New York City residents, already grappling with some of the country’s highest housing prices, face extra costs to comply with a law mandating greenhouse gas emission cuts at their buildings.
At Queensview cooperative, residents in the 726-unit housing complex — about half of whom are retirees — fear that their roughly $1,000 maintenance fee will soon double to cover the cost of electrifying their heat and hot water systems over the next five years. “People have very large mortgage payments” and may not be able to handle the added burden, said Alicia Fernandez, treasurer of the co-op.
The bill is starting to come due for many property owners throughout the five boroughs that must make significant capital upgrades to comply with Local Law 97, which requires nearly 50,000 large buildings to cut their emissions starting this year or face fines. The mandate is one of the most ambitious plans in the country to reduce emissions by imposing stricter carbon limits every few years through 2050.
While some of the initial requirements can be achieved through modest measures like insulating pipes, its ultimate aim is to push most buildings to electrify by 2050 — a costly endeavor that many owners will have to start soon to meet the upcoming carbon limits.
So far roughly 10% of properties are out of compliance with the law’s 2024 requirements and could be subject to penalties beginning this year. But some of the steepest mandates kick in in 2030, when most covered buildings must lower emissions by 40%. About 54% of them have yet to meet the 2030 standards, according to city officials.
Condo and co-op residents are raising alarms that they’ll face steep monthly fee increases to absorb the cost of any upgrades deemed necessary by their boards of directors. Landlords could also pass costs onto renters, though the size of rent increases may be limited by various rent control laws.
As financial pressure mounts in a city struggling with an affordable housing crisis, state and local lawmakers representing New York City are taking a new approach: They are pushing for tax breaks to help cover expensive building projects, without touching the law’s framework.
After languishing for more than a year, a bill to reinstitute the J-51 tax break passed the New York City Council and was signed into law by Mayor Eric Adams in December, providing affordable multifamily buildings with a property tax break for major capital improvements. This month, state legislators will renew a fight for a bigger property tax exemption geared toward more properties that make upgrades specifically meant to reduce carbon emissions.
With property taxes providing the largest source of revenue for the city, budget crunchers will only be able to accommodate so many carve-outs. Discussions around the tax breaks have centered on which buildings are in the most need and what kinds of projects should qualify. The J-51 tax break only applies to condos and co-ops with an average assessed value under $45,000 per unit and certain rental buildings that meet affordability standards. The proposed state bill would apply to a larger universe of buildings, but city officials have raised concerns about its cost.
Still, without financial assistance, property managers like Fernandez worry residents won’t be able to stomach the hit, with many already reaching out about their cost-of-living concerns.
“I just got one this morning. A woman’s on maternity leave, and she’s only getting 50% pay, and she was asking: Are we anticipating any maintenance increases in January?” Fernandez said. “Another gentleman just emailed me from another building that he wants to know: Are we doing a maintenance increase? Are we increasing parking? Because his child care is going up to $5,000 a month in January.”
Last year, the city estimated that roughly 15,000 buildings would need to invest between $12 billion and $15 billion to meet the 2030 emissions cap, and that the transition would be “difficult and expensive” for some. Roughly a quarter of properties over the 2030 limit can get the job done with low-difficulty measures to increase energy efficiency. But for at least 40% of buildings over the 2030 threshold, like Queensview, those kinds of upgrades will have to be combined with electrification.
En-Power Group, an engineering firm, recently estimated that electrifying the natural gas-fueled heat, hot water, and stoves at Queensview would cost $62 million, which could boost monthly maintenance fees by $1,155 for a one-bedroom apartment, Fernandez said. It was one of two scenarios provided that could entirely eliminate penalties in 2030. It’s unlikely the buildings could physically support the other, much less expensive, option, she said — adding a heating and cooling system known as variable refrigerant flow to the roof, for between $29 million and $47 million.
Real estate interests have pushed through the years to weaken the law’s requirements, with one coalition of building owners suing to overturn the mandate. The case is ongoing after it was reinstated by a state appeals court in May.
While major reforms aren’t in the city’s interest — elected leaders already are confronting the cost and damaging effects of climate change — officials can’t afford to entirely ignore the financial hardships of property owners. There’s an incentive for some owners to push off construction and instead pay the penalty, Fernandez said.
Buildings that aren’t in compliance face an annual fine of $268 for every metric ton of carbon they emit over the limit. For Queensview, that amounts to about $500,000 in 2030, breaking down to roughly $50 per month for tenants, Fernandez said.
Joe Chavez, a deputy director in the city’s Office of Climate & Environmental Justice, said while there is concern that some may opt for the penalties, he’s skeptical property owners would choose to do so every year for decades.
The building improvements come with energy savings and other perks for residents, many of whom can’t control how hot their radiators get in the winter and thus resort to opening windows, he said. Tax incentives could “tip the scale from just paying penalties to doing the work and realizing all of the benefits that you’re going to get out of this,” he added.
Queensview could benefit from the new version of the J-51 tax break, which has undergone various permutations since it was first created after World War II to rehabilitate vacant apartments. While the break wasn’t initially designed to subsidize sustainability projects, the Adams administration has said the incentive could play a critical role in helping pay for the upgrades in affordable-apartment buildings, and has pushed for its revival.
About 1,000 of the 2,751 co-ops and condos that are currently over the 2030 emissions cap set by Local Law 97 would be eligible for the new J-51 incentive, according to city officials.
The latest version would provide an up to 20-year property tax exemption covering as much as 70% of the renovation costs undertaken by affordable rental, co-op, and condo buildings.
It’s unclear how much Queensview would receive until the city creates rules on the type of work that qualifies for the abatement. But Fernandez said the co-op won $1.8 million over two decades under a prior version of the tax break for a $12 million elevator modernization project.
Property owners have a short window to take advantage of it before it expires in 2026, unless state lawmakers, who control most city taxes, pass legislation allowing the city to extend it.
“In the last four years, we’ve seen significant inflation, and we know that many building owners out there are finding it harder to cover their expenses and to secure the financing,” said Kim Darga, a deputy commissioner in the city’s Department of Housing Preservation & Development. “So this is an essential program at this point in time.”
Groups representing landlords and developers are also putting muscle behind state legislation that would reduce property taxes for work done to cut emissions, with the reductions geared to the level of emission cuts achieved. It would additionally provide a 20-year property tax abatement for any assessment increases that result from making the improvements. Assemblymember Ed Braunstein, the Queens Democrat sponsoring the bill, said he plans to reintroduce the bill for the start of the new legislative session.
It has earned the backing of the Real Estate Board of New York, an influential trade group, and the Council of New York Cooperatives and Condominiums.
But the bill “would be incredibly costly to the city,” Chavez said, adding it would have to be narrowed to target specific types of buildings for the city to support it.
The city is pursuing other kinds of incentives, he said, including advocating for a portion of the planned statewide $5 billion New Efficiency: New York program to help owners of multifamily properties pay for the changes. That funding will be available for five years beginning in 2026. The Adams administration also finalized several rules in December to help building owners comply with the upcoming caps, including allowing owners to meet some requirements by buying emission offsets from a proposed Affordable Housing Reinvestment Fund.
Some property owners remain skeptical these steps are enough to alleviate the costs that Local Law 97 puts on tenants and unit owners. But as the 2030 deadline nears, “any relief is helpful,” Fernandez said.
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