Purpose and Scope
This article is written for co-op and condominium boards, and for the managing agents who support them. It describes how to take a Local Law 97 (LL97) emissions projection and turn it into a capital plan, a reserve strategy, and, where needed, an assessment schedule that shareholders or unit owners can understand.
It does not address legal questions such as how a penalty is allocated among unit owners under a particular condominium declaration, or the tax treatment of an assessment. Those belong with the board's counsel and accountant.
Why 2030 Is the Planning Year for Multifamily Buildings
Most residential buildings covered by LL97 are classified in the Energy Star Portfolio Manager (ESPM) property type "Multifamily Housing." DOB's LL97 rule, 1 RCNY §103-14, sets the following emissions factors for that property type:
| Compliance period | Multifamily Housing emissions factor (tCO₂e per sq ft) |
|---|---|
| 2024–2029 | 0.00675 |
| 2030–2034 | 0.003346640 |
| 2035–2039 | 0.002692183 |
| 2040–2049 | 0.002052731 |
| 2050 and later | 0.00 |
The factor falls by about half between the first and second compliance periods. At the same time, the coefficient DOB applies to grid electricity also falls, from 0.000288962 tCO₂e per kWh in 2024–2029 to 0.000145 tCO₂e per kWh in 2030–2034. The coefficient for utility natural gas stays at 0.00005311 tCO₂e per kBtu in both periods.
For a building heated with gas or oil, the result is that the limit falls much faster than the building's emissions. Many buildings that meet their 2024 limit will exceed their 2030 limit with no change in how they operate.
An illustration
The following example uses hypothetical figures for a 150,000 square foot multifamily building with gas heat and hot water.
| Item (hypothetical) | 2024–2029 | 2030–2034 |
|---|---|---|
| Grid electricity, 1,500,000 kWh | 433.4 tCO₂e | 217.5 tCO₂e |
| Natural gas, 10,000,000 kBtu | 531.1 tCO₂e | 531.1 tCO₂e |
| Total emissions | 964.5 tCO₂e | 748.6 tCO₂e |
| Emissions limit (150,000 sq ft × factor) | 1,012.5 tCO₂e | 502.0 tCO₂e |
| Over the limit by | None | 246.6 tCO₂e |
| Annual penalty at $268 per tCO₂e | $0 | about $66,090 |
Emissions Limit = Gross Floor Area × Emissions Factor for the Property Type
In this example the building is compliant today and faces a penalty of about $66,000 a year from 2030, or roughly $330,000 over the five years of the second period if nothing changes. That is about $0.44 per square foot per year. The building's actual figures depend on its own floor area, fuel mix, and consumption, and the LL97 calculator gives a first estimate from public benchmarking data.
The four years before 2030 are the board's planning window. Work that will affect 2030 emissions has to be designed, approved, funded, and installed before the first year of the new period begins.
The Inputs a Board Needs
A useful capital plan for LL97 draws on information most buildings already have, in different places.
1. A reviewed benchmarking record
Every projection starts from the building's annual benchmarking record: gross floor area, property use types, and twelve months of energy use by fuel. Errors in that record carry into every number that follows. Our article on benchmarking data errors describes the issues that most often affect the result.
2. The reserve study or capital needs assessment
A reserve study lists major components, their remaining useful life, and their expected replacement cost. For LL97 purposes, the most important entries are the boiler plant, domestic hot water equipment, the electrical service, windows, and the roof. A component that is due for replacement in the next several years is often the lowest-cost point at which to change systems.
3. The most recent energy audit
Buildings over 50,000 gross square feet complete an energy audit and retro-commissioning under Local Law 87 on a ten-year cycle. A recent audit identifies measures, estimates their savings, and describes existing equipment. It is often the most useful single input to an LL97 capital plan.
4. An emissions projection with measures
The projection shows emissions against the limit in each compliance period, first with no changes and then with each candidate measure applied. Our article on what a decarbonization plan contains describes this work in more detail.
Building the Capital Plan
The capital plan combines the projection with the reserve study into a single schedule. In practice it is usually developed as a small number of scenarios that a board can compare.
| Scenario | Description | What the board is weighing |
|---|---|---|
| No action | Pay the annual penalty in each year the building is over | Recurring cost with no asset in return, rising in later periods |
| Phased measures | Controls, distribution upgrades, and envelope work first; system changes later | Lower early cost, with a smaller penalty that may continue for some years |
| Aligned replacement | Time system changes to the end of life of existing equipment | Uses money already planned for replacement; depends on equipment timing |
| Accelerated | Complete the major measures before 2030 | Highest early cost; avoids most second-period penalties |
Each scenario should show, by year, the capital cost of the work, the penalty that would be due, the change in energy costs, and any incentives the building expects to receive with the conditions attached to them. A plan presented this way lets the board compare the total cost of each path over ten or more years rather than the cost of the first project alone.
Two timing points affect every scenario. First, a measure completed partway through a year affects only part of that year's emissions. Second, measures that require an electrical service upgrade depend on utility review and construction schedules that the board does not control. The schedule should allow for both.
Choosing a Funding Mix
Once the board has a preferred scenario, the next step is to decide how to pay for it. Most buildings use some combination of the following:
- Existing reserves. Funds already set aside for equipment replacement can be redirected when a replacement is also an LL97 measure.
- Increases to maintenance or common charges. A gradual increase spreads the cost over time and builds reserves ahead of the work.
- Special assessments. An assessment raises a defined amount for a defined project in a defined period.
- Financing. Co-ops may be able to draw on or refinance an underlying mortgage, and both co-ops and condominiums may have access to other forms of building-level financing. Terms and eligibility vary, and the board's lender and counsel should review any option.
- Incentives. Utility and State programs can reduce the net cost of qualifying measures. Many require an application before equipment is purchased, so incentive timing belongs in the schedule.
The right mix depends on the building's current reserve balance, its existing debt, and the board's view of how shareholders or unit owners will respond to each approach. A plan that combines a modest increase in charges now with a smaller assessment later is often easier to present than a single large assessment shortly before 2030.
Presenting the Plan to Shareholders and Unit Owners
A board's communication about LL97 works best when it is specific and calm. A clear presentation usually covers four points:
- Where the building stands today, including whether it meets its current limit.
- What changes in 2030, with the projected penalty if nothing is done, stated as an annual figure and per share or per unit where useful.
- The plan the board has chosen, with the work, the schedule, and the reasons for the choice.
- The cost to owners, by year, and how it compares with the projected penalty.
Showing the penalty that the plan avoids gives owners a basis for comparison. Showing the full schedule, including later compliance periods, reduces the chance of a second unexpected assessment a few years later.
A useful test for a board presentation: an owner should be able to tell what the building will spend in each of the next several years, what that spending achieves, and what would happen without it.
Administrative Items Boards Should Track
Two administrative points affect every covered building and are worth placing on the board's annual calendar.
The annual report. The LL97 building emissions report for each calendar year is due to DOB by May 1 of the following year. Under DOB's rule, a building that does not file within 60 days of the deadline, or by an approved extension date, is liable for a penalty equal to its gross floor area multiplied by $0.50 for each month the report is not submitted, within the 12 months following May 1. For a 150,000 square foot building, that is $75,000 for each month. The cost of preparing the report each year belongs in the operating budget.
Condominium filings. DOB's rule requires that a covered building held in condominium form file a single report covering all units, submitted by the board of managers. Condominium boards should confirm that the report includes the energy data for every unit, and that the managing agent has a process to collect it.
How the Work Is Organized
An LL97 capital plan draws on several parties. The managing agent maintains the building's records and budget. The reserve study preparer and the building's engineers provide equipment condition and replacement costs. Contractors provide pricing. Counsel and the building's accountant advise on financing, assessments, and allocation. Where DOB requires a report or a plan to be certified, the certification is made by a registered design professional.
DE Energy Consultants provides technical advisory and consulting services to co-op and condominium boards. We prepare emissions projections and scenario analyses, combine them with the building's reserve study into a capital plan, and prepare material the board can present to owners. We work alongside the managing agent, the building's engineers, and its other advisors.
Next Steps
For a first estimate of a building's position in each compliance period, use the LL97 calculator. For background on the penalty calculation, see How NYC's Local Law 97 Fines Work.
To discuss a projection or capital plan for your building, see our services or contact us.
Planning for 2030 as a Board?
We prepare LL97 projections and capital plans for co-op and condominium boards, working alongside the managing agent and the building's engineers. Initial consultations are free.