Just as restaurants are required by the city Health Department to post letter grades announcing the results of their most recent cleanliness inspection, many NYC building owners must now post letter grades regarding their energy efficiency. The new policy is intended to compel building owners to take a closer look at their properties’ energy use, and although there are currently no fines attached to the grades, some property owners with low grades are already worried about their reputations.

That may be exactly what the City wants.

In October, New York City buildings 25,000 square feet and larger were required to prominently post the letter grade, showcasing their degree of energy efficiency.

The letter grades range from A to F and are based on the U.S. Energy Star Score. The building owner provides energy and water consumption data, and details on how the building is used and occupied. The buildings are then rated based on the energy consumption of buildings across the country of similar size, use, occupancy, and climate.

Some well-known landmarks, such as the Flatiron Building (grade A) and the Empire State Building (grade B) did well on their scores, while others, like the New York Stock Exchange and Trump Tower, performed poorly (grade D).

Roughly half of the approximately 40,000 buildings that had to post the grades received a D or lower (F scores were only given to buildings that failed to comply).

Gina Bocra, chief sustainability officer for the Department of Buildings, said that although building owners have been required to disclose their property’s energy and water consumption for years, not many people saw it because it was in a database on a city website.

“The letter grade was a way for that information to become very visible, not just for the owners, but for the tenants,” Bocra said.

The city wants to achieve an emissions reduction of at least 80% by 2050, according to the Mayor’s office. Buildings are responsible for nearly 70% of the city’s carbon emissions, due to their extensive heating, cooling and lighting needs, as well as the energy inefficiency of older structures.

Alex Zafran, Senior Consultant at Aurora Energy, who helps buildings manage their energy costs, said many building owners were surprised to find out their grades were so low. He said after the grades were published on October 1st, he received a lot of correspondence from building owners who were “everything from furious and irate, to shocked and confused.”

The public prominence of the scores means they are visible to people passing by on the street.

“It is in many senses, a true real estate energy efficiency scarlet letter. And the buildings with the low scores are suffering immensely,” Zafran said.

Matt Cebula, director of Energy Services at Akam Associates, which manages more than 200 buildings across the city, said he thinks this is the reaction the city wanted from building owners.

“It was sort of a call to action,” he said.

Bocra said she is aware that the city is facing an economic crisis that’s especially difficult for building owners. Helping buildings to perform better in terms of energy efficiency can also be a strategy for recovering from the current crisis in the real estate market, she said. Buildings won’t be fined for receiving low grades (they only receive fines if they fail to post them). But that will all change in 2024 when local law 97 goes into effect. Those fees could be tens or hundreds of thousands of dollars for the lowest performing buildings.

“Buildings are now clamoring and struggling and rushing in an all hands on deck manner to figure out how they can start correcting systems or efficiencies that they’re building now so that they aren’t subjected to the fees,” Zafran said.

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Zafran said that even though there currently aren’t any fines for low grades, owners are worried low grades will drive away new residents to competitors. “It’s still very unsightly and off-putting for any potential buyer or renter to come in and to see this grade… they don’t want to be in a position where people walk past their building and see a ‘D’ and say, ‘This building isn’t for me.”’

The grading system may also give the impression that a building is unsafe, rather than conveying its energy performance, Zafran said.

And unlike with restaurants, where grades can change rapidly after further inspections from the Health Department, building grades remain in place for a whole year. Every year, the data is resubmitted and buildings have the chance to improve their scores.

“We want to get that information out there so that everybody understands how buildings are performing and starts to think about how they impact the city’s greenhouse gas emissions,” said Borka.

The Buildings Department encourages New Yorkers to complain if their buildings aren't posting letter grades. "Enforcement of this sign letter grade requirement in NYC is complaint based," DOB spokesperson Andrew Rudansky said. "If a member of the public believes that a building is not properly hanging their letter grade sign in a conspicuous location, as required by law, we encourage them to file an official complaint through 311."