LL97 Fines by 2027
NYC's LL97 fines start biting in 2027. Are you prepared?
I recently met with a building engineer at 7am to walk through a 1970s Class B office building in Midtown East. The building's ENERGY STAR score was 42, and the owner was concerned about the potential LL97 fines. As we walked through the building, I explained that the building performance standards set by LL97 would require significant reductions in energy usage.
Understanding LL97 Fines
According to NYC Local Law 97 Article 320, buildings over 25,000 square feet must meet certain emissions limits or face fines. The fine is $268/tCO2e, which can add up quickly. For example, a building with an emissions limit of 4,250 tCO2e and actual emissions of 5,180 tCO2e would face a fine of $249K in 2024. By 2030, the fine would increase to $1.4M annually.
LL97 fines will start impacting NYC building owners in 2027, with fines of $268/tCO2e.
Portfolio Impact
A mid-sized family office, Meridian Equity Partners, recently closed on a 312K RSF Class B office building at 1234 Madison. The building's ENERGY STAR score was 58, and the LL97 emissions limit for the 2024-2029 period was 4,250 tCO2e. However, the actual 2023 emissions were 5,180 tCO2e, resulting in an overage of 930 tCO2e. At $268/tCO2e, the fines for 2024 would be $249K. By the 2030-2034 period, the projected annual fine would be $1.4M.
Some brokers may downplay the impact of LL97 fines, but the numbers are clear. As I've written before, autonomous excavators won't save you from LL97 penalties. The real cost breakdown is in the emissions reductions, not in the technology used to achieve them.
Pushing Back on Bad Advice
I've seen some LinkedIn posts from self-proclaimed sustainability experts claiming that LL97 won't get enforced. However, this is simply not true. The NYC Department of Buildings has already started enforcing LL97, and the fines are real. In fact, the SEC Final Rule on Climate Disclosure requires publicly traded companies to disclose their climate-related risks, including LL97 compliance.
This does NOT mean that hitting the LL97 2024-2029 limit means the asset is set through 2030. The period-2 limit drops roughly 40% in most building types, so if your retrofit plan stops at period-1 compliance, you are designing for a headline that ages in 4 years.
Conclusion
In conclusion, LL97 fines will start impacting NYC building owners in 2027, with significant financial implications. It's essential to understand the mechanics of LL97 and take proactive steps to reduce energy usage and emissions. If you have any questions or concerns about LL97 compliance, don't hesitate to reach out.
Frequently Asked Questions
How much is an LL97 fine?
The fine is $268/tCO2e.
Does LL97 apply to my building?
Yes, if your building is over 25,000 square feet.
When do LL97 period-2 limits start?
LL97 period-2 limits start in 2030.