The Developer's Guide to GreeNYC, Part II

This article is the second in a series discussing sustainability measures in the NYC construction codes. For more information, check out Part I here.

Starting in 2009, with the ‘Greener Greater Buildings Plan’, NYC has pushed to the head of the pack when it comes to the sustainability agenda.  By laying the foundation, requiring buildings to audit and benchmark their energy consumption, the Bloomberg administration set in motion the decade long process that culminated in 2019 with the passage of the Climate Mobilization Act (CMA), also known as #GreenNewDeal4NY.

Claiming to be “the largest climate solution put forth by any city in the world”, the CMA aims for “40x30” (40% reduction in greenhouse gas emissions from buildings by 2030) and “80x50” (80% reduction by 2050). It imposes severe fines for buildings that do not comply with proscribed emissions caps, which includes 75% of all the building in the City, and requires all new buildings to provide “sustainable roofs” (see below more on exactly what that means).

While the legislation leaves many details up to ‘rulemaking’ under the jurisdiction of the 16- member Climate Advisory Board, the first compliance hurdle in 2024 leaves little open for interpretation. As a good first step, check the City’s benchmarking map (switch to GHG at the top) and compare your property to the limits listed in the image at the right. With about 4 years left until the first compliance report comes due in May 2025, owners still have time to get ahead of the curve and include this in their larger capital planning process.

We hope that the information here not only encourages you to take action, but actually sparks your curiosity to become more educated on the greatest regulatory shift of our generation.

Carbon Emissions

As the backbone of the CMA, Local Law 97 places carbon caps on most buildings larger than 25,000 square feet—roughly 50,000 residential and commercial properties across NYC. Without getting too deep into the science, this refers to ‘greenhouse gas’ emissions, and ties into the larger push towards de-carbonization in the energy sector. The City, which has benchmarked these stats since 2009, uses CO2e as the measuring stick and fines start at $268 per metric ton for buildings that exceed the cap. Because office buildings in NYC run massive HVAC and lighting systems for upwards of 16 hours/day, the legislation singles them out as the primary targets, and the 2030 cap holds them to almost the same standard as multi-family properties.

In many cases, replacing oil-burning heating systems with natural gas (or even better, going all electric), and installing high-efficiency LED lighting can drastically improve your building’s performance, and a qualified MEP engineer can help you down that path. Depending on the exterior condition of your building, window replacements or even all-out fa?ade recladding can help get you over the hump.

Given the recent news of Gov. Cuomo’s office-to-residential conversion plan, the possibility of changing your commercial building’s occupancy may allow owners to relieve some of the pressure. Because apartments use heating, cooling, and artificial lighting on a space-by-space (as opposed to floor-by-floor) basis, and have many fewer people in the building, they inherently produce less carbon than office buildings. And if the Governor’s plan includes large affordable housing set asides, then owners could side-step the law altogether by providing 35% rent-regulated units.

If you still have some ‘carbon’ leftover, the law also introduces a carbon trading system (I think you can find that desk somewhere on the floor near Bitcoin), although the mechanics have yet to get totally worked-out. A unique provision allows owners to prorate their emissions over their entire portfolio, ‘trading off’ carbon between assets.

As a best practice, I recommend owners to have a basic carbon audit performed on their portfolio so they can have the data available to do this analysis. For those who would like to take it a step further, a detailed Building Information Model (BIM) can serve as both a database of all the building components and a digital twin to run energy models (refer to the previous article in the series for some of the ROI benefits of energy modeling).

And at the end of the day, some owners may just choose to swallow the fines as another cost of doing business in the most expensive market in the world.

Sustainable Roofs

In addition to carbon emissions limits, the CMA also includes provisions for sustainable roofs, codified in Local Laws 92 and 94. Amending the Building Code to include a new concept, the “sustainable roofing zone”. Owners must either provide a solar array that produces 4kW+ of capacity or a vegetative green roof on 100% of low-slope roof surfaces not used for zoning/code setbacks, mechanical equipment, recreational terraces, and a few other exceptions.

Promoting solar energy ties into the larger goal of the CMA by supplementing the utility grid with renewable electric energy resources, encouraging the switch to electric heating/cooling, and reducing the broader reliance on fossil fuels. They can also add a distinctive design touch to the top of the building and double as shade canopy over terraced spaces. PV arrays qualify under the Zoning Resolution as a ‘permitted obstruction’ which can exceed the maximum building height, so you do not have to shave your design down to incorporate them.

But before you go slap on another piece of equipment to your building, make sure you check out some of the coordination issues below:

First of all, make sure your building actually gets sunlight. While you eventually have to do more sophisticated analysis, you can quickly check by looking at neighbors. In the northern hemisphere the sun always travels in the southern half of the sky, so if your southern neighbors are taller than you, or you have significant tree coverage, then solar does not make a lot of sense. Also, depending on the orientation of your building, the arrangement may not work even if you have southern exposure (this map can come handy to check that out, just look for RED).

If you think you actually have solar potential, you need to look at the structure, because those panels can get pretty heavy, and loads have to carry down to the foundations.

At the end of the day, if solar doesn’t light your fire, then you can consider a vegetated green roof, which has the added benefit of super-insulating your building. Given the relatively large surface area that roofs occupy across the building envelope, installing a green roof can reduce the amount of insulation required on the exterior walls and allow for more glass on the fa?ade. It also serves as a unique amenity space, and for the entrepreneurial, a potential cash flow stream for organic vegetables (ok, just kidding).

Just as with solar, the design team must give special attention to green roof installations. While I'd love to tell you that green roofs are as easy laying down some AstroTurf, they actually significantly complicate roof design.

In the good old days, we designed roofs to efficiently REMOVE water from the top of your building, but in the 21st century, we've flipped that concept on its head. Vegetation requires water, and when that vegetation lives on your roof, so does the water. We now design these roofs to RETAIN water, or at least to slowly discharge it. All that extra water can freeze, get heavy, and imposes additional loads on the structure. Properly detailing the waterproofing and roof drain tie-in has become one of the most important tasks in working drawings, and you have to keep a close eye on the install.

PACE Financing

OK, so ready to save the planet? Sounds a bit expensive!

Fortunately, the CMA framers also included a mechanism to assist in financing all the green upgrades they have required. Otherwise known as Property Assessed Clean Energy, the PACE program provides up to 100% financing with 30-year terms for qualifying energy efficiency and renewable energy projects. PACE gets underwritten as an assessment based on the projected savings of your upgrades and gets paid as an add-on to your property tax bill.

Intended to take the place of mezzanine debt, interest rates can run as low as 5-6%. It’s non-recourse, so the cost stays connected with the property through full term, and it gets passed on to the new owner though a sale and potentially to commercial tenants through their lease. With the first LL97 milestone coming in 2024 building owners reaching their next 5-year refi should keep this program in mind.

Since you’ve made it this far, you’ve surely decided to build a sophisticated energy model of your entire portfolio and all your new development projects, which serves you well when it comes to obtaining your PACE financing. Contact your lender for specific requirements, but the NYC law requires projects funded by PACE to achieve an energy savings compared to the baseline required by the Energy Code (remember, the most stringent one in the country?), which a detailed model can tease out.

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