Understanding Energy Efficiency Grades for NYC Real Estate

October 15, 2021

New York City is one of the largest cities in North America. With so many buildings and vehicles, it produces staggering carbon emissions and has a notable impact on the world’s climate. For that reason, NYC’s government officials have been devising ways to take action — incentivizing positive change and protecting the environment.

As part of this initiative, the NYC government has enacted energy efficiency scoring criteria for large residential buildings. You’ll need to understand the energy efficiency benchmarking grading scale to decide how to improve your score. The ratings present an opportunity for improvement and give every large building owner the chance to create a more eco-friendly NYC.

What are energy efficiency grades in NYC?

As of 2020, owners of NYC buildings larger than 25,000 square feet have to display their energy efficiency grades near their public entrances by May 1st of each year. It’s similar to other local law inspection requirements. The presented scores represent benchmarks comparing a building’s energy performance to that of similar buildings. It is a simplified reference of performance level to show building owners their room for improvement. Most large residential building owners have to comply. 

Why the new energy regulations were enacted

These new energy regulations and performance metrics represent one small part of the city government’s initiative to reduce carbon emissions. With buildings accounting for over 70% of the city’s greenhouse gases, it’s no surprise large buildings have become a key target. Large building owners have to share responsibility for the city’s massive carbon footprint. 

Prominently displayed building grades encourage NYC property owners to improve their energy efficiency. A rating of “D” or “F” raises questions among potential tenants or shareholders, while a high rating helps build credibility. Scores are bound to have an impact on property valuations. The financial effects of the ratings incentivize positive change, giving you a concrete reason to improve. It also offers transparency to non-building owners, including everyday NYC residents. Some residents may consider building energy ratings in their apartment searches, and high scores could increase market value. 

What buildings it applies to

NYC residential building grades only apply to some buildings. To interpret the local laws, you need to know the definitions of these two terms:

  • City building: A city building is one owned by New York City, measuring at least 25,000 square feet. The city pays its energy bills. It does not participate in the tenant interim lease apartment purchase program.
  • Covered building: A covered building is a non-city building that exceeds 25,000 square feet. Covered buildings also include two or more buildings on the same tax lot or under the same management with a total of 100,000 or more square feet. Owners of covered buildings are subject to the benchmarking requirements and energy efficiency ratings.

The energy benchmarking grading scale for NYC buildings

The energy efficiency scores derive from the Energy Star Portfolio Manager, an online tool from United States Environmental Protection Agency (EPA). The tool compares energy performance to that of similar buildings in like-climates. It factors in the energy consumption of your mechanical equipment, appliances, lighting, and other components. Since it compares your building to similar ones, you get a better feel for your performance. 

As you’re filling out the online form, you’ll choose from one of 18 categories and one of 80 functions to describe your building. The EPA bases building groupings on: 

  • Size
  • Location
  • Metering
  • Performance indicators

The Scores

Understanding energy efficiency grades in NYC requires you to recognize each letter grade and what it denotes. The letter grades designate the following scores: 

  • A: 85 and higher.
  • B: 70 to 85. 
  • C: 55 to 70. 
  • D: 55 and lower. 
  • F: Non-compliance. 
  • N: Exception.

Aim for higher scores to save on your energy bill and attract energy-conscious tenants. Keep in mind, if you do not comply with the energy scoring regulations, you’ll receive a letter grade of “F.” 

What happens if your building is out of compliance

Each year, covered building owners have to submit their updated benchmarking data by May 1st. Failure to comply with the energy efficiency rating program will result in a violation from the Department of Buildings. Failure also incurs fines starting at $500. At each quarterly deadline — August 1st, November 1st, and February 1st — penalties increase for continued non-compliance. Fines reach up to $2,000 per year. You’ll also incur a $1,250 fine for not displaying your benchmarking scores. In addition, your reported letter grade will be an “F” for your non-compliance.

It’s in your best interest to comply with the program rather than rack up fines and damage your reputation. In any case, the energy efficiency scoring program presents building owners with a unique opportunity to improve their marketability — receiving a high score may increase your property valuation. 

How to resolve benchmark violations and improve energy benchmark

If you’re unsatisfied with your energy efficiency score, you’ll find plenty of opportunities to take action. At AKAM, we provide resources to reduce carbon emissions using several strategies. To improve your score, you may want to: 

  • Commission an energy audit to find weak spots. 
  • Replace older technologies with newer ones. 
  • Use incentive programs to reduce upfront costs. 
  • Train staff on best practices. 
  • Keep up with routine heating, ventilation, and air condition (HVAC) maintenance and inspection. 
  • Fix issues with insulation or other concerns. 

Contact AKAM for more information

Understanding these energy efficiency scores is vital for any NYC property owner. Earning a high score helps you improve your property valuation, attract residents, and build your reputation in your community. Complying with the EPA scoring program enables you to avoid fines and violations — it also provides you with concrete, actionable data for improving your building’s carbon footprint. Once you know how you compare to similar facilities, you’ll have an idea of how you might become more environmentally friendly. 

The experts at AKAM can help you improve your building’s energy efficiency score with green initiatives and energy-preserving solutions. Along with helping you reduce your carbon footprint, we’ll give you the tools to cut back on costs. You can also take advantage of our comprehensive property management services, including financial oversight, staff training, and building operations management. If you have any questions or you’d like to learn more, feel free to contact us at AKAM. We’ll be happy to connect with you!