Real Estate Weekly
March 28, 2012
By Andrew Giglio, Benchmarking Specialist, CPC
Since unveiling his Greener, Greater Buildings Plan on Earth Day 2009, New York City Mayor Michael Bloomberg has been hailed for creating an innovative blueprint for groundbreaking sustainability.
The core of the plan concentrates on a thorough set of efficiency laws, such as Local Law 84 (LL84) & Local Law 87 (LL87), created to boost the quality of life for New Yorkers by making the Big Apple greener.
Major objectives include lowering airborne emissions by almost five percent, yearly reducing citywide energy costs to $700 million by 2030 and creating roughly 17,800 construction-related jobs over the next 10 years.
Industry organizations, such as The Community Preservation Corporation (CPC), a non-profit affordable housing lender that finances residential multifamily development throughout NY, support Mayor Bloomberg's efficiency initiatives and implemented proprietary benchmarking products and services to compliment the program and help multifamily building owners comply with the City and navigate these new waters.
Last November, Mayor Bloomberg released the "Energy Benchmarking Report," which noted that 75 percent of the City’s building portfolio that were required to had been benchmarked under LL84.
CPC has worked with scores of building owners and managers to benchmark their buildings and implement the requirements of the plan.
Though the City has worked to steadily communicate with building owners about components of Greener, Greater Buildings Plan, some owners did not benchmark last year and, with less than two months until the May 1, 2012 deadline, have not begun the benchmarking process.
Why Haven't All Owners Complied?
In my experience, I have come across two consistent reasons. Most owners who have not benchmarked remain unaware of the new laws.
They receive mail from the City about the program and throw it out, not realizing its importance.
Others are unfamiliar with benchmarking or overwhelmed by what they believe will be a time-consuming process.
Here's the reality: benchmarking is not time-consuming if it is done properly. In fact, once the building owners fully understand that particulars of the Greater Green Buildings Plan, making NYC buildings compliant by 2030 should not be intimidating.
Tying it Together – What Are The Laws & Who is Impacted?
LL84 requires all owners and managers for buildings over 50,000 square feet to annually report their building’s energy and water usage to the City each year for the next 10 years. The first benchmarking report was due to the City on August 1, 2011 and the yearly deadline moving forward is May 1st. Owners who do not comply are subject to a $500 fine per building for each quarter they do not benchmark energy usage. Each violation carries a penalty.
LL87 requires owners and managers of buildings larger than 50,000 square feet to complete an energy audit by end of 2013. Energy audits identify individual building energy inefficiencies and provide suggestions to improve overall sustainability in areas such as heating, hot water, electricity and water.
What are "Dirty Oils?"
Under the City's Clean Heat Campaign, there are plans to phase out the use of "dirty" building heating oils, specifically No. 6 oil by 2015 and No. 4 oil by 2030.
The purpose is for all buildings to ultimately switch to cleaner fuels like natural gas and low-sulfur No. 2 oil through phasing and varied incentives.
The replacement of large ineffective units with enhanced and smaller ones provides much greater energy efficiency and overall savings.
A Building's Healthy Bottom Line Links to Energy Efficiency
Benchmarking gives owners a crucial opportunity to analyze their bills, which surprisingly, is not always done.
By analyzing this data, owners get important information which details how their buildings compare to similar buildings in energy and water usage, and how they can start to recognize operational savings.
Once introduced to sustainable alternatives, many owners noted that their energy bills were reduced by up to 20 percent.
Building a Sustainable City: How it Ties Together
Though the City's vision calls for total implementation by 2030, it may be cost effective for building owners to consider complying with not only LL84 but also LL87 and phasing out dirty oils, particularly if they are considering refinancing their building's debt.
While refinancing, borrowers can simultaneously borrow supplementary funds to cover the cost of future energy retrofit requirements. Especially now, developers should critically assess benchmarking services and green lending programs.
It is crucial to find a reputable organization, like CPC, that can provide green financing while educating developers about these new laws and available Federal, State and City Tax incentives.
The City's new comprehensive and mandatory campaign to create a greener New York is an important call to action for not only building owners, but all New Yorkers and their future generations to get our consumption under control.