Purpose and Scope
This article describes three categories of data error in a building's benchmarking record that can change a Local Law 97 (LL97) penalty calculation without any change in the building's physical energy performance. It is intended for owners, boards, and managing agents who are reviewing a projected or assessed penalty.
The LL97 penalty is the excess of a building's actual emissions over its emissions limit, multiplied by a fixed rate per metric ton. Both terms of that excess are derived from data that originates in the building's ENERGY STAR Portfolio Manager (ESPM) record. An error in that record therefore carries forward into the penalty.
Basis of the Reported Data
Under Local Law 84 (LL84), a building over 25,000 gross square feet, or a tax lot with multiple buildings totaling more than 100,000 gross square feet, benchmarks its energy and water use annually through ESPM, with a filing deadline of May 1. The ESPM record contains the gross floor area, the property use type assigned to each space, and the energy consumption data for each meter.
The Department of Buildings (DOB) draws on the same source for LL97 reporting. ESPM data populates the Building Energy Analysis Manager (BEAM), the portal used to prepare the LL97 compliance report, and the report addresses gross floor area, property use categories, and energy data.
The emissions limit is calculated from those inputs:
Annual Penalty = (Actual Emissions − Emissions Limit) × $268 per tCO₂e
DOB has revised the limits from NYC Building Code occupancy groups to ESPM property types, which DOB states reflect energy consumption patterns in New York City buildings. For 2024 and 2025, owners whose limits became stricter under the revision could use either basis. From 2026, all owners must report using ESPM property types. The property type assigned in ESPM therefore determines the allowance applied to each space.
Error Category 1: Property Use Type Does Not Reflect Current Use
A property use type is assigned when a building is first enrolled in ESPM and remains in place until it is edited. Occupancy changes over time. A retail space may become a restaurant, an office floor may be converted to medical office, or a storage area may be repurposed. The allowance differs by property type, so a recorded type that no longer matches the actual use applies the wrong allowance to that area.
The following illustration uses hypothetical allowance values, which are not DOB figures, to show the mechanics.
| Item | Hypothetical value |
|---|---|
| Area recorded under an outdated property type | 20,000 sq ft |
| Allowance for the recorded type | 0.0080 tCO₂e per sq ft |
| Allowance for the actual type | 0.0060 tCO₂e per sq ft |
| Difference in emissions limit | 40 tCO₂e |
| Difference in annual penalty at $268 per tCO₂e | $10,720 |
The direction of the effect depends on which allowance is higher. Where the recorded type carries the lower allowance, the limit is understated and the penalty overstated. Where it carries the higher allowance, the limit is overstated, which is still an inaccuracy in the filing that an owner has reason to correct.
Correcting a property use type is a records reconciliation. It can change the emissions limit without any change to building systems.
Error Category 2: Gross Floor Area Is Not Reconciled
A building's gross floor area can appear differently in Department of Finance records, in the ESPM record, and in architectural drawings. Differences arise from the treatment of below-grade space and mechanical penthouses, from inconsistent conversion between gross and rentable area, and from values entered at enrollment that were never updated.
Because the emissions limit is proportional to area, a discrepancy in area changes the limit directly. Using a hypothetical allowance of 0.0075 tCO₂e per square foot, an 8,000 square foot discrepancy changes the limit by 60 tCO₂e, which is $16,080 per year at the $268 rate. The figures are illustrative, and the effect is proportional at any allowance value.
Owners should identify which area basis the filing uses, confirm that it is consistent across the three sources above, and document the reason for any difference.
Error Category 3: Estimated Consumption Is Not Replaced
ESPM allows energy entries to be marked as estimated, and it reports an Estimated Data Flag for each meter type. The Data Quality Checker within ESPM screens a record for incomplete or out-of-range data. Estimated entries arise for ordinary reasons, such as a submeter that was offline for a billing period, a change of utility account, or tenant consumption data that was not available to the filer.
Where an estimated entry remains in the record after actual data becomes available, the reported consumption, and therefore the calculated emissions, reflects the estimate. The direction and magnitude of the error depend on the estimate. Replacing estimated entries with actual utility data removes that source of uncertainty from the emissions total.
None of these three categories requires a change in energy use. Each can change a penalty calculation on its own.
Recommended Review Procedure
A review of the benchmarking record before a penalty is accepted, or before capital measures are evaluated, typically includes the following steps.
- Reconcile gross floor area across Department of Finance records, the ESPM record, and the LL97 filing, and record the basis used.
- Confirm the property use type of each space against current occupancy, as opposed to occupancy at the time of enrollment.
- Review the Estimated Data Flag for each meter in the ESPM Data Quality Checker, and replace estimated periods with actual data where it is available.
- Compare the record with the building's entry on the DOB Covered Buildings List, and confirm that the classification and status are consistent with the filing.
- Retain documentation of the source and basis for each reported value.
Verify the record before evaluating capital measures. A records review is a lower-cost step than an equipment upgrade, and it establishes whether a projected penalty reflects the building's actual performance.
Related Filing Obligations
The corrections described above concern the accuracy of a filing that has been made. They are distinct from the penalty for failing to file. Under LL84, DOB may assess a penalty of $500 for each quarter in which a required benchmarking report has not been submitted, up to $2,000 per year. That penalty is separate from, and in addition to, any LL97 emissions penalty.
The two obligations are connected in practice. A benchmarking record that is submitted on time but contains the errors described in this article can produce an emissions penalty that a timely, accurate record would not. Owners are best served by treating the submission deadline and the accuracy of the submitted data as parallel responsibilities.
Relationship to Penalty Planning
The accuracy of the underlying record affects every later estimate, including projections for the 2030 compliance period and any allocation of costs among occupants. For background on how the penalty is calculated, see How NYC's Local Law 97 Fines Work. For buildings with multiple occupants, see how penalty costs are allocated between owners and tenants.
DE Energy Consultants provides technical advisory and consulting services on benchmarking, LL97 compliance, and decarbonization planning. See our services, use the LL97 calculator for a building-level estimate, or contact us to discuss a review of a filing.
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