemic has caused cash-flow problems for some building owners as tenants skip rent and seek to rework leases. Pomesroy said the emptying out of buildings — as employees work from home — could offset some of the energy costs associated with higher-tech HVAC filtration systems. The reprieve, however, would likely be temporary.

Even with buildings at partial capacity, they need infrastructure up and running for employees to effectively work from home — data servers, for example, said Rudin Management’s John Gilbert. Though the company’s buildings largely emptied out in late March, energy consumption dropped just 30 percent between then and the end of May.

“We in effect have never shut down our buildings,” Gilbert said.

John Mandyck, CEO of the Urban Green Council, a group that supports the city’s climate law, said he has heard from owners who have learned a lot about how their buildings consume energy during the pandemic.

“There is a lot of phantom use that is going on when buildings are empty,” he said. “So this is a tremendous learning moment.”

He added, “The one thing we know for sure is that climate change is not going to put itself on pause for the coronavirus, so we are going to need to find a way to manage both simultaneously.”

Much about Local Law 97’s rollout has yet to be determined. Property owners are anxiously waiting for the Department of Buildings to release an application for them to seek relief from the measure. The law allows for a building’s emission cap to be raised if an owner can show financial hardship or if compliance with the law would prevent a “reasonable” financial return. The law clearly defines financial hardship, but “reasonable” leaves room for interpretation.

Applications for financial hardship will be created after recommendations are submitted to the mayor by Jan. 1, 2023, according to the Department of Buildings.
But the de Blasio administration has vowed not to weaken the climate bill.

“The Covid-19 pandemic has created unprecedented challenges for our city, and it’s critical that we avoid another crisis by remaining steadfast to our climate goals,” Mark Chambers, director of the Mayor’s Office of Sustainability, said in a statement. The city is committed to helping building owners meet them, he said.

Part of the Climate Mobilization Act called for a low-cost loan program to help landlords meet the requirements. But the rollout of the Commercial Property Assessed Clean Energy program (C-Pace) has been delayed — in part by the pandemic.

Fred Lee, co-CEO of the New York City Energy Efficiency Corporation, the organization administering C-Pace, said the city is expected to issue rules for the application of the climate law “in the near term.” He expects C-Pace to launch by the end of the year and for his organization to issue guidelines about which owners and lenders qualify before that.

“The city is motivated to launch this program, and we are actively working to set up the program infrastructure, despite the delays,” he said.

A 15-member advisory board was launched in December to study the law and provide recommendations for its rollout. The board is to provide a report to the mayor by 2023. One of its members, Empire State Realty Trust’s Tony Malkin, noted that advisory board has been meeting virtually during the pandemic and its timeline for submitting reports has not changed.

Malkin said Local Law 97 is “very much in its infancy.” While he acknowledged that increased ventilation put into place for Covid-19 could increase energy use in buildings, he noted that this is presumably a temporary condition of the pandemic.

“To look at today’s condition and assume failure is totally premature,” he said. “You’ve got to let the technical working groups do their work and report back.”

He said the bill could have been better crafted, based on history and data, but that “doesn’t mean it can’t be done.”

“The reality is, this is an extraordinarily challenging mandate,” he said. “That said, until we do the work, I don’t think one can presume anything.”

Write to Kathryn Brenzel at [email protected]


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