Build­ing ener­gy effi­cien­cy update — Com­mer­cial Build­ings Manda­to­ry Dis­clo­sure Regime and Environment

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In Brief — Mixed use build­ings, refur­bish­ments and Envi­ron­men­tal Upgrade Agreements

The Com­mer­cial Build­ings Manda­to­ry Dis­clo­sure Regime has under­gone amend­ments, effec­tive 29 Novem­ber 2010, relat­ed to mixed use build­ings and refur­bish­ments. The Local Gov­ern­ment Amend­ment (Envi­ron­men­tal Upgrade Agree­ments) Bill 2010 facil­i­tates a financ­ing mech­a­nism for build­ing own­ers to imple­ment major long term ener­gy effi­cien­cy upgrades to buildings.

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Mixed use buildings

Mixed use build­ings which com­prise office space with oth­er uses such as retail, indus­tri­al, hotel or hos­pi­tal are now not required to dis­close a NABERS ener­gy rat­ing if the build­ing has less than 75% office space (cal­cu­lat­ed on net let­table area). How­ev­er, this is an inter­im mea­sure dur­ing the 12 month tran­si­tion peri­od which expires on 31 Octo­ber 2011.

This devel­op­ment has the effect of exclud­ing most indus­tri­al and retail premis­es from com­ply­ing with the new manda­to­ry dis­clo­sure regime, even if the office com­po­nent is greater than 2,000 sq metres.

Refurbishments

In cas­es where build­ings under­go major refur­bish­ments, there is now no require­ment to dis­close a NABERS ener­gy rat­ing for two years from the date of the cer­tifi­cate of occu­pan­cy relat­ing to the refur­bish­ment, on the con­di­tion that the refur­bish­ments meet three criteria:

• They involve sub­stan­tial change to the fab­ric, plan or equipment
• They require the issue of a cer­tifi­cate of occu­pan­cy under State or Ter­ri­to­ry legislation
• They will have a sub­stan­tial effect on the ener­gy per­for­mance of the base building

Addi­tion­al infor­ma­tion can be found at the government’s Com­mer­cial Build­ing Dis­clo­sure web­site.

Local Gov­ern­ment Amend­ment (Envi­ron­men­tal Upgrade Agree­ments) Bill 2010

This bill facil­i­tates a financ­ing mech­a­nism for build­ing own­ers to imple­ment major long term ener­gy effi­cien­cy upgrades to build­ings. The con­cept of an ​“envi­ron­men­tal upgrade agree­ment” will be intro­duced to assist build­ing own­ers to gain access to com­mer­cial finance in the time­frame and on terms need­ed to progress cost effec­tive envi­ron­men­tal upgrade works.

The pro­posed envi­ron­men­tal upgrade agree­ments will oper­ate accord­ing to the fol­low­ing framework:

• The lender pro­vides finance to the build­ing owner
• The lender takes a charge over the building
• The build­ing own­er upgrades the building
• The build­ing own­er then makes reg­u­lar pay­ments to the local coun­cil in the form of a spe­cial rate or charge
• When repay­ment is received, the coun­cil for­wards it to the lender to repay the debt

Par­tic­i­pa­tion on the part of build­ing own­ers, lenders and local coun­cils is voluntary.

Pass­ing on costs to the tenant

In prin­ci­ple, as the spe­cial rate or charge will be ren­dered by coun­cil, it is like­ly to fall under the def­i­n­i­tion of ​“out­go­ings” in a lease and there­fore be capa­ble of being on-charged to the ten­ant under the out­go­ings pro­vi­sions of the lease. How­ev­er, ten­ants must not be required to pay more than they would have been required to pay had the envi­ron­men­tal upgrade agree­ment not been in place.

In prac­ti­cal terms, the ben­e­fit in the reduced pow­er bill as a result of the envi­ron­men­tal upgrade must out­weigh the con­tri­bu­tion that the ten­ant will be required to make under the out­go­ings pro­vi­sions of the lease.

A copy of the Local Gov­ern­ment Amend­ment (Envi­ron­men­tal Upgrade Agree­ments) Bill 2010 can be down­loaded from the web­site of NSW Par­lia­ment.

For fur­ther infor­ma­tion please contact: