NYC's LL97 Rollout Shows the Tough Road Ahead for Energy Efficiency Regulations

• ScoffLaw97: New York City’s groundbreaking LL97 is finally going to be enforced but a surprising amount of buildings are still not on the path to energy efficiency.

• District of DOGE: Avalon Bay’s CEO expressed concern about the dropping occupancy rates of their D.C. area properties as job cuts start to impact housing demand.

• CrowdFleeced: The CEO of Nightingale Properties has been sentenced for his involvement in the CrowdStreet fraud.

Buildings

NYC's LL97 Rollout Shows the Tough Road Ahead for Energy Efficiency Regulations

New York City's Local Law 97, enacted in 2019, stands as a pioneering model for building performance standards nationwide. With enforcement commencing in 2025, the regulation mandates substantial reductions in greenhouse gas emissions from large buildings, aiming for a 40% decrease by 2030 and net-zero emissions by 2050. The upcoming compliance report deadline of June 30, 2025, marks a critical juncture for property owners to align with these ambitious targets.

Industry experts emphasize that while the grace period offers temporary relief, it should not be misconstrued as leniency. Tristan Schwartzman of Goldman Copeland advises a phased strategy—optimizing existing systems now and planning for future electrification to ensure compliance without incurring prohibitive costs. Similarly, Yotam Cohen of Daisy warns against viewing compliance as a mere checkbox exercise, stressing the importance of tailored energy conservation measures to achieve meaningful emissions reductions.

As the federal government steps back from climate leadership, cities like New York remain at the forefront of environmental policy. The momentum behind building performance standards is gaining traction across the U.S., with over 40 jurisdictions adopting similar frameworks. For commercial landlords, the challenge lies not only in meeting compliance deadlines but also in navigating a rapidly evolving policy landscape that demands agility and foresight.

Overheard

AvalonBay Rebalances Portfolio As Job Market Jitters Mount in D.C.

AvalonBay Communities is feeling the tremors of federal volatility close to home. On its recent earnings call, CEO Ben Schall acknowledged the economic uncertainty of Trump-era policy shifts but emphasized AVB’s strong balance sheet and strategic positioning. While the company’s D.C.-area assets remain stable, with steady occupancy and a drop in lease breaks, COO Sean Breslin noted rising anxiety among D.C. residents, 12% of whom are government employees.

Outside the capital, AVB’s established markets are benefitting from strong occupancy and a historic low in new supply. Northern California is outperforming expectations, especially in San Francisco and San Jose. Seattle remains robust thanks to return-to-office mandates. Los Angeles, however, continues to lag amid weak job growth and subdued rent increases.

In contrast, AVB’s expansion markets, particularly in Texas, face oversupply challenges but also opportunities. The REIT recently acquired eight garden-style properties in suburban Texas, funded by selling assets in more mature markets. At $230,000 per door, the deals reflect a strategic long-term value play.

With $3 billion in match-funded developments underway, Schall said the firm’s development pipeline remains a key differentiator, poised to generate significant earnings in 2025 and beyond.

Nightingale Properties CEO Gets Hefty Sentence for CrowdStreet Fraud

Back in 2022, the real estate crowdfunding platform CrowStreet raised $63 million from investors for two real estate deals, one in Atlanta and one in Miami. Unbeknownst to them, roughly $54 million of that money was being diverted into accounts controlled by partner company Nightingale Properties. Once investigated it was found that Nightingale's CEO, Elie Schwartz, had used much of the money to buy himself luxury goods, including a Miami condo, art, and high-end watches.

Soon after, 125 investors filed a legal action against CrowdStreet, alleging negligence in vetting Nightingale and failing to safeguard investor funds. They claimed that CrowdStreet aggressively marketed the investment without proper due diligence. In October 2023, Nightingale agreed to a settlement to repay investors $4 million per quarter over three years.

Now, Schwartz has been sentenced for his crimes. A U.S. District Court judge in Atlanta ordered him to serve 87 months in jail. The large sentence was a way for the court to prevent similar white collar crime. “To use the parlance of investors, you need to flip the ROI, because otherwise, rational people can make the decision it's worth the risk if the consequences are going to be modest,” the judge said.

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