It is understandable that co-op and condo board members may view the new comprehensive climate legislation passed by New York City and New York State with a mixture of disbelief, hostility, and helplessness. However, their lawyers do not have that luxury

In May, New York City enacted Local Law 97 of 2019, the Climate Mobilization Act (CMA), and at the end of the June legislative session, New York State passed the Climate Leadership and Community Protection Act (CLCPA).

As has been reported, the CMA sets emissions caps on buildings larger than 25,000 square feet beginning in 2024, with the goal of reducing their collective carbon emissions by more than 80% by 2050; the CLCPA calls for 85% reductions by 2050. Of the approximately 50,000 properties in New York City currently affected by these laws, over 70% will need to reduce their emissions significantly by 2030 in order to avoid heavy penalties for noncompliance that can potentially exceed $1 million per year.

Co-op and condo lawyers are going to face difficult legal questions about this legislation right from the beginning. At the outset, the new emissions legislation will need to be analyzed in light of other new statutory developments affecting building owners, such as the Housing Stability and Tenant Protection Act and the gas line inspections mandated by Local Law 152. Counsel will need to advise their co-op and condo clients on problems ranging from compelling commercial tenants with existing long term leases to engage in emissions reductions, to negotiating contracts with engineering consultants or energy supply companies, to working around restrictions on capital financing in a building's existing mortgage or governing documents. On top of that, the emissions requirements themselves will evolve as the city issues implementing regulations and new standards under the CLCPA are developed.

More fundamentally, lawyers are fiduciaries, and they have an obligation to help their clients avoid a nightmare scenario whereby a building fritters away the next few years, finds itself seeking a building permit behind 37,000 other properties, using unproven or incompetent professionals because its preferred choices were fully booked long ago, and incurs million dollar fines year upon year. With sufficient planning, however, there is no reason why any building should face this worst case.

Co-op and condo counsel are uniquely positioned to assist boards in facing the new legislation in an intelligent way. First of all, lawyers have a level of credibility that give them the chance to raise consciousness of these issues on the board and get clients thinking about the problems constructively. Lawyers can leverage their experience to help boards identify and retain the qualified engineers, architects, and consultants that the building will need.

Lawyers can also assist boards in identifying existing resources available to them. For example, labor unions have been training their superintendents and maintenance workers on green energy projects. Many of the city's management companies have been working on these issues for years and have developed considerable expertise on the problems, at least at the executive level.

In addition, lawyers can suggest that boards recruit new members who have the knowledge and enthusiasm necessary to tackle these projects—after all, those engineers, architects, and consultants live somewhere, and some of them probably live in your clients' buildings. These same individuals may be best able to communicate with the other residents in the building about what needs to be done.

Because lawyers are not involved in the day-to-day management of the building, they can keep an eye on the big picture in a way that superintendents or property managers or board members are not always able to do. Although counsel should not be dictating whether a building should install this particular solar roof or invest in that particular boiler upgrade, a lawyer who brings value will be conversant enough with these systems to discuss them with their clients and help ensure that decisions are made in a timely and strategic manner.

The most important advice that lawyers can give their clients facing the new emissions legislation is to make the effort to figure out their end goal at the beginning, so that in the interim the boards make decisions that advance towards, and do not undermine, their end goal.

Lawyers can help boards identify and secure sufficient funding for capital improvements, even for buildings with low cash reserves or existing mortgages. For example, the CMA establishes a PACE financing program designed to provide capital with little or no money required up front. The New York State Energy Research and Development Authority (NYSERDA) offers financial incentives for some energy upgrades, including for solar and cogeneration installations. Con Ed and the other utilities offer similar incentives to their customers.

Tax incentives are also available at the city, state, and federal levels, and capital improvement loans can be sought from governmental (or quasi-governmental) bodies such as the New York City Energy Efficiency Corporation (NYCEEC), the New York City Department of Housing Preservation and Development (HPD), or New York State's Green Bank.

There is also a burgeoning industry of private energy supply companies (ESCOs) offering comprehensive, performance-based programs whereby building owners are promised energy and cost savings over time, though it remains to be seen whether these types of energy service agreements will be a good fit for New York City co-ops and condos.

While the alphabet soup of financing possibilities can be daunting, lawyers can remind their clients that the aim is very simple: to find a sufficient amount of the cheapest money available to complete projects that will assure emissions compliance.

Lawyers can also help their clients not be paralyzed by the larger strategic issues, because there are many simple first steps that buildings can and should take right away. For example, buildings should make an inventory of their physical plant, starting with the makes and models of all key equipment such as boilers, burners, elevator motors, elevator controls, house water pumps and water pump motors, and determine the number of years left on their roof warranty. This way, they can begin developing a timeline to upgrade their systems in the ordinary course.

There is a wealth of low hanging fruit that buildings can pick, from installing LED lighting to sub-metering electricity, both of which are relatively low cost improvements that can provide potentially dramatic energy cost savings. Boards should also review their annual benchmarking reports for information about how their building uses energy, which will help suggest possibilities for energy upgrades or retrofits.

Given sufficient, time, money, and attention, almost any co-op or condo building will be able to reduce its emissions to meet the 2024 and 2030 targets. But in addition to achieving emission reductions through retrofits, the CMA also provides that building owners can also purchase carbon offsets (up to 10% of the building's annual emissions limit), or purchase unlimited renewable energy credits (subject to certain restrictions).

For buildings that still cannot meet their emissions targets, whether because of lack of funds or physical or legal limitations in the buildings themselves, there is a hardship process written into the CMA that can be used to postpone the compliance deadlines. Lawyers are well advised to study these procedures closely because at least some of their buildings will probably need to rely on them.

The final bit of good news is that all of these mandatory building improvements should eventually provide tremendous cost savings, and if all goes well, help save the planet. Once boards overcome their initial shock, they will see that there are as many opportunities as there are challenges for coops and condos arising from the new emissions laws. Those same challenges and opportunities are awaiting their lawyers.

William D. McCracken is a partner at Ganfer Shore Leeds & Zauderer. He can be reached at [email protected]. Chris McGinnis, board member at the 2 Charlton St. Co-op, assisted in the preparation of this article.