Building Upgrade Finance has been passed into law in South Australia, which means there’s another tool in the arsenal for Adelaide to go carbon neutral.

The Local Government (Building Upgrade Agreements) Amendment Bill 2015 will allow building upgrade finance – or Environmental Upgrade Agreements – to be used by commercial property owners to retrofit their properties. The mechanism allows access to cheap finance from banks for upgrade activities, with loans repaid through increases to council rates, which are generally offset by cheaper energy bills.

SA Climate Change Minister Ian Hunter said the legislation would overcome the barriers to retrofitting commercial buildings and lead to significant economic activity, job creation and emission reductions.

“This bill has the potential to create hundreds – if not thousands – of important jobs and free up more than half a billion dollars in potential CBD capital investment,” Mr Hunter said.

“It clears the way for building owners to begin revitalising our ageing building stock, which will have the added benefit of advancing our plans for Adelaide to become the world’s first carbon neutral city.

He said building upgrades could reduce operating costs, increase yields, help attract and retain tenants, and improve asset values.

“Benefits to tenants include net reductions in operating costs, improved indoor amenity, staff productivity and contributions towards corporate social responsibility goals – not to mention greenhouse gas savings of up to 32 per cent.”

The news was welcomed by the Property Council, whose SA executive director Daniel Gannon said building upgrade finance offered a number of benefits over traditional forms of finance.

“The potential is limitless and could be applied to offices, shopping centres, hotels, healthcare facilities, university buildings, factories and warehouses,” he said.

Local Government Association chief executive Matt Pinnegar said the bill would also benefit council ratepayers.

“The local council’s participation in the mechanism could attract investment in its area, facilitate upgrades of ageing building stock, revitalise the urban environment, reduce emissions and deliver economic benefits,” he said.

“We see this very much as a win-win for councils, landlords and tenants.”

Building upgrade finance, however, has seen generally slow take-up in other states. Potential roadblocks include that owners of low-grade commercial offices, and property that is privately owned, typically have poor understanding of and engagement with sustainability initiatives, or little motivation to undergo upgrades.

The latest 1200 Buildings survey in Melbourne found that 29 per cent of respondents were not interested in using environmental upgrade finance, while 14 per cent did not know. However, 30 per cent were “quite” or “very” interested, and 27 per cent were “a little interested”.

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