Glossary

Building Performance Standard (BPS)

Also known as: Local Law 97, building emissions law, BPS

A municipal or state regulation that sets mandatory energy-use or emissions-intensity limits for existing buildings above a specified size, with escalating targets over time and financial penalties for noncompliance — exemplified by New York City's Local Law 97.

Unlike voluntary certifications such as LEED, a Building Performance Standard is a legal compliance obligation: covered buildings (often those above 25,000 square feet) must meet carbon or energy intensity limits by specified deadlines, with fines assessed per ton of excess emissions or per unit of excess energy use. BPS regulations have become a material underwriting consideration in gateway markets, since noncompliant older buildings may face six- or seven-figure annual penalties absent capital improvements, effectively creating a new category of contingent liability that must be sized alongside deferred maintenance in acquisition due diligence. Compliance strategies range from electrification and envelope retrofits to purchasing emissions offsets or credits where a jurisdiction allows it, and BPS exposure is increasingly a line item lenders request in environmental and capital needs assessments for existing-building acquisitions in regulated cities.