Local Law 97 is one of the most ambitious climate laws enacted by a major city in the world. Passed in 2019 as part of New York City’s Climate Mobilization Act, the law places greenhouse gas emissions limits on most buildings over 25,000 square feet. Its goal is straightforward but far-reaching: reduce emissions from the built environment, which accounts for roughly two-thirds of the city’s total carbon output.
While the law is rooted in environmental policy, its implications stretch far beyond sustainability. It touches on operations, capital planning, compliance, and financial management. Understanding Local Law 97 means understanding how building performance and environmental responsibility are now intertwined.
The Origins and Goals of Local Law 97
The foundation of Local Law 97 lies in New York City’s broader strategy to become carbon neutral by 2050. In 2019, the City Council passed the Climate Mobilization Act, a package of legislation aimed at making buildings more energy-efficient. Local Law 97 became the centerpiece of that effort.
The law’s intent is to push buildings—particularly large residential and commercial properties—to reduce their carbon footprints. To achieve this, it imposes annual emissions limits beginning in 2024 and tightening significantly by 2030. Buildings that exceed their limits face substantial fines.
By 2030, Local Law 97 aims to reduce emissions from covered buildings by 40 percent compared to 2005 levels. The long-term goal is an 80 percent reduction by 2050.
Who Is Covered by Local Law 97?
The law applies to most buildings in New York City that are larger than 25,000 square feet. It also covers groups of buildings on the same tax lot or operated as a single condominium if their combined floor area exceeds 50,000 square feet.
Certain buildings are exempt from emissions limits, such as houses of worship, city-owned properties, and certain income-restricted housing. However, many of these properties still have alternative reporting or benchmarking requirements.
The Timeline of Compliance
The implementation of Local Law 97 is structured around two key compliance periods. The first begins in 2024 and runs through 2029. During this initial period, emissions caps are relatively lenient. The goal here is to encourage early action and establish momentum.
The second period, beginning in 2030, brings significantly stricter caps. Buildings that have not started making energy efficiency upgrades by this point may find compliance more difficult and expensive.
In both compliance periods, property owners must submit annual emissions reports certified by a registered design professional. The first report is due in May 2025 and will cover emissions from the 2024 calendar year.
How Emissions Are Calculated
Under Local Law 97, emissions are calculated based on a building’s energy usage. This includes electricity, natural gas, fuel oil, district steam, and other sources. Each energy type is assigned a specific emissions factor, which translates usage into carbon dioxide equivalent emissions.
The formula considers the total square footage and the primary use of the building. For example, a commercial office building and a multifamily residential building will have different emissions limits based on their occupancy classifications.
This methodology allows the law to take a tailored approach rather than a one-size-fits-all threshold. However, it also requires building owners to have a clear understanding of their energy profiles and systems.
Penalties for Non-Compliance
Buildings that exceed their emissions limits will face significant financial penalties. The fine is calculated at a rate of $268 per metric ton of carbon dioxide equivalent over the building’s allowable limit.
For many properties, particularly those in the second compliance period, this could translate into hundreds of thousands of dollars in fines annually if steps are not taken to improve efficiency.
In addition to emissions penalties, there are also fines for failing to file reports on time or submitting inaccurate data. These administrative violations, while smaller in scale, can still add up quickly.
Options for Achieving Compliance
There are several strategies buildings can pursue to comply with Local Law 97, depending on their baseline emissions and building systems.
Energy efficiency retrofits are often the first and most impactful approach. These can include upgrades to HVAC systems, insulation, lighting, and building controls. Reducing energy waste directly lowers emissions and can lead to long-term cost savings.
Switching to cleaner energy sources is another avenue. This might involve electrifying building systems, sourcing renewable electricity, or installing onsite renewable generation like solar panels.
Operational changes, such as tuning up building systems, monitoring equipment performance, and improving tenant behavior, can also play a role. Even relatively small adjustments can create measurable improvements.
In some cases, buildings may apply for adjustments or special considerations, such as those facing physical or financial hardship, landmark restrictions, or technical constraints. However, these pathways involve complex applications and are not guaranteed.
Preparing for the Future
While 2024 is the start date for enforcement, the timeline for preparation is already well underway. Building owners and managers are expected to have a plan in place now to assess risk, prioritize projects, and allocate resources.
Energy audits and benchmarking should already be happening. These processes help identify which systems are consuming the most energy and where the biggest gains can be made.
Capital planning is especially critical. Many of the upgrades needed for compliance are not minor tweaks but significant infrastructure improvements. That means budgeting, sourcing contractors, and often navigating DOB filings or incentives.
Compliance with Local Law 97 is not a one-time task. It requires an ongoing commitment to performance monitoring, reporting, and adaptation as the requirements become stricter.
Local Law 97 and the Broader Regulatory Environment
Local Law 97 does not exist in isolation. It works in tandem with other local regulations and incentives aimed at improving building performance and reducing emissions.
For example, Local Law 84 requires benchmarking of energy and water use for large buildings, while Local Law 87 mandates periodic energy audits and retro-commissioning. These laws create a framework of data and insight that supports compliance with Local Law 97.
At the state level, the Climate Leadership and Community Protection Act aligns with New York City’s goals, creating additional momentum for decarbonization. Federal incentives under the Inflation Reduction Act may also support buildings looking to invest in clean energy or efficiency.
The Financial Impact of Compliance
There is no question that compliance with Local Law 97 can require significant investment. However, failing to comply can be more expensive in the long run, both in fines and in decreased asset value.
Buildings that do not meet emissions targets may become less attractive to tenants, lenders, and buyers. In contrast, properties that invest early in sustainability may benefit from reduced operating costs, better tenant retention, and access to green financing.
Financial planning should incorporate not just the cost of upgrades but also the long-term return on investment. In some cases, energy savings can cover the cost of improvements within a few years. Incentives, rebates, and tax credits can further improve the economics.
Looking Ahead
Local Law 97 marks a turning point in how New York City approaches building management and environmental responsibility. The law establishes clear expectations, hard deadlines, and meaningful consequences for inaction.
Its message is unambiguous: the era of voluntary sustainability is over. The path forward requires proactive planning, informed decision-making, and a willingness to adapt.
Success under Local Law 97 is not just about checking boxes. It is about building resilience, protecting asset value, and embracing a future where efficiency is not just a regulatory requirement but a competitive advantage.
Partner with Experts Who Understand Local Law 97 Compliance
Complying with Local Law 97 is about more than avoiding fines. It is a key part of protecting your property’s long-term value, improving operational efficiency, and staying ahead of city requirements. MD Squared Property Group offers the experience, oversight, and strategic planning needed to guide your building through every stage of compliance. From energy assessments to capital improvements and reporting, we deliver clear, customized solutions that meet the unique demands of your property.
Contact MD Squared Property Group to start building your compliance strategy today.
