In April 2019, as part of the Climate Mobilization Act, the City of New York passed Local Law 97 (“LL 97”), which, starting in 2024, will require certain buildings that are larger than 25,000 square feet to comply with a carbon emissions cap.

Due to concerns that landlords would pass the costs of installing the LL 97-required energy efficient retrofits onto rent stabilized tenants through the Major Capital Improvements program (“MCI”), buildings falling within the definition of “rent regulated accommodations” will not be subject to the carbon emission caps. The term “rent regulated accommodations” is defined to include buildings containing at least one rent controlled or rent stabilized apartment.

Since mixed-income buildings that were, or will be, constructed under the Inclusionary Housing, Mandatory Inclusionary Housing, Affordable Independent Residences for Seniors and/or the Section 421-a programs have rent stabilization requirements, such currently exempt mixed-income buildings (hereinafter “CEMIBs”) fall squarely within that exception.

The new rent laws that went into effect last year, which limit MCI rent increases to 2% and only permit such increases in buildings where more than 35% of the apartments are rent regulated, obliterated the City’s concern that landlords would pass the cost of compliance onto rent stabilized tenants. That change cleared the path for a proposed amendment to LL 97 that seeks to revise the definition of “rent regulated accommodations” to include only buildings in which more than 35% of the residential units are rent regulated.

If the proposed amendment passes, CEMIBs would be covered by the LL 97-required carbon emissions caps. It would, therefore, be wise for owners and developers of CEMIBs to assess the costs and timing of installing the required energy efficient retrofits needed to comply with the carbon emissions caps. Developers who are in the process of developing CEMIBs that will have up to 35% rent stabilized apartments should strongly consider incorporating the required energy efficiencies directly into the building design.

Seiden & Schein, P.C. regularly represents CEMIBs that do not have more than 35% apartments that are rent regulated in obtaining benefits under the Inclusionary Housing, Mandatory Inclusionary Housing, Affordable Independent Residences for Seniors (a/k/a Privately Financed Affordable Senior Housing), Section 421-a and other programs administered by the New York City Department of Housing Preservation and Development. For further information about the proposed amendment to LL 97 and how it might impact your project, please feel free to contact David Shamshovich (dshamshovich@seidenschein.com) by email or by phone at (212) 935-1400.