Churchwarden James Balfour, Lord Mayor Clover Moore, CEFC CEO Oliver Yates and Eureka Fund Management's Rachael Scott.

A $700,000 Environmental Upgrade Agreement has been signed for the Anglican Church’s St James’ Hall building at 169-171 Phillip Street, Sydney.

The EUA, number three for the City of Sydney, will fund energy efficient lighting, airconditioning and building management system upgrades for the building, owned by the Anglican Church Property Trust Diocese of Sydney on behalf of the Parish of St James.

The tripartite agreement between the City of Sydney, the Parish and the Australian Environmental Upgrade Fund (managed by Eureka Funds Management and contributed to by the National Australia Bank and Clean Energy Finance Corporation) is expected to reduce base building energy use and outgoings by around 30 per cent.

Under an EUA, a financier provides the building owner with funds to upgrade its asset, with the tenant repaying the loan through an additional charge on their rates notice, called an environmental upgrade charge, which is no greater than the savings made from lower energy bills. The arrangement removes the split incentive of building upgrades while providing low interest finance that may not otherwise be accessible, especially to small and medium building owners.

Work on the building, which is tenanted by barristers’ chambers, has already begun and is due for completion in October.

“The Parish of St James is delighted that the EUA will enable it to install new systems and equipment to improve the energy efficiency of the building,” churchwarden James Balfour said. “The project provides benefits for our tenants as well as for us and for the environment. It’s a win-win-win.”

James Balfour, Clover Moore and Oliver Yates.

CEFC chief executive Oliver Yates said the deal reflected “a growing market for EUAs”.

Lord Mayor Clover Moore agreed it was an encouraging sign to see building owners using EUA finance to improve building performance and reduce emissions.

“I hope to see many others access EUAs to continue to deliver great results for our city,” Ms Moore said.

Building manager JLL said the EUA would lead to benefits for the tenants and owner.

“As the building managers, we are pleased to have participated in this project with our client,” JLL director of NSW property management Troy Shepherd said. “Improving the environmental performance of the building will not only result in enhanced capital value for the owners, but also provides long term attractiveness for tenants.”

NSW Environment Minister Rob Stokes also welcomed the addition.

“EUAs are a great way for property owners to gain competitive finance for work that improves the value of their assets,” Mr Stokes said.

“It is not just the building owner that benefits – buildings with high energy productivity are generally better places to work, have higher tenancy rates and have a smaller carbon footprint – and that is great for our economy and environment.

“Environmental Upgrade Agreements are a key resource efficiency initiative and show that business and environmental goals work together and have a future in NSW.”

EUAs have not been without their problems, however, with the uptake much slower than has been expected due to a number of factors including limited awareness in the building sector, a depressed market, the low cost of capital (especially for large institutional owners) and the perception of agreements being overly complex.

A City of Sydney source told The Fifth Estate the tides were turning, though, and uptake of EUAs was gaining momentum and the building sector was becoming increasingly aware of how it could benefit. Owners too, the source said, were reporting to the City that the process was much more straightforward than perceived.