NEW YORK, N.Y. – As reported by CNBC and elsewhere, New York recently became the first state in the country “to pass a law banning fossil fuel combustion in most new buildings, getting rid of gas stoves, furnaces and propane heating in favor of climate-friendly appliances such as heat pumps and induction stoves.”

Carol A. Sigmond (pictured), partner at Greenspoon Marder LLP, New York, N.Y. has been tracking the issue since around 2017. As someone who is sympathetic to the law’s intent, Sigmond nonetheless has many concerns about the legislation. Third Thursday sat down with the Manhattan attorney to get the full story behind the legislative platitudes.

Third Thursday: What’s the history of this natural gas legislation?
Sigmond: This arises out of a de Blasio [Bill de Blasio, mayor of New York City from 2014 to 2021] initiative to try to attack climate change.

This was very poorly thought through, regardless of what they wanted to accomplish. It is foolish. They started this process around 2017. Developers have had time to plan for all electric buildings, and I would guess that everything that’s under construction now is probably all electric.

Third Thursday: What’s one of the biggest concerns about this legislation?
Sigmond: There are 700,000 buildings in the city of New York, so right off the bat you’re going to know that one size does not fit all.

Third Thursday: How would you characterize the debate among opposing parties?
Sigmond: It’s sort of been non-existent. Initially the city council and the mayor didn’t really pay any attention to people like me who were raising questions. This is probably why the city is not trying to ban gas in existing buildings—yet.

Third Thursday: What types of questions?
Sigmond: The first question is; Do you have the electric capacity to start to shift the city from natural gas to all electric? The answer to that question is no. We don’t have the electric capacity. That hasn’t been addressed or talked about or thought about. We don’t have the capacity. We just don’t have the electric power. We need the gas and we’re going to need it for a long time.

Third Thursday: For attorneys in construction law, how will this law affect their work?
Sigmond: It’s going to create additional opportunities for defect litigation against new buildings, particularly on energy issues. It’s going to increase the pressures for breach of fiduciary duty actions on board members who haven’t taken care of these buildings to keep them maintained and get them energy efficient. The unit owners are going to be upset about the loss of property value, which is going to contribute to this. So the answer is, lawyers like me, construction lawyers—people in this space—we’re going to get busier.

Third Thursday: How have the state and city approached the issue?
Sigmond: They’ve basically gone after existing large residential buildings and developments, particularly co-ops and condos, less so moderate income housing. Take the gas these buildings use to heat and cook. Commercial buildings did not have the cooking demands. But if you curtail gas in residential buildings, you have to replace it with electricity and there is not going to be enough. Ask yourself: If you’re having to burn coal to get enough electricity, which is dirtier? Coal or natural gas? That’s the kind of thing that was not thought about. That’s the first problem.

Third Thursday: What’s the second problem?
Sigmond: The second problem is that you have an enormous number of old buildings in this city. These are buildings that cannot go without natural and can’t convert to all electric, so we will have gas for a long time. They can’t make all of these current energy efficient standards. Because of the city’s property tax structure, and because of the land marking, it’s very difficult to get rid of some of these older buildings.

We may be coming to a moment when buildings are going to become tear-downs. Class C and D commercial space may be tear-downs. Even Class B space may be tear-downs. Remember, we’re looking at around 30,000,000 square feet of empty office space.

Third Thursday: What’s a possible remedy?
Sigmond: Some of these buildings could be converted to residential, but it’s going to be tough to do that because they must have operable windows and windows in the bedrooms. You’ve got to get bathrooms. There’s a lot of things you have to change in these buildings to make multi-family work—so that’s another aspect of this.

Third Thursday: What about moderate income housing where they can’t afford to do all of these upgrades?
Sigmond: The city may have some exceptions for moderate income properties, but basically the city mandated that buildings over 25,000 square feet engage in all of this energy savings or pay these massive taxes—because that’s what they are—taxes. They call them penalties, but they’re really just property taxes. The group that’s been left with all of the mandates and all of the tax threats are residential co-ops and condos, and most of the boards have not thought this through. I live in a building that’s got a rating of D, so we’re going to get slammed on taxes starting January 1. To get rid of that D, we would have to do a lot of insulation and probably change the windows and nobody is thinking about it.

Third Thursday: How much can New York affect the energy profile of the country?
Sigmond: New York can’t do anything to change the national energy profile. New Yorkers already use, on average, less energy than most of the people in the country because of the way we live. We use so much public transportation and our energy footprints are small already. This new law is poorly thought through, poorly considered, and will be incredibly unfair to co-op and condo owners in the city—and to rental apartment owners in the outer boroughs. It’s not going to do anything to help the environment.

Third Thursday: Has the state mandated sufficient disclosures of information to unit owners in connection with local law 97 so that they understand the financial implications?
Sigmond: I don’t think so. The people in the buildings don’t understand what’s about to happen. Board members are in denial. The managing agents aren’t advising them. It’s a nightmare. And the question is, what are we accomplishing? Where are we going with this? New York already has a smaller energy footprint than anybody else.

Third Thursday: What should have been done?
Sigmond: The smarter play probably would have been to give property tax percentage reduction to buildings that improve their insulation and change their windows. That would have made more sense. The gas is a little piece of this.

Third Thursday: How likely is it that similar laws will spread?
Sigmond: That’s difficult to project, because this is going to be state by state and locality by locality. I don’t know how many localities are going to, in effect, commit slow suicide the way New York is on this. That’s essentially what they’re about to do. They’re about to damage their own property value for very little gain. I can’t believe that most communities are going to go down this road.

Third Thursday: What’s your assessment of the law’s intentions?
Sigmond: Climate change is real and it is a real issue. I’m not saying it’s not a real issue. I’m just saying this is an ineffective plan. This is a silly plan. It hasn’t been thought through. It’s got a very specific target, which is to try to get more tax revenue from co-ops and condos, and there’s no more tax revenue to get. We’re already over taxed. Again, I pay $25,000 dollars a year for my two-bedroom apartment.

Comparable single family homes anywhere in the city probably would be paying a fifth of that. They’ve maxed it out. The governor is probably going to see some pressure from the high net worth individuals in the city who say, ‘We’re done.’ The governor can’t afford to have the New York City income tax fall off. She can’t afford to have property values in the city fall. Everybody is going to be facing trouble. She’s got one crisis now—the migrant workers. This is going to make that look like a cake walk if this really starts to roll downhill. They need to take a long hard look at the city governance.