The state and city are playing good cop, bad cop to get owners of big buildings to cut their carbon footprints.
The efforts are not actually coordinated, but do reflect clashing approaches to climate change and real estate. While New York City is preparing to fine high-emissions properties millions of dollars, the Hochul administration is offering cash prizes to landlords who go green.
Six more big real estate players joined good-cop Gov. Kathy Hochul’s Empire Building Challenge, she announced Monday: Tishman Speyer, the LeFrak Organization, Sam Zell’s Equity Residential, Boston Properties, Brookfield Properties and Amalgamated Housing.
She rewarded them with a gushing press release that deemed them “best-in-class building owners” and praised their “vision and dedication to decarbonizing our buildings.” They have not yet decarbonized anything yet, but if they slash emissions at eight of them as promised, they could win $3.1 million.
That is pocket change for these firms, but the idea is to show others that energy-saving retrofits can be done, even to skyscrapers.
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The targeted buildings include Tishman Speyer’s 520 Madison Avenue and Boston Properties’ 601 Lexington Avenue in Manhattan, Richard LeFrak’s 59-17 Junction Boulevard in Queens, Sam Zell’s 180 Montague Street in Brooklyn; and Amalgamated’s 3965 – 3975 Sedgwick Avenue in the Bronx.
Get it? All four boroughs!
Just kidding, Staten Island! Hochul knows you’re a borough, albeit sometimes a forgotten one. But this round of the contest is for towers, so try again when you get one. (Madison Realty Capital tried to break the island’s 20-story record with River North, but last year halved its height to get it past then-Council member Debi Rose.)
The program is a public-private partnership between NYSERDA and real estate firms. The companies will test ways to decarbonize the heating and hot water systems of tall multifamily and commercial buildings, such as by recovering and sharing heat and using thermal storage, advanced heat pumps and low-temperature hydronics.
Four large companies previously joined the program: Ron Moelis’ L+M Development Partners, Hines, Tony Malkin’s Empire State Realty Trust and Mo Vaughn’s Omni New York. They are trying to bring net carbon output to zero at seven buildings with $5 million of state money at stake.
How many other firms replicate their solutions, which The Real Deal explained in detail could pay for themselves and more over time, remains to be seen. That is where the city’s Local Law 97 comes in.
The measure, passed during the de Blasio administration, requires 26,000 buildings to reform by 2030 or face annual fines that could run into the millions of dollars. A smaller number of larger buildings only have until 2024 to meet emissions targets.
The Real Estate Board of New York has been seeking amendments to that law, arguing that it punishes densely occupied buildings, such as the Durst Organization’s green trophy tower One Bryant Park, and lets largely empty buildings off the hook.
The law, they say, is akin to punishing a ship stuffed with cargo but not five similar ships each only 20 percent full. Some environmental groups sided with REBNY on that argument, but the City Council went ahead and passed the law anyway.
The trade group then asked the state government to override the city and provide reasonable ways to comply with the state law, such as by purchasing renewable energy credits created by solar farms and other carbon-reducing projects. The city’s law only recognizes such credits if they are generated in New York City, where solar farms are rarer than ivory-billed woodpeckers.
REBNY pointed out that greenhouse gas emissions anywhere contribute to climate change everywhere, so limiting renewable energy credits to those generated in the city made no sense from an environmental perspective. But city lawmakers refused to budge, preferring that buildings performed retrofits instead, and state legislators were not motivated enough to pass anything.
But, there is the Empire Building Challenge.
Office buildings in the new round of the contest include Tishman’s 520 Madison, 43 stories and 1.1 million square feet; Brookfield’s 660 Fifth Avenue, 41 stories and 1.5 million square feet; Boston Properties’ 601 Lexington Avenue, 59 stories and 1.8 million square feet. LeFrak’s 59-17 Junction Boulevard is a Class B commercial building of 20 stories and 396,000 square feet.
Amalgamated entered two apartment buildings with 316 affordable units and 425,000 square feet. Equity Residential, aside from its 31-story Brooklyn Heights property, will decarbonize 32-story multifamily property at 777 Sixth Avenue in Manhattan. The buildings combine for 467,762 square feet.
Each building owner comes into the state’s contest with a team of energy and financial consultants. Amalgamated’s includes En-Power Group and Egg Geo; Boston Properties has Jaros, Baum, & Bolles Consulting Engineers and Norges Bank Investment Management; Brookfield is bringing Cosentini Associates; Equity Residential has Goldman Copeland Consulting Engineers, JLL and RUHL; LeFrak is joined by Steven Winter Associates and Ryan Soames Engineering; and Tishman Speyer is partnering with Jaros, Baum & Bolles Consulting Engineers,Brightcore and Watt Time.