Parramatta Council is on the verge of signing the state’s first Environmental Upgrade Agreement with the owners of a multimillion-dollar property in the city centre.
The agreement will help the healthcare, finance and retirement services company Australian Unity make energy-related upgrades at their commercial property located at 10 Valentine Avenue.
Environmental Upgrade Agreements (EUA) aim to help building owners - who may not have access to funds or are reluctant to increase their debt levels - obtain the money they need to make environmental upgrades to existing, non-residential properties.
The program, which includes a contract between Parramatta Council, a building owner and a financier, the agreement, aims to make upgrades easier for building owners by removing the need for upfront capital, offering improved loan rates and allowing repayments to be made through cost savings.
The upgrades must have environmental benefits but that can include improving old air conditioning, lifts and lighting systems.
Parramatta Lord Mayor John Chedid said it was vital to upgrade the city’s existing buildings.
“EUAs are about making buildings and businesses more efficient and reducing costs,” councillor Chedid said.
“It is an innovate way for property owners to fund upgrades that can boost the value of their buildings and reduce vacancy rates.
“We are home to the sixth biggest CBD in the country with an economy generating more than $14 billion annually.
“Yet we have one of the lowest A-grade office vacancy rates in the country and almost half of the buildings in and around Parramatta were built more than 20 years ago.”
The Valentine Avenue property doesn’t quite fit the mould of the two-decade old building upgrading and increasing the number of prime office spaces in Parramatta.
According to the Australian Unity website, the Valentine Avenue building is already considered an A-grade office space, was fully occupied at the end of last year and has a National Australian Built Environment Rating System (NABERS) energy rating of four-and-half stars out of five.
It was the building’s tenant, the NSW Government’s State Property Authority, who initiated the project and will contribute to the upgrade repayments.
But Parramatta Council is no doubt hoping the announcement of the pending agreement will entice the owners of older buildings to consider signing an EUA.
According to Cr Chedid, EUAs in Parramatta’s CBD could attract more than $150 million of investment in building upgrades and create 148 full-time jobs in the city.
For building owners themselves the agreement has long term financial incentives that extend beyond removing the need for upfront capital and longer term loans.
The Institute for Sustainable Research reported last year that energy prices are estimated to rise by as much as 78 per cent by 2012.
Government and corporate tenants are also increasingly requiring properties to be rated above NABERS four stars,
When the property at 100 George Street in Parramatta – formally known as the McNamara Centre - had a $6 million facelift that included a new air conditioning system and changed the building casing to insulating materials, their NABERS rating increased from one star to four.
The restoration also resulted in a 50 per cent saving on electricity usage, a $6 million increase in asset value and a forecasted 20 per cent increase in rental return.
Low Carbon Australia chief executive Meg McDonald said commercial building upgrades increase tenant attractiveness and result in lower operational costs.
“It makes good financial sense to operate as cost effectively as possible, and Environmental Upgrade Finance is one way of making it easier for property owners to make improvements sooner,” she said.
How do EUAs in Parramatta work?
Under an EUA, a building owner is able to access finance from a lending institution for environmental upgrades works on their existing building.
The amount financed is levied on the land as a council statutory charge.
Repayments on the loan are collected by Parramatta Council through the rates payment system and paid through to the financial institutions.
Tenant contributions, collected by the building owner, can be put towards these repayments.
Source: Parramatta Council
Pick up your copy of PS and PS Business in Parramatta CBD or go to www.psmag.com.au to read it in full online.