On the 4th February 2016, The Minister for Resources, Energy and Northern Australia, The Hon. Josh Frydenberg MP, released the report on the Commercial Buildings Disclosure (CBD) Program Review (http://cbd.gov.au/overview-of-the-program/cbd-review).
 
The independent review, produced by ACIL Allen Consulting, found the CBD Program to be a successful and effective way of delivering significant benefits at a minimal cost to industry and government. The review concluded the CBD Program has delivered $44 million in benefits over the last four years by assisting to improve the energy efficiency of Australia’s large office buildings. The Hon. Josh Frydenberg MP agreed that the CBD Program will continue and consideration would be given to the recommended regulatory changes that are projected to deliver an additional $13 million in energy efficiency benefits by 2028 and streamline industry regulatory obligations.

The proposed changes to the CBD Program include:

• Lowering the threshold for mandatory disclosure of energy efficiency information on buildings from 1,000 square metres and up to capture smaller office buildings.
• Extending the validity period for the tenancy lighting assessment from one to five years.

Any changes to the CBD Program will be preceded by a one year transition period following Ministerial approval. It is anticipated that the proposed changes won’t be introduced until July 2017.

A Regulatory Impact Statement on the proposed changes has been prepared and is available on the CBD website (http://cbd.gov.au/overview-of-the-program/cbd-review).

A consultation survey on the proposed changes to the CBD Program is open to the public until 5 pm AEST on the 12 March 2016. The public consultation can be accessed here:
https://consult.industry.gov.au/energy-division/cbd-public-consultation

They also welcome feedback from stakeholders through the CBD Hotline: 1800 020 131 and through the CBD email address: info@cbd.gov.au

Napier & Blakeley are pleased to have the following CBD Assessors and they invite you to contact them if you have any queries regarding this or anything else related:

SYDNEY Rod Clarke o.  02 8113 7104 m. 0417 736 402 e.  rclarke@napierblakeley.com	MELBOURNE Paul Bullen o.  03 9915 6300    m. 0418 407 863 e.  pbullen@napierblakeley.com
BRISBANE Clayton Stewart o.  07 3815 0498 m. 0419 528 707 e. cstewart@napierblakeley.com	BRISBANE John Proctor o.  07 3815 0428 m. 0415 422 313 e. jproctor@napierblakeley.com

Transitional Provisions Ending this Year

The current transitional provisions of the CBD program that require only a NABERS base building energy rating to be disclosed will end on 31 October 2011, with full mandatory disclosure requirements commencing on 1 November 2011.

From 1 November 2011, the Building Energy Efficiency Disclosure Act 2010 (BEED Act) requires corporations selling, leasing or subleasing certain large (>2000sqm) office spaces to register a full Building Energy Efficiency Certificate (BEEC), not just a NABERS rating.

What is a BEEC ?

The BEEC is comprised of three parts:

1.   NABERS Energy base building rating
2.   Tenancy lighting energy efficiency assessment
3.   General energy efficiency guidance for building owners and tenants

The BEEC may be valid for up to 12 months, however will only be valid to the date of the expiry of either Parts 1 or 2 whichever occurs first, as Parts 1 and 2 individually may be valid for up to 12 months but may be completed at different times.

At the time of disclosure, the BEEC will need to be valid, current and registered on the publicly accessible registry on the CBD program’s website.

Importantly, both the NABERS rating and new tenancy lighting assessments take a significant amount of time to complete the assessment and certification process, so need to be undertaken and certified well before a need to disclose for advertising may arise to avoid the risk of non-compliance with the legislation.

What’s the difference?

The required BEEC now incorporates a tenancy lighting assessment. A CBD tenancy lighting assessment of a building is based on a methodical survey of the general lighting system installed in the tenant office spaces of a building (the system that is reasonably expected to be left in a tenant space when the tenant leaves and the tenancy fitout removed).

The NABERS base building rating requirements remains the same as the current transitional provisions, and still requires a full 12 months of building operational data to provide a valid accredited NABERS assessment. Note that a NABERS estimate or non-accredited assessment has no credibility in terms of the BEEC, it requires a current certified NABERS Energy base building rating.

The general energy efficiency guidance will be provided as part of the BEEC when issued.

Accredited tenancy lighting assessments

For a lighting assessment to be valid under the BEED Act, it must be performed in accordance with the new CBD Tenancy Lighting Assessment for Offices Rules, by a CBD accredited assessor.

The tenancy lighting assessments may be completed for all of the building, in which the total office space NLA is assessed, or for a selection of tenancies only within the building. Typically, an all building assessment would be undertaken if the building is being prepared for sale. Assessments of tenancies typically would be undertaken if these areas are to be advertised for lease or sub-lease.

The lighting assessment measures only the energy used by the lighting on an area basis. It does not assess or measure lighting output, quality or suitability of the lighting for use in offices.

Penalties for failure

Failure to disclose may result in civil penalties of up to $110,000 for the first day and $11,000 for each subsequent day may be imposed by a Court for each breach of a disclosure obligation. Alternatively, the Secretary of the Department of Climate Change and Energy Efficiency can issue an infringement notice of up to $11,000 for the first day and $1,100 for each subsequent day of non-compliance.

Further penalties may apply for various breaches of the CBD. Refer to the website for further information with links to the Act and subordinate legislation: www.cbd.gov.au

Have you got a CBD action plan?

Napier & Blakeley are experts in the provision of strategic property advice and can assist in getting your property ready for the demands of the full disclosure requirements.

Meeting the requirements for a BEEC in obtaining an accredited NABERS rating and tenancy lighting assessment for your building is time consuming and intensive, which many people underestimate, so be pro active and plan ahead.

The CBD accreditation and training process for performing tenancy lighting assessments is underway. It is expected that tenancy lighting assessments and hence full BEECs will be available from July 2011, so don’t leave it to the last minute to meet your mandatory disclosure requirements and organise a BEEC with a CBD accredited assessor.

Contact 

Our strategic, cost effective advice will best position your property for the future.

Call Napier & Blakeley today to ensure you are ready for the upcoming changes to this legislation on 1 November 2011 or if you want further information on the Commercial Building Disclosure, or any other Napier & Blakeley services please contact any of our offices below:

Melbourne - Rob Howells            03 9915 6300             rhowells@napierblakeley.com
Sydney – Gavin Peach                02 9299 1899              gpeach@napierblakeley.com

Napier & Blakely services:

• Accredited CBD Tenancy Lighting Assessments
• Accredited NABERS Ratings
• Technical Due Diligence
• Capital Expenditure Planning
• Quantity Surveying
• Strategic Asset Management
• Building & Sustainability Consulting
• Property Depreciation

………

Using depreciation as a way to encourage the greening of the build environment has been a hot topic for a number of years. During the recent federal election the Labor party announced policies that included the delivery of such incentives.

Last week via their web site Labor provided a little more flesh to their approach in this area.

We outline the salient details below:

• Scheme starts from 1 July 2011 – 30 June 2015.
• Applies to Retro-fits of existing buildings.
• Applicable to buildings 2 Star NABERS rating or lower looking to achieve 4 stars or higher.
• Available for Office buildings, Hotels and Shopping Centres.
• Provides a 50% increase in deductions over the life of eligible assets.
• Anticipated cost $1bn.

How does it work?

• The scheme will run in the same manner as the recent investment allowances scheme.
• From the 1 July 2011 applications will need to be made to the Government for review and approval prior to any works taking place.
• NABERS assessments will be required before the works commence.
• Upon completion of the works 12 months will need to pass to enable a post construction NABERS assessment to be completed.
• Application with results will need to be submitted to the Government for approval.
• Claim for depreciation may be made with approval in that year accounts.
• Depreciation claims that would otherwise be available can be claimed from the date of practical completion.

The Good

• Fairly generous deduction available given the scale of likely expense to achieve a two star rating increase.

The Uncertain

• This is a proposal and not final legislation.
• There is no current indication what assets will be considered eligible for the 50% allowance.
• The $1bn may be capped by the Government so fewer projects may be eligible.
• How the Government will effectively assess applications.
• Likely to take 3 – 4 years before the incentive reaches owners returns.

Napier & Blakeley’s head of sustainability Roger Walker is one of the members of the committee reviewing the assets that will be included within the scheme.

Napier & Blakeley will keep you informed as more information comes to light. In the mean time should you wish to discuss the above article or any other matters relating to Sustainability or Tax Depreciation please does not hesitate to contact us at Napier& Blakeley.

NSW / ACT / WA / NZ  -  Roger Walker, Alastair Walker -  02 9299 1899
VIC /  SA  / TAS  -  Peter Frith, Rob Howells -  03 9915 6300

……..
Today the Australian government announced that mixed use buildings will be excluded from the CBD legislation for a period of twelve months and major new refurbishments will have a two year exclusion from date of refurbishment.

Following industry consultation the Australian Government Department of Energy Efficiency  and Climate Change set up an industry forum to review the implementation of the Commercial Building Disclosure legislation (mandatory rating legislation).

This group includes Roger Walker, Head of Sustainability at Napier &  Blakeley. We are pleased to advise that Roger’s advice that the legislation should exclude buildings which do not have a minimum of 75% office use has been accepted by the Hon Minister Combet.

The legislation which looks to enable comparison of energy performance of office space will now exclude mixed use buildings, this releases most industrial and retail premises which have an office component over 2,000sqm from the requirements of the legislation for a period of twelve months.

The Department announced today:

” The Government has worked with industry stakeholders to address these complex issues and decided as an interim approach that buildings with less than 75 per cent office space (of the net lettable area 1), will not be required to disclose a NABERS Energy rating. This approach to mixed use buildings is an interim measure during the transition year of the program and will be subject to review by a panel of industry experts. This panel will report back to the Government before the end of July 2011 on their recommendations. Industry will be given clear advice and an appropriate time frame to adapt to any changes, recognising the possible need for metering changes and collection of 12 months data for a NABERS Energy rating.” 

This is a positive move and ensures that the intent of the legislation, to provide comparative ratings for office space, is delivered, with the buildings which are impacted by other uses being excluded.

Whilst parts of the industry would like to see the exclusion as permanent the transition period provides mixed use building owners with a period to review the impact and assess costs to implement metering and other changes to ensure that their office areas can be comparatively assessed against predominately office buildings. Owners in this mixed use category will still need to review their strategy quickly as changes to metering and other areas will take twelve months from implementation to be fully accounted for in a NABERS Energy rating.

Importantly transactions underway and in the pipeline will now be able to move forward without the risk of non compliance or further delay of the transaction for the completion of compliance under the Act. This will alleviate some legal costs and risk reviews for these impacted transactions where the details to obtain a NABERS Rating are not easily met.

To read more information on the legislation and to find out what is needed for NABERS rating please click here to review our earlier update http://napierblakeley.info/sustainability/commercial-building-disclosure-cbd/

Further information on the CBD program, including the amended Determination, is available at www.cbd.gov.au or e-mail Napier & Blakeley for a copy.

Roger Walker, Head of Sustainability at Napier & Blakeley is a representative on the Commercial Building Disclosure Implementation Forum, a representative on the NABERS Stakeholder Advisory Committee, Chairs the ADPIA Sustainability Committee, is a member of the APREA Sustainability Committee, is a registered Valuer and Associate of the Australian Property Institute and works with other industry organisations, business groups and client strategy groups.

Napier & Blakeley can provide you with strategic portfolio planning advice, applications for funding and complete your NABERS ratings for you.

For more info please contact your local office.

NSW / ACT / WA / NZ  -  Alastair Walker -  02 9299 1899
VIC /  SA  / TAS  -  Peter Frith, Rob Howells -  03 9915 6300

The short answer is yes it does, with direct financial support for improvements in emission reductions for commercial buildings.

Election promises impacting the commercial property industry were:

• Green Building Fund extension (now office, retail and hotels that can be NABERS Energy rated) with $30Million dollars available for funding for new application rounds from now until July 2011.
• Tax allowance bonus for Green building improvements, for office buildings, Retail Centres (over 10,000sqm) and Hotels. Conditions will apply, but if you meet them then this is a 14.5% reduction in project costs for improving energy efficiency.

With the details yet to be defined by the responsible departments we assume that the green building fund mark 2 will be delivered fairly quickly and with their previous rounds offering around $15million per round then another two rounds should be undertaken. Perhaps one for January and one for April 2011, which allows for time to set up and then for all funding agreements to be finalised before the tax allowance bonus commences in the following financial year.
The conditions of the tax allowance bonus for Green building improvements will need to be very clear to ensure the financial benefits can be guaranteed for an owner when undertaking a project. Industry consultation for this should commence straight away on the details for this legislation.

The main condition of performance to be eligible for the tax bonus in the election promise was that the works must move a building from a 2 star or lower NABERS Energy rating to a 4 star or higher NABERS Energy rating. Industry input into the criteria for meeting the tax bonus requirements will be required to ensure this policy does encourage investment. On the surface as it stands now, the cost to guarantee the energy improvements will outweigh the benefit received, so this may be as it states, a bonus, rather than an incentive to upgrade your property.

It all moves to NABERS Energy ratings

With the Commercial Building Disclosure (CBD) legislation in place from November 2010 we will see all advertisements for commercial office space over 2000sqm stating the NABERS Energy rating. The funding available federally under the Green Building Fund and tax bonus are dependant on NABERS Energy ratings. Commercial building owners must understand their portfolio energy performance and be working to a strategic NABERS performance strategy, embedding this in contracts with building contractors and building managers.

Costs to upgrade for energy improvements

From our work with environmental strategy and completion of a number of recent commercial building upgrades, when you isolate the energy improvement works the numbers vary from site to site and an order of costs is difficult to assess.

Projects we have recently completed or are under way which are targeting existing buildings to improve to 5 star NABERS Energy range from $50 to $150 psm. For an exemplar building targeted to be the lowest emission multi tenanted building in Australia the costs are coming in considerably higher with the tri-generation system and other emission reduction technologies added to the best practice upgrade. At the top end of the cost scale, would be an early 1970s building requiring new energy and HVAC systems throughout. The cost can be considerable and by this we mean around $600psm and you would want a vacant building to undertake the required work.

Technology and payback analysis

In assessing technology and payback you need to review not just the emission savings but also the impact on water use, outgoings, available funding and most importantly the impact on tenants indoor environment quality.

A review of indoor environment quality impact with the implementation of a dedicated outdoor air handling system with humidity control and energy reduction benefits has shown a significant impact to the improvement of the working environment to tenants but how you calculate the benefit for the payback analysis alters depending on a number of issues such as lease profile, tenant profile and existing NABERS Energy Rating.

A tri-generation system has a significant impact on emission reduction but should you be looking at a multi engine system with undetectable NOx and SOx such as Bennett Clayton engines and how can you size this to create an option for future tenants to obtain their low emission power? We selected this as a first for NSW Local Government Super at 76 Berry Street and as a first use of this technology for a tri-generation installation this gained the exemplar funding under the green building fund.

If you are looking at lighting improvements you need to assess the impact now of the Building Energy Efficiency Certificate (BEEC) and the tenancy lighting assessment within this which you will need to provide publically. Will a few watts per square metre make a difference to a tenant considering a lease or will quality and compliance to Australian standards be more important in their decision making process?

Rating and Funding Advice.

In the first 5 rounds of the Green Building Fund (Round 6 is yet to be released), Napier & Blakeley achieved great success with GBF applications for our clients, securing over $5M of funding for clients including obtaining one of only two awarded exemplar project funding.

Napier & Blakeley can provide you with strategic portfolio planning advice, applications for funding and complete your NABERS ratings for you.

For more info please contact your local office.

Commercial Building Disclosure (CBD) is a national program designed to improve the energy efficiency of Australia’s large office buildings.

The disclosure requirements under the CBD program will commence on 1 November 2010.

The CBD program will ensure that credible and meaningful energy efficiency information is available to prospective purchasers and lessees of large commercial office space. Owners and lessors of commercial office space with a net lettable area of 2,000m² or more will be required to disclose energy efficiency information to prospective purchasers and tenants when the space is to be sold, leased or subleased.

Transitional Provisions

The legislation contains transitional provisions that will apply for the first twelve months of the program (i.e. from 1 November 2010 to 30 October 2011). During this period, a valid National Australian Built Environment Rating System (NABERS) Energy base or whole building rating, must be disclosed. After the transition period, a full Building Energy Efficiency Certificate (BEEC) is required to be disclosed.

Requirements for a Building Energy Efficiency Certificate

The requirements to disclose a BEEC will commence in the second year of the program (i.e. from 1 November 2011) and will include three components:

1.   a NABERS Energy base building rating
2.   tenancy lighting information
3.   generic energy efficiency guidance.

The BEEC will be valid for up to 12 months. At the time of disclosure, the certificate will need to be valid, current and registered on the publicly accessible registry on the program’s website.

For More Information

A new CBD program website has been established, with links to the Act and subordinate legislation:  www.cbd.gov.au

NABERS Energy Base Building Rating Checklist

The following information is required for a NABERS Energy Base Building rating. This checklist covers the minimum of information needed, but individual ratings may require additional information or documentation depending on the individual circumstances of the premises.

Rated Hours 

• Documentation notifying the building manager of agreed Hours of Service for normal and after-hours operation.
• After-hours air conditioning request logs.
• Any documentation required to verify hours of occupancy over 60 hours a week.
• Permission from any affected third parties to survey staff managers or supervisors responsible for the Functional Spaces in the premises to be rated to determine hours of occupation; and the survey itself, if required.

Energy & Water Usage

• Single-line diagrams, electrical circuit schedules and diagrams to ensure all energy sources are included.
• Evidence of accuracy and validation of high-voltage electricity meters and all other non-utility meters and records of non-utility meters.
• Documentation of any agreements between tenants or between building owner and tenants, to allocate costs or responsibility for consumption (for example for shared facilities or shared supplies).
• Utility billing data covering the full 12 months of the Rating Period for each energy source (e.g. Electricity, gas, diesel) used in the rated premises.
• Bills for deliveries of any discrete (batch) supplies, showing quantities delivered and how they were measured.
• Documentation of any GreenPower purchases, including the allocation of bulk purchases.

Penalties

Failure to disclose may result in civil penalties of up to $110,000 for the first day and $11,000 for each subsequent day may be imposed by a Court for each breach of a disclosure obligation. Alternatively, the Secretary of the Department of Climate Change and Energy Efficiency can issue an infringement notice of up to $11,000 for the first day and $1,100 for each subsequent day of non-compliance.

Further penalties may apply for various breaches of the CBD.  Refer to the website for further information www.cbd.gov.au.

Have you got a CBD action plan ?

Napier & Blakeley are experts in the provision of strategic property advice and can assist in getting your property ready for the demands of this new legislation.

Call Napier & Blakeley today to ensure you are ready for this legislation.

With over 25 year’s industry experience, we can assist you in:

• Sustainable Property Solutions
• Quantity Surveying
• Property Depreciation Allowances
• Green Star & NABERS Ratings
• Due Diligence & Capex Planning
• Insurance Reinstatement Costs
• Project Management

Our strategic, cost effective advice will best position your property for the future.

NSW / ACT / WA / NZ  -  Rod Clarke, Alastair Walker -  02 9299 1899
VIC /  SA  / TAS  -  Peter Frith, Rob Howells -  03 9915 6300