Alert - Melbourne takes the lead in green building retrofits
October, 2010 - Melbourne, Victoria
The Victorian parliament has passed legislation that will make it easier for commercial building owners and occupiers in the City of Melbourne to obtain finance for environmental retrofitting works.
The Local Government and Planning Legislation Amendment Act 2010 (Vic) (LP&G Act) was passed on 14 September 2010. The LP&G Act, among other things, amended the City of Melbourne Act 2001 (Vic) (City of Melbourne Act) by inserting a new Part 4B.
Framework established by Part 4B
The new Part 4B of the City of Melbourne Act empowers Melbourne City Council (Council) to enter into an Environmental Upgrade Agreement (EUA) with the owner or occupier of a commercial building and a lender.
Provided that the building in question is primarily non-residential and situated on rateable land within the City of Melbourne, the owner/occupier of the building will be entitled, under the EUA, to obtain finance from the lender for the purpose of funding works that improve the energy, water or environmental efficiency or sustainability of that building.
Under an EUA, the owner of the rateable land will be liable to pay an Environmental Upgrade Charge (EU Charge) levied by Melbourne City Council. The EU Charge consists of the amount advanced by the lender plus Council administration fees. Council will in turn use the revenue from the EU Charge to repay the lender.
Content of EUA
An EUA must be in writing and contain the following:
- an outline of the works to be undertaken on the rateable land
- the funds to be advanced by the lender, including the principal amount plus interest;
- the payment schedule for the EU Charge
- agreement by the owner/occupier to pay the EU Charge, and
- agreement by Council that it will use the funds received under the EU Charge to repay the lending body.
Preconditions to EUA
The following conditions must be satisfied before the Council is permitted to enter an EUA:
- Council must give notice to and obtain consent from the owner/occupier regarding their liability to pay the EU Charge
- the owner of the rateable land must give notice to any existing mortgagee in respect of the rateable land, and
- The lending body must confirm to the Council that the total value of the EU Charges does not exceed the capital improved value of the land prior to the commencement of works under the EUA.
Declaration of EU Charge
After entering an EUA, Council must declare an EU Charge by giving written notice to the person liable to make payments under the relevant EUA (addressee). The notice must specify:
- the EUA under which the EU Charge is levied
- the amount for which the addressee is liable, and
- that penalties may apply if the addressee fails to pay the EU Charge.
Unpaid EU Charge
An unpaid EU Charge can be treated by Council in the same way as unpaid rates and charges. Council can recover the EU Charge, plus interest by issuing proceedings and obtaining judgement. If the amount remains unpaid for three years and there is no current agreement relating to the payment of the charge, Council can sell the land.
