New York City’s Local Law 97 Spurs Conflict Over its Potential Effects

10/23/2024

There’s a debate raging at the intersection of climate change and commerce in New York City, and it’s Local Law 97. 

Haven’t heard of Local Law 97? The legislation, passed in 2019, sets limits for emissions of greenhouse gases from large buildings in the city. The law targets more than 50,000 buildings larger than 25,000 square feet. Building owners and facility managers must take steps such as installing energy-efficient equipment, replacing existing heating and cooling systems, and improving building insulation. 

These buildings must cut their CO2 output by 40 percent by 2030 — and 80 percent by 2050 — or face hefty fines. The first compliance period (2024-29) is underway. 

Buildings are responsible for about 70 percent of the city’s greenhouse gas emissions, which contribute to global warming and unpredictable weather patterns. 

So, hooray for Local Law 97, right? Green is good? Not so fast.  

Yes, it’s a big step toward a more sustainable future, at a time when big steps are needed. But it’s also a heavy lift that shouldn’t be underestimated, according to Michael De Chiara, a native New Yorker and prominent construction lawyer whose firm, Zetlin & De Chiara LLP, focuses on all aspects of construction law and the built environment.  

“Local Law 97 is one of several things New York is doing to make itself less attractive to business and individuals,” De Chiara says. “Will the city respond in a sensitive way, or just say ‘we don’t care’ and push forward an anti-business agenda?” 

De Chiara said the short-term cost of Local Law 97 will be reflected in rents and the cost of doing business — already higher in the wake of the COVID-19 pandemic. The ripple effects, he says, could be felt throughout the city’s economy. 

“This factors into the decision (of businesses) on whether to stay in New York,” De Chiara says. “When the time comes to renew (a lease), the question becomes: Why would you want to stay? If institutions continue to look at alternatives, that’s not good for New York and its tax base. That impacts services and could become a kind of death spiral. 

“We could turn out to be the greenest poor city in the country.” 

The commercial real estate market has been under intense pressure, De Chiara says, adding that Local Law 97 could result in backbreaking costs unless there is some sort of adjustment of its requirements. 

“Will there be political pressure to modify implementation or extend out the mandates?” he asks. “If there isn’t, the impact will be significant and negative. The goals (of Local Law 97) are laudable, but it has to be done in a way that takes economic realities into account. The burden has to be carefully measured and applied.” 

The three biggest industries in New York City are finance, real estate and healthcare, De Chiara says. Some industries that once were essential to the city — oil, for example — have relocated their headquarters to other regions of the country. 

“After 9/11, I was very concerned that many industries would leave New York,” De Chiara says. “New York has lived on a demographic of highly educated and motivated professionals between the ages of 25 and 45. The city was set up to cater to them, and it had no competition in the U.S. 

“That has changed. Now the 30-year-old Harvard or Stanford graduate can go to other cities for work. … I want the city to do well. New York has been resilient. But we’re chipping away at the economic foundations of the city.” 

Doug Carroll is a freelance writer based in Chandler, Arizona.