Torchlight #25 | We The People

Torchlight We The People

By: Nancy E. Anderson, Ph.D., Executive Director, The Sallan Foundation Issue: Torchlight #25 Date: July, 2009 0

Torchlight #25 We The People After long months of bill drafting, meetings and more drafting, the City Council held hearings on Mayor Bloomberg’s green building legislative quartet in late June. Supporters, ranging from the expected — environmental and environmental justice advocacy groups — to the less expected — labor unionists and affordable housing activists, made their case and offered their proposals for legislative improvements. Opponents, particularly of Intro 967, the energy audits and efficiency retrofits bill, ranged from the Real Estate Board of New York to the New York Council of Cooperatives and Condos.

The Administration made its broad case for its four-part “Greener, Greater Buildings Plan” in terms of the City’s commitment to combating climate change already codified in local law. That law requires New York to cut its carbon footprint 30% by the year 2030. It also framed the quartet as a powerful stimulus suited to these difficult economic times. Focusing in on the specifics of the bills, the Administration set out to make the case “we know that because of the way energy prices are set, citywide efficiency measures save every New Yorker money — so there is a compelling public purpose, even aside from climate change and air pollution, for achieving energy efficiency” in the City’s existing stock of buildings, 85% of which will still be standing in 2030. Making an effort to acknowledge that out-of-pocket costs would be a burden for some, the Administration proposed to use $16 million in federal stimulus funds for a pilot revolving loan fund to assist “financially distressed” buildings meet new legal requirements. Testimony stressed that the legislation preserved property owners’ discretion about what energy efficiency measures to undertake. The legislation would neither dictate particular actions nor set specific energy reduction requirements. The only germane legislative stipulation is that an owner’s selected course of action would be limited to those options calculated to repay the owner’s initial investment within five years. As a practical matter, this stipulation excludes capital-intensive building work like boiler replacement or upgrading the building façade from Intro 967 obligations.

The testimony of advocates and opponents sometimes appeared to be a discussion and other times a shouting-match over how to address the costs imposed by the Greener, Greater Building Plan, particularly, although not exclusively related to Intro 967. The Real Estate Board maintained that

© 2009 The Sallan Foundation, Inc. All rights reserved. http://www.sallan.org

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Torchlight #25 We The People the long-term nature and renewal options typical of commercial leases would leave owners unable to recoup the costs of energy audits and efficiency retrofits. The typical short-term nature and extremely challenging current market for commercial mortgages would only add to this burden. The testimony of the Environmental Defense Fund sought to tackle and allay concerns of property owners. “By tying the obligation to make energy-related improvements to returns projected to accrue as a result of such improvements, the bill encourages energy efficiency improvements that make sense for owners as well as for the planet. In addition, by allowing owners to perform alternative retrofits that yield the same energy conservation outcomes, the bill accords to building owners discretion to act based on different cost judgments than the auditors’ own, provided equivalent energy efficiency improvements can be achieved by such alternative means”. In a follow up reply to a Council member’s question about the impact of long-term commercial leases and automatic renewal clauses, EDF questioned what proportion of current leases would run for fifteen years starting from 2009 and emphasized that the provisions of commercial leases can be drafted differently in response to legislation like the audits and retrofit bill, which give landlords an incentive to ensure that the benefits and costs associated with energy efficiency retrofits would accrue to the same party.

The Council of New York Cooperatives and Condos voiced strong objections to both the audit and retrofit bill and the energy benchmarking bill, Intro 476A. “Our experience is that using the online benchmarking tool is neither simple nor cost-free, and we are not convinced that the major utilities will take the necessary steps to provide this information directly to the City.”i Turning to Intro 967, “Perhaps most troublesome is the absolute requirement that a building implement all measures deemed to have a payback of seven years or less.ii This removes from the Board its discretion to run its cooperative or condominium.”

This conclusion ran counter to the Administration’s emphasis on the choice retained by property owners as to what specific energy efficiency investments they must make. From a housing activist perspective, the testimony of Enterprise Community Partners, a hands-on organization involved in

© 2009 The Sallan Foundation, Inc. All rights reserved. http://www.sallan.org

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Torchlight #25 We The People financing and building affordable homes added credibility to the aspirations of the legislation and could help allay the fears of the Condo and Co-op Council. Through its Green Communities program, Enterprise has created more than 3000 green affordable homes for low-income New Yorkers. Based on its real-world experience around the nation, Enterprise testified that, “new and existing properties that achieve 20 percent to 30 percent greater energy efficiency generate substantial cost savings from lower energy and water use”.

Then there was the toothless tiger problem. At least two union-related witnesses who supported the overall intent of the legislation raised concerns about the lack of explicit enforcement provisions applicable to violators. This should ring a bell with Torchlight readers, where I wrote

The benchmarking bill’s explicit enforcement language is unique among the four pieces of legislation. It spells out that failure to file mandatory benchmarking reports by the stipulated due date makes building owners subject to a Buildings Department notice of a “lesser” violation, which could entail a Commissioner’s Order to correct the problem. Property owners are also required to retain relevant documents that must be available for inspection and audit by the Department. Curiously, there is no language that addresses the filing of false, misleading or incomplete data.

And now I want to go one step further. The final version of the benchmarking bill should include a provision requiring building data to be provided to prospective buyers and lenders as a necessary part of any lease, sale or financing arrangement. Since benchmarking data will be collected by the City, comparing the energy consumption data across similar property categories becomes a real possibility and this opens the way for property markets to become better informed about salient building cost and performance characteristics. Just what makes this data so important now? That’s easy.

First, the recent, short-lived swoon in energy prices appears to be a thing of the past. Then, in June 2009, the US Green Building Council announced that, “As part of LEED v3, the latest version of

© 2009 The Sallan Foundation, Inc. All rights reserved. http://www.sallan.org

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Torchlight #25 We The People the U.S. Green Building Council’s program for green building design, construction, operations and maintenance, buildings seeking LEED certification will begin submitting operational performance data on a recurring basis as a precondition to certification.” This new USGBC policy shows that performance data can be captured. Last, but hardly least, should the US get a climate change law this year, energy consumption and costs will become a permanent part of the nation’s day-in and day-out considerations and calculations. New Yorkers can only benefit by getting ahead of the carbon-control curve.

The many months that passed from the time Mayor Bloomberg announced his green building bill quartet to the day of the City Council hearing, combined with testimony that conveyed the strenuous objections to the legislation, which remained after months of “stakeholder” meetings, signal that legislative action and comprehensive compliance will be no easy thing. In reflecting on House passage of the Waxman-Markey climate change bill, David Brooks wrote, “Democrats were able to pass a politically treacherous cap-and-trade bill out of the House…This was an impressive achievement…But the new approach comes with its own shortcomings. To understand them, we have to distinguish between two types of pragmatism. There is legislative pragmatism — writing bills that can pass. Then there is policy pragmatism — creating programs that work. These two pragmatisms are in tension”. From my perspective, there’s a tension in New York City as well, but failure to enact smart and effective green building legislation would be a shame on We the People.

Nancy Anderson is the Executive Director of The Sallan Foundation.

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It’s worth noting that the Council puts together a detailed annual listing, based on information provide by its members, of buildings’ income and expenses. For example, members have access to annual comparative data energy expenses per square foot. ii

Different versions of Intro 967 have circulated. Some have five-year paybacks, others seven year. A five-year payback is the current Administration version.

© 2009 The Sallan Foundation, Inc. All rights reserved. http://www.sallan.org

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