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Condo-Co-op Helpline: New York City Local Law 97 of 2019

Depending on your perspective, Local Law 97 is either a great leap forward in reducing climate change or another unrealistic piece of legislation set forth by the New York City Council.

Local Law 97, as amended, is intended to reduce carbon emissions in New York City by focusing on larger buildings including residential and commercial buildings of 25,000 square feet or more. Additional provisions are intended to capture mid-rise and garden-type apartment buildings by including buildings on the same lot totaling more than 50,000 square feet and condominiums on multiple lots with common boards. Oddly, there is no mention of cooperative apartment buildings; it appears that the New York City Department of Buildings (DOB) is including “cooperative” apartment buildings in the definition of “condominium.” Specifically, the law is intended to force approximately 50,000 buildings to convert from natural gas, steam and heating oil to electric service within eight years, at a likely overall cost of $16.6 billion to $24.3 billion.

These costs do not consider the engineering and permitting costs, current inflation, the current supply chain issues and the current labor shortage. Additionally, many unit owners will have to incur costly loans to pay the required special assessments. The law penalizes the condominiums and landlords with a fine of $268 per unit per year. These fines will fall heavily on residential buildings, particularly condominiums, including those which have previously spent money to convert from heating oil to natural gas.

In Glen Oaks Village Owners Inc. et al. v. City of New York, et al., three residential buildings and two-unit owners are challenging the law’s constitutionality. There are four basic contentions: 1) The law is preempted by the New York State Climate Leadership and Community Protection Act (CLCPA); 2) The law violates the 14th Amendment of the U.S. Constitution; 3) It violates Article I, Section 6 of the New York State Constitution and 4) It imposes improper taxes in violation of Article IX, Section 2 (c) (ii)(8) of the New York State Constitution and Sections 10(1)(i) and 10(8) of the Municipal Home Rule Law.

In July, the city moved to dismiss the challenge on the following grounds: that CLCPA does not preempt the law; that it is not void for vagueness nor is it applied retroactively and, lastly, Local Law 97, as amended, imposes neither a tax nor excessive penalties. Of these arguments, the most interesting is the issue of the reach of CLCPA.

A simple reading of the text of the CLCPA shows that regulators are directed to consider “localized” impacts of rulemaking and impacts of climate change on local communities. However, the CLCPA appears to intend a statewide and region-wide plan for addressing climate change. The only language that expressly leaves any role for local government is a provision that the CLCPA does not provide relief from “state air and water quality requirements, and other requirements for protecting public health or the environment.” That would appear to be intended to leave certain clean air, clean water and environmental regulations in place, not to allow for New York City to create its own climate program separate from the rest of the state of New York.

Likewise, there is specific language that allows for local governments to enhance labor standards above the minimums set by the state under the CLCPA. There is no similar provision for greenhouse gas emissions nor is there any other similar provision for any other issue.

To counter the remaining attacks, the city relies on a regulatory process for exemptions from the law’s requirements, as well as rulemaking under the statute intended to address the deficiencies identified by the plaintiffs. However, the regulations are not in place and the regulatory system in the City of New York suffers from certain flaws, including a toothless and largely ineffective New York City Administrative Procedure Act.

For condominiums and likely cooperative apartment buildings, Local Law 97, as amended, may be a costly and burdensome program. In one interesting respect, the law’s focus on residential condominiums as a target for penalties and burdens is contrary to the letter and the spirit of the CPCLA, which is intended to ensure relatively equal impacts statewide of climate initiatives. CPCLA does not appear to contemplate specific burdens on landlords of small apartments or small businesses nor condominiums, regardless of size, while Local Law 97, as amended, is geared specifically to burdening this group of property owners and users.

This column presents a general discussion. This column does not provide legal advice. Consult your attorney for specific legal advice.

Carol A. Sigmond
Greenspoon Marder LLP
590 Madison Ave., Suite 1800
New York, NY 10022
carol.sigmond@gmlaw.com
(212)524-5074