New York City has established a goal of reducing citywide greenhouse gas (GHG) emissions by 30 percent below 2005 levels by 2030. The city already has one of the lowest per capita GHG emissions rates among comparable cities because of its extensive public transit system. (According to the Inventory of New York City Greenhouse Gas Emissions: September 2011, “compared to other U.S. cities and the U.S. average, New York City has the highest use of non-automobile transportation.”) Therefore, considerable effort is being made to address the energy efficiency of its existing buildings. For example, according to the city’s plan, it will be “enact[ing] regulations to phase out dirty heating fuels, which are responsible for more pollution than all of the cars and trucks on our streets.” Such an endeavor for a city of the size of New York is daunting, but by targeting properties with more than 50,000 square feet, the city can address 50 percent of its buildings’ square footage and 45 percent of its total greenhouse gas emissions. New York City’s Greener, Greater Buildings Plan is a portfolio of four legislative initiatives—annual energy performance benchmark (Local Law 84), adaptation of local energy code (Local Law 85), 10-year energy audit and a retro-commissioning (Local Law 87), and lighting and commercial tenant sub-metering requirements (Local Law 88)—that will target this subset of its buildings with the hopes that they will reduce greenhouse gas emissions and save money for the owners of these buildings.

Local Law 87 requires owners of certain “covered buildings,” which include buildings owned by the city, to periodically file energy efficiency reports with the Department of Buildings, detailing the required energy audits and retro-commissioning. The term “covered buildings” generally applies to buildings having more than 50,000 square feet, but does not include “class-one” buildings. Certain other buildings, such as those that qualify for the EPA Energy Star label (energy audit exemption only) or are LEED certified, can also claim exemptions. Local Law 87 requires the owner to file a report with the Department of Buildings every 10 years, but the report can only be filed after the energy audit and retro-commissioning study have been completed.

The energy audit is intended to be fairly comprehensive. Its purpose is to identify modifications and improvements to a building’s base system (building envelope, HVAC, elevator, hot water, and electrical and lighting systems) to optimize energy performance of the building and achieve energy savings. The standard Local Law 87 requires a level of audit that is not less stringent than a level II ASHRAE (American Society of Heating, Refrigerating and Air-conditioning Engineers, Inc.) survey. Local Law 87 does not, however, require the owner to follow through with the suggestions of modifications and improvements that resulted from the audit. The thought is that an otherwise indifferent owner might be motivated to spend capital to improve the building’s energy systems once the owner sees potential energy efficiencies (and cost savings).

What is retro-commissioning? Roughly speaking, if an energy audit results in potential capital expenditures, a retro-commissioning study can result in potential operational and maintenance expenses. In other words, a retro-commissioning study concerns itself with optimizing the energy efficiency of existing building systems though the identification of defects, cleaning, adjustments, and operational practices, among other things. Also, unlike an energy audit, Local Law 87’s retro-commissioning requires follow-through by the building owner of the items identified by the retro-commissioning report. In fact, the owner cannot file the report with the Department of Buildings unless and until each item identified in the report has been addressed. Because of this, a retro-commissioning process may take up to 18 months to complete, which is a longer lead time than what is suggested for an energy audit.

Local Law 87 has been in effect since December 2009, but the reporting schedule is only starting now (beginning with calendar year 2013). On September 5, 2012, the commissioner of the Department of Buildings promulgated rules further detailing the audit and retro-commissioning requirements of Local Law 87. The compliance year for a building is determined by the last digit of that building’s tax block number. For example, if the last digit of a building’s tax block number is three, then the compliance year will be 2013, but if such digit is two, then the compliance year will be 2022. A building owner may choose to early comply during calendar year 2013, in which case the owner will not be subject to rules promulgated by the commissioner. We recommend that owners who are required to comply during calendar years 2013-2014 begin the compliance process if they have not already started.

For an owner that is subject to Local Law 87, it is not all bad news. There are financing and cost sharing programs that are available, including from NYSERDA and ConEd, that will share costs (up to 50 percent) related to energy audits and retro-commissioning studies (but not the follow-through of action items) required by Local Law 87.