[REN #730] New Rules for “Dirty” Buildings in NYC and LA

Picture of skyscrapers in NYC for Real Estate News for Investors Podcast Episode #730

New York City is taking drastic action to reduce greenhouse gas emissions by the city’s biggest polluters, and the culprits are not cars. City officials passed a landmark package of bills to reduce the city’s carbon footprint, and the centerpiece is a mandate for older, glass and steel skyscrapers. They are considered “incredibly inefficient” because so much of the heating and cooling escapes through the glass. This new law aims to change that with rigid new guidelines and retrofit requirements.

Mayor Bill de Blasio announced the city’s Green New Deal on April 22nd, which was Earth Day. The legislation is officially called the New York Climate Mobilization Act, and consists of several bills, but the one that’s grabbing most of the headlines is the one that will impact the city’s tallest buildings.

New York’s Green New Deal

The new law sets emission caps for buildings larger than 25,000 square feet. According to NPR, about 50,000 so-called “dirty” buildings will be forced to meet ambitious emission caps that align with caps in the Paris Agreement. (1) The city mandate will require a 40% emissions cut by 2030 and 80% by 2050. The estimated price tag for all those changes is $4 billion. Ignoring the rules will also be expensive. Violators could face fines of $1 million or more per year.

De Blasio told NPR, “These are very intense goals.” He also believes they are reachable, and necessary. The mayor and other city officials cite Superstorm Sandy in 2012 as an example. It killed 233 people and caused immense amounts of damage in 24 states. New York City was hit by a storm surge that caused massive flooding and power outages. U.S. damage added up to about $65 billion.

According to Wikipedia, Hurricane Sandy was headed away from the East Coast, but hit a kink in the jet stream that forced it to double back toward land. Scientists say, warmer temperatures that are melting the Arctic ice are responsible for that jet stream abnormality. They also say that higher sea levels along the New York and New Jersey coast helped intensify the storm surge.

Existential Threat to the City

While the retrofits will be expensive, council members who passed the legislation believe the increasing severity of coastal storms is an existential threat to the city. City Council speaker, Corey Johnson, said at the time they voted, “You can’t put a price tag on life on Earth.” NPR also cited an environmentalist outside the chamber who commented, “If your house is on fire, you don’t ask how much the windows cost when they kick them in.”

Members of the Real Estate Board of New York say they support the goals of the legislation but they don’t support the specific mandate, mostly because it’s very aggressive and expensive. New York’s sustainability director, Mark Chambers, told the New York Times that building owners will eventually recover the costs of the retrofits from lower operating expenses. (2)

Some building owners don’t believe the goals are attainable, however. One apartment building owner told the Times that he’s already paid thousands of dollars for energy efficient upgrades like computerized boiler controls, and he’s still very far from the goals put forth in the new law. Ed Ermler says, “To get to even 20 percent from where I am today, with the technology that exists, there’s nothing more that I can do.”

There’s also concern that too many buildings were exempted from the rules, which will place a heavier burden on those that remain to meet the city’s requirements. Among those exempted are hospitals, places of worship, and some rent-controlled apartment buildings.

Some businesses also use more energy than others because of the nature of their operations. Critics say the law could lead to discriminatory rental policies by landlords worried about paying fines if their tenants use too much energy. The Times reports, the city plans to create a new agency with the power to grant waivers for tenants with high energy requirements.

The city believes that drastic measures are needed because these older, glass skyscrapers are sooo inefficient. City officials say these skyscrapers account for half of all building emissions and they only comprise two percent of the city’s square footage. City Council Speaker Johnson tweeted in response to the measure’s passage, “We are on the precipice of climate disaster, and New York City is acting. I hope other cities follow suit.”

Los Angeles’ Green New Deal

Just a few days after New York’s announcement, Los Angeles also unveiled new clean energy goals. Mayor Eric Garcetti is calling for aggressive action now, to reduce smog, and energy use by businesses and residents. He says, it’s L.A.’s version of the Green New Deal.

On the transportation side, Garcetti hopes to increase the percentage of electric or zero emission cars to 25% by 2025, 80% by 2035 and 100% by 2050. Right now, only 1.4% of all L.A. vehicles are electric. He also wants to implement congestion pricing, reduce commute distances, and greatly expand public transit.

For buildings, the plan calls for a net zero footprint for all new construction by 2030, and retrofits that meet that goal for all existing buildings by 2050. That’s not just for tall buildings. That’s for all structures, including homes.

The L.A. Times reports, the city’s chief sustainability officer, Faber O’Connor, doesn’t think it will be a monumental task. (3) She says, building codes will be changed, and property owners will get rebates for energy efficient upgrades which would include the swapping of gas appliances for electric. And yes, that would apply to the cherished gas stoves that many chefs like to cook with.

Swapping Gas Stoves for Electric

The L.A. Times says, SoCalGas is pushing back against this idea and suggesting some sort of natural gas replacement that’s renewable, with the use of hydrogen at some point down the road. But it appears, from the article, that the use of electric appliances is gaining a lot of support as a hedge against climate change. The article says, “A study released… by the consulting firm Energy and Environmental Economics found that newly built all-electric homes in California can save residents $130 to $540 per year, and that the vast majority of single-family homes with gas furnaces and air conditioners would save money by replacing those systems with electric heat pumps.”

So there you have it. L.A. homeowners may be required to swap out their gas-powered appliances including stoves, washers, dishwashers, and systems for heating and cooling. It’s something to keep in mind as you think about future home improvement projects.


(1) NPR Report

(2) New York’s Green New Deal: NYT Article

(3) LA Green New Deal: LA Times


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