Local Law 97: What You Need to Know about the Compliance Pathways

By Amanda Clevinger, Policy & Programs Manager
August 16, 2023
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Local Law 97 goes into effect in less than a year, but confusion and questions remain as building owners prepare for compliance. New York City is only the second jurisdiction in the country to begin implementing a law like this, and the city agencies are working hard to finalize many of the remaining details.

Much of the complexity centers around the law’s various compliance pathways. Certain building types including affordable multifamily, some market rate multifamily, and houses of worship, have different requirements or “pathways” for compliance than commercial buildings do. The pathway assigned to your building can significantly affect the deadlines and costs associated with your compliance requirements, thus, determining the appropriate pathway is a key step in LL 97 planning.

We’ll tell you what you need to know about the LL 97 Pathways and other common questions we’ve fielded from our clients.

What are the different pathways?

Standard Pathway

The Standard Pathway is what we generally think of with LL 97, this pathway assigns a carbon emissions limit to individual properties, and every year, buildings must demonstrate that their emissions are below this limit. Any emissions above the limit are penalized at a rate of $268/ton of CO2e. Only 25% of buildings on the Standard Pathway will face fines from 2025-2029, however, that will increase to 75% of buildings in 2030 and beyond. As time goes on, the emissions limits become more aggressive and more challenging to achieve, pushing buildings towards zero emissions in 2050. The first baseline year will be calendar year 2024, and the first reports are due in May 2025 and every year thereafter.

Prescriptive Pathway

This pathway offers a choice of two options:

  1. Install 13 Prescriptive Measures
    • This option requires buildings to install 13 applicable prescribed measures by December 31, 2024. The measures include items like pipe insulation, lighting, and boiler tuning etc. This option is designed to prolong the life of existing equipment rather than making capital upgrades. Currently, this is a one-and-done requirement, buildings will not have to do anything else to comply with the law over time.
  2. Beat your 2030 Emissions Limit Early
    • This option requires buildings to reduce their emissions below their 2030 limit by December 31, 2024. This is also a one-and-done requirement, buildings will not have to do anything else to comply with the law over time.

2026 Pathway

This pathway is the same as Standard Pathway, except buildings have two extra years before they start complying. For these properties, the baseline year will be calendar year 2026, with first reports due in May 2027 and every year thereafter.

2035 Pathway

This pathway is the same as Standard Pathway, except buildings have an extra 10 years before they start complying. For these properties, the baseline year will be calendar year 2035, with first reports due in May 2036 and every year thereafter.

Frequently Asked Questions

  1. How do I figure out my Pathway?
    • The city released the following chart to assist properties in understanding which pathway is applicable. Start on the left side in orange, and keep moving to the right if none of the items listed applies. If none of the items are applicable in any of the three columns, your property will be on the Standard Pathway. Have questions? Check out this guide we assembled with the NYC Housing Partnership. In addition, we can provide you with an easy spreadsheet tool to assist with pathway determination.
  2. I’m on the Prescriptive Pathway, how do I choose between my two options?
    • Many affordable multifamily buildings will be subject to the Prescriptive Pathway, and need to decide which option to choose for compliance. For recent ground up new construction and/or gut rehab projects, these buildings may already be performing well enough to meet Option B: Beating your 2030 Emissions Limit by the end of next year. For most existing buildings, Option A will likely be the cheaper compliance option, however, it may not set up the building for long term success. Even though both Prescriptive Pathway options are currently one-and-done, the City Council will likely amend that in future to decarbonize affordable housing too. Pursuing Option B now sets up affordable housing for longer-term compliance as the rules evolve.
  3. I’m on the Prescriptive Pathway, should I be buying RECs?
    • The law allows certain types of Renewable Energy Credit (RECs) purchases to offset the emissions associated with electricity consumption at your building. REC purchases will be allowed if they adhere to a very specific set of rules, however, most properties on Prescriptive Pathway will not need to buy RECs at this time. REC purchases are not applicable to Prescriptive Pathway Option A: Installing the 13 Measures. REC purchases could potentially be applicable to buildings pursuing Option B: Beating your 2030 Emissions Limit Early, however, the Department of Buildings (DOB) has not yet specifically said if they will allow this. In addition, most eligible RECs will not become widely available for purchase until 2026-2027, so even in cases where RECs are relevant, purchasing them will still be a challenge during the first few years.
  4. I’m on the 2026 Pathway, do I need to start thinking about this now, even though it’s a later start date?
    • Yes absolutely! The 2026 Pathway is arguably more challenging than the Prescriptive Pathway, because while Prescriptive Pathway is currently a one-and-done requirement and has a tighter deadline, 2026 Pathway requires you to comply every year until 2050 just like the Standard Pathway. In fact, the only real difference between 2026 and Standard Pathway is that the former has a slightly delayed start date. We’ve seen several multifamily owners and managers think that they’ll get Prescriptive Pathway, but upon closer inspection are on the 2026 Pathway instead, and will have to make significant and expensive modifications to their compliance planning.
  5. I’m managing a large portfolio, what strategies should I consider?
    • There are several strategies to consider when looking to prioritize the buildings in your portfolio for upgrades. Owners should try to identify:
      1. Buildings on the LL 97 official Covered Buildings List
      2. The applicable pathway for each building and the timing constraints for each
      3. Buildings facing large anticipated fines
      4. Imminent equipment failures
      5. Upcoming transactions like a refinancing or a sale 
      6. Additional compliance requirements like LL 87 audits
    • It’s important to investigate all of the factors above because it can significantly change your strategy. For example, a building with a large fine may be deprioritized if it’s on the 2035 Pathway, because you would have 10+ years to get into compliance. The reverse is also true, Prescriptive Pathway properties have the shortest timeline and should be prioritized even if the anticipated fines are low. Another common scenario that we assess is interaction with other compliance requirements like LL 87. LL 87 requires certain buildings to have an energy audit performed every 10 years, and so far, it appears that LL 87 requirements will remain as is even as LL 97 gets started. Our team can help owners and managers prepare for both laws in a single study, saving time and money for our partners.
  6. How can Bright Power help me?
    • We understand that there is a lot of anxiety in the market as we make preparations to comply with LL 97. However, our team is here to help. Your Bright Power Account Manager can assist with the following:
      1. Sharing our tool to assist with pathway determination
      2. Discussing benchmarking and energy audit options tailored to the needs of your pathway and your buildings
      3. Identifying incentives, tax credits, deductions, and financing to help get your project implemented
      4. Additional services still yet to come once the DOB finalizes all the remaining rules

Our Policy and Programs team is working round the clock to ensure we have the most up-to-date information available to help you achieve compliance. Reach out to your Bright Power Account Manager to learn more.

New to Bright Power? Email info@brightpower.com and an Account Manager will reach out to you shortly.

Disclaimer: All pathway guidance provided by Bright Power is based on the best available information from NYC Department of Buildings (DOB) Local Law 97 guidance and the housing classifications provided by the client. Bright Power is not responsible for any incorrect pathway determinations. Questions about pathway eligibility should be referred to DOB and/or the applicable affordable housing agency.