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What will energy efficiency letter grades mean for NYC buildings?

Legal Developments, NYC, Other, Real Estate Developments, Real Estate Legality

We discussed the “green roof” requirements for New York City buildings in a recent post (November 21), but another change set to take effect next year has the potential to be even more significant, namely letter grades for energy efficiency. Similar to restaurant letter grades based on inspections from the Department of Health familiar to New Yorkers, these energy grades will be based on an EPA tool called Energy Star and displayed prominently by the Department of Buildings. Like the green roof initiative, this effort to classify and regulate NYC buildings is predicated on the reality that 71 percent of greenhouse emissions in the city come from buildings, many of which are old and poorly insulated or use huge amounts of power for heating, cooling, and light very inefficiently. [1]

The letter grades will only be assigned to medium and large buildings, defined as greater than 25,000 square feet. Estimates suggest this will effect more than 40,000 of the city’s one million buildings. If the score is equal to or greater than 85, the building’s grade will be A; if it is equal to or greater than 70 but less than 85, the grade will be B; if it is equal to or greater than 55, but less than 70, the grade will be C; and if it is less than 55, the grade will be D. Owners and landlords who fail to submit energy-use data used to calculate the grade by May 2020 will receive a fine.

The city’s broader goals as part of the Climate Mobilization Act are to reduce emissions by 30 percent—it remains to be seen whether this component of the legislation will advance this goal by increasing public awareness of energy inefficiencies and altering the decisions of building owners and consumers. However, as noted in several publications, buildings will be required to actually meet strict emissions requirements by 2024 or pay steep fines, meaning these grades are only the first chapter of a longer push for emissions reductions. [2]

[1] Ricciulli, V. (November 2019) NYC buildings will soon display letter grades tracking energy efficiency from Curbed NY Accessed December 2 2019

[2] Margolies, J. (November 209) Like Restaurants, Buildings Will Get Grades (D’s for Energy Guzzlers) from NY Times Accessed December 2 2019

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