Building Energy Efficiency Disclosure Act 2010 Commercial Building Disclosure Program

Building Energy Efficiency Disclosure Act 2010 Commercial Building Disclosure Program The Building Energy Efficiency Disclosure Act 2010 established a mandatory regime called the Commercial Building Disclosure (CBD) Program in relation to buildings in reaction to climate change. The CBD Program requires the registration and disclosure of a Building Energy Efficiency Certificate (BEEC) in relation to the sale or leasing of certain buildings. Substantial penalties can be imposed if the regime is not complied with. Although the CBD Program s operation is currently restricted to larger commercial office buildings, the Act has been designed to be capable of applying to other types of buildings by government decision and without the need for new legislation to pass Parliament. This means the operation of the Act could be expanded in the future to other building types, e.g. other commercial buildings such as hotels, retail buildings, schools and hospitals. Objectives of the Act The Act s stated objective is to improve the energy efficiency of commercial buildings in Australia. What buildings does the Act apply to? The Act only refers to disclosure affected buildings and disclosure affected areas of a building. It states that the Minister for Climate Change, Energy Efficiency and Water may determine the kinds of buildings or kinds of affected areas of buildings that the Act is to apply to. The Minister has made a determination that, on and from 1 July 2017, the Act will apply to the following buildings and areas: commercial office buildings with a net lettable area of 1,000m² or more (with strata titled offices being excluded); and commercial office areas in a building being net lettable areas of 1,000m² or more (and, again, with strata titled offices being excluded). Who does the Act apply to? Being Commonwealth law, the Act s application is restricted by the Commonwealth Constitution to Constitutional Corporations, which includes: any company incorporated in Australia under the Corporations Act; any other corporation including foreign companies, not for profit associations incorporated under State or Territory incorporated associations legislation and being a corporation engaged in a significant number of financial activities or engaged in a significant number of trading activities; and statutory corporations. In other words, most building owners and landlords of premises. KCL Law 2017 code X_2 19 June 2017 Level 4 555 Lonsdale Street Melbourne VIC 3000 T 03 8600 8888 kcllaw.com.au 1

Building energy efficiency Know your obligations Fundamental obligations When the Act applies (e.g. when a Constitutional Corporation is owner of a disclosure affected building or a building containing a disclosure affected area commercial office area of 1,000m² or more): the building owner must not sell or lease a disclosure affected building unless a BEEC for the building (or the disclosure affected area in the building) is registered; a landlord in the case of a lease must not sublease a disclosure affected building unless a BEEC for the building (or the disclosure affected area in the building) is registered. Registration of a BEEC Registration of a BEEC must take place before: advertising the building for sale or lease; inviting offers for purchase or lease; and offering to enter into put or call options to sell or lease. In the advertisement for the sale or lease of a disclosure affected building a valid energy rating must be clearly disclosed. This rating will be found in the BEEC. The owner must give to a potential buyer or tenant if requested a copy of the registered BEEC as soon as reasonably possible after request. While the obligation under the Act to disclose a BEEC to a buyer or tenant only arises on request by a potential buyer or tenant, disclosure of a BEEC in relation to a sale may be required in a Vendor s Statement given under Section 32 of the Sale of Land Act. Consequence of breach Failure to register a BEEC when required or to disclose it when requested will not render void, voidable or unenforceable a contract of sale or a lease. The building owner (or landlord where appropriate) will, however, become liable to fines of up to $210,000 for each offence, and to fines of up to $21,000 per day for subsequent offences occurring consecutively in relation to the same building or area. When the breach is failure to register a BEEC the Act states that a new offence occurs each day that the building owner continues to offer for sale or lease a disclosure affected building without a valid BEEC being registered. Each time an advertisement appears for the sale or lease of a disclosure affected building without an energy rating appearing is a separate offence under the Act. It is, accordingly, easy to see how fines for breaches of the Act could quickly add up to substantial amounts. KCL Law 2017 code X_2 19 June 2017 Level 4 555 Lonsdale Street Melbourne VIC 3000 T 03 8600 8888 kcllaw.com.au 2

Building energy efficiency Know your obligations Accessories to breaches Breaches of the Act can also extend to persons who aid, abet, counsel, procure or induce a breach of the Act or who are any way directly or indirectly knowingly concerned in or a party to a breach of the Act. Accordingly, agents and lawyers and others involved in selling and leasing transactions of disclosure affected buildings need to make sure the Act is complied with otherwise they could face fines of the same amounts that building owners may be subject to. Exemptions Exemptions from disclosure may apply where: the building is used for police or security operations; the characteristics of the building mean that it is not possible to assign an energy efficiency rating or to assess the energy efficiency of lighting; the building falls into a prescribed class of exempt buildings. The prescribed classes of exemptions include circumstances where: an unsolicited offer is made to buy or lease a building; major refurbishment of the building is underway. There are no exemptions for transfers within a corporate group. Exemptions are not automatic. Exemptions must be applied for and obtained before selling or leasing activities start otherwise the building owner or landlord may in breach of the Act and liable for substantial fines until the exemption is granted. What is a Building Energy Efficiency Certificate? An example of a BEEC has been attached. A BEEC must contain: an energy efficiency rating for the building (or the disclosure affected area in a building); and an assessment of the efficiency of the lighting for the building (or the disclosure affected area in a building) that might reasonably be expected to remain if the building is sold or let or sublet. Standard energy efficiency guidance information which includes information on how building owners and tenants might improve a building s energy efficiency is available at. A BEEC is: current for 12 months from the date of issue; and valid only if issued by an accredited assessor applying relevant assessment methods and standards. The cost of obtaining a BEEC will vary depending on the size and complexity of the property. The approximate cost estimated by the industry is between $4,000 for simple buildings and up to $13,000 for more complex buildings. KCL Law 2017 code X_2 19 June 2017 Level 4 555 Lonsdale Street Melbourne VIC 3000 T 03 8600 8888 kcllaw.com.au 3

Building energy efficiency Know your obligations The relevant energy efficiency rating system used for the purposes of providing a BEEC is the National Australian Built Environment Rating System (NABERS). What is NABERS? NABERS is the National Australian Built Environment Rating System managed by the NSW Department of Environment Climate Change and Energy. NABERS is a performance-based rating system for existing buildings. NABERS rates a building on the basis of its measured operational impact on the environment and provides a simple indicator of how you are managing these environmental impacts compared with your peers and neighbours. [per www.nabers.com.au] Under this system, building energy performance is measured on a scale of 0 to 6 stars. A 0 star rating means the building is performing well below average and has scope for improvement while a 6 star rating means the building is doing well and has half the greenhouse gas emissions or water use of a 5 star rated building. Building Energy Efficiency Register BEECs must be registered with the Building Energy Efficiency Register. Energy Efficiency Non-Disclosure Register The Energy Efficiency Non-Disclosure Register lists individuals and corporations that have persistently failed to comply with the CBD Program. Details of non-compliance are usually listed on the Energy Efficiency Non-Disclosure Register if there have been two or more instances of nondisclosure within 12 months. Assessors and auditors Only accredited assessors can apply for a BEEC on behalf of building owners or landlords. Both assessors and auditors have the power to enter buildings to carry out their functions and it is an offence for building owners and tenants to obstruct them. What should building owners do now? If you are a building owner or landlord of commercial office buildings or premises with a net lettable area of 1,000m² or more and you are offering the building or premises for sale or lease, you will need to engage an accredited assessor to undertake the necessary assessments and lodge an application on your behalf for a BEEC. 0 0 0 The register can be searched for current and expired BEECs issued in respect of disclosure affected buildings and disclosure affected areas in buildings. KCL Law 2017 code X_2 19 June 2017 Level 4 555 Lonsdale Street Melbourne VIC 3000 T 03 8600 8888 kcllaw.com.au 4

BUILDING ENERGY EFFICIENCY CERTIFICATE BUILDING DETAILS Building name BEEC Example Building Certificate no. Owner's name Example Company Name Issue date 6/10/2011 Building address 123 ANYWHERE STREET BRISBANE 4000 QLD Net Lettable Area of the building 2,668.0 m² Current to 18/09/2012 CBD assessor name CBD assessor no. CBD Assessor CBDA9999 PART 1 - NABERS ENERGY RATING This building has achieved 3-STAR NABERS ENERGY RATING (excluding GreenPower) Rating scope - All building PART 2 TENANCY LIGHTING ENERGY EFFICIENCY ASSESSMENT This certificate uses 1 lighting assessment that was current for the building at the time of issuing this certificate. The lighting assessment is recorded as covering part of the building and relates to 8 functional spaces with existing lighting systems. There are proposed lighting systems contained in this certificate. PART 3 ENERGY EFFICIENCY GUIDANCE Part Three contains general guidance on how building energy efficiency might be improved for building owners and tenants. Issued under the Building Energy Efficiency Disclosure Act 2010 to disseminate information and encourage energy efficiency in large commercial office buildings in Australia. Page 1 of 8

BUILDING DETAILS PART 1 NABERS* ENERGY RATING Building address 123 ANYWHERE STREET BRISBANE 4000 QLD NABERS rating no. N11111 Certified date 18/09/2011 Current to 18/09/2012 NABERS ENERGY RATING This building has achieved 3-STAR NABERS ENERGY RATING** (excluding GreenPower) Rating scope Base Building Rated area 2,668.0 m² Rated hours 67.0 BUILDING CONSUMPTION & EMISSION DETAILS Annual emissions Annual emissions intensity Annual consumption 801,286 kg CO²-e per year 300.3 kg CO²-e/m² per year 4,087,376 MJ per year NABERS ASSESSOR DETAILS Assessor name NABERS Assessor Assessor number 23456 ABOUT NABERS ENERGY RATINGS 0... Very poor 1... Poor 2... Below average 2.5 to 3... Average 4... Good 5... Excellent 6... Market leading * National Australian Built Environment Rating System is a joint initiative of the Australian, State and Territory governments. ** This rating must be used in all advertising. Page 2 of 8

ASSESSMENT SUMMARY PART 2 TENANCY LIGHTING ENERGY EFFICIENCY ASSESSMENT Building address Assessment scope 123 ANYWHERE STREET BRISBANE 4000 QLD All building Assessed NLA 2,668.0 m² CBD tenancy lighting energy efficiency assessments are expressed as Nominal Lighting Power Density (NLPD) # NLPD Performance comparison < 7.0 W/m² Excellent 7.0-10.0 W/m² Good 10.1-15.0 W/m² Median > 15.0 W/m² Poor Assessor name Assessor no. Assessment no. Space ID Certified date Current to CBD Assessor CBDA9999 LA9999 1, 2, 3, 4, 5, 6, 7, 8 6/10/2011 6/10/2012 Space ID Functional space name NLA (m²) Existing lighting system ## NLPD (W/m²) Control Capacity 1 Level 1 401.0 20 Sophisticated 2 Level 2, Suite 1 200.5 18 Average 3 Level 2, Suite 2 200.5 12 Basic 4 Level 3 401.0 n/a n/a Not assessable 5 Level 4 372.0 11 Basic Desktop task lighting used 6 Level 5 372.0 10 Basic Luminaires delamped 7 Level 6 372.0 n/a n/a Not assessable 8 Basic Scheduled upgrade 8 Level 7 349.0 18 Basic Voltage reduction 6 Sophisticated Make good devices used Disclaimer: The Australian/New Zealand Standards 1680 series makes recommendations for the lighting of interiors and workplaces. This assessment makes no judgment about the performance of the installed lighting system against the recommendations of those standards. Prospective tenants or owners should check that the lighting system is fit for their requirements. # The NLPD has been rounded to the nearest whole number. Performance comment NLPD (W/m²) ## Definitions and other information on how to interpret the lighting assessments are at Attachment A. Proposed lighting system ## Control Capacity Reason for assessment Page 3 of 8

PART 3 ENERGY EFFICIENCY GUIDANCE FOR BUILDING OWNERS AND TENANTS GUIDANCE ON HOW ENERGY EFFICIENCY MIGHT BE IMPROVED BUILDING OWNERS^ Guidance about... To improve building energy efficiency, a building owner can: 1. having an energy management plan 2. reviewing skills and responsibilities A. develop and promote a corporate-wide energy management policy; B. implement the policy with an action plan that includes targets, responsibilities and resources; C. establish a program of regular, independent energy audits, and implement the recommendations made by audits A. assign responsibility for managing energy to a key member of a management team responsible for the building; B. ensure the on-site building manager understands how all building systems and services are designed to operate; C. set up an ongoing program of energy management training for key staff 3. tenant collaboration A. collaborate with managers and tenants to improve and maintain energy efficiency; 4. improvements to lighting energy efficiency B. advise tenants about the building owner s commitment to managing energy in the building; C. formalise shared responsibilities between the building owner and a tenant by making ^ Source: Building Energy Efficiency Disclosure Determination 2011 specific commitments, for example, by negotiating with the tenant to have energy efficiency clauses in a lease contract (a green lease); D. provide a building user guide for occupants of the building and run information sessions about how lighting and how heating, ventilation and air conditioning (HVAC) systems influence comfort and energy costs; E. include in a user guide mentioned in paragraph (d), information about how daily tasks like opening and closing blinds and switching-off lights can improve energy efficiency; F. seek regular tenant feedback on thermal comfort and lighting levels, and set up systems for responding to complaints; G. discuss with tenants the use of economical indoor temperature ranges, and recommend, for example, a temperature range of 20 22 C in winter and 23 25 C in summer; H. liaise with tenants about their hours of occupation, and realign HVAC operating times to reflect any changes to the hours of operation A. replace old lights with energy efficient ones, for example, with compact fluorescent lamps that use existing fittings; B. label light switches with clear descriptions of the associated lighting areas; C. install motion or noise sensors, and install switch-off timers, for lights in areas that are not always occupied, for example, in storage areas; D. recommission lighting system controls to ensure they are working correctly; E. remove light fittings from over-lit areas (after seeking advice about light levels and consulting with occupants) Page 4 of 8

Guidance about... To improve building energy efficiency, a building owner can: 5. opportunities for further energy saving improvements and upgrades 6. on-site management systems and procedures 7. equipment settings, maintenance procedures and replacement schedules A. check whether the temperature settings on domestic hot water systems can be reduced; B. ask tenants to trial using the recommended minimum settings for domestic hot water systems as follows: (i) for storage systems the minimum safe level is 60 C; (ii) for instantaneous systems the minimum safe level is 50 C; C. ask tenants to switch off hot water systems in areas where they are not essential; D. check whether hot water systems can be switched off overnight and on weekends; E. install programmable timers on instantaneous hot water systems; F. install flow control devices on hot water taps and showerheads and insulate hot water pipes and tanks where it is appropriate to do so; G. upgrade outdated electrical appliances and equipment with more energy efficient models; H. make sure that electrical equipment is operating on low energy mode or standby mode and is switched off when not in use; I. seek advice about upgrading the building envelope s thermal performance, for example, advice about insulation, air seals and solar controls on glazing A. install real-time smart metering devices for sub-metering major equipment and tenancies; B. monitor energy consumption in the building (for example, by making regular checks on bills, building management control system data, metering data and other relevant data), look for trends and diagnose areas of energy waste; C. keep management records up to date (for example, commissioning data, asset plans, complaints logs, and operations and maintenance manuals) A. identify heating, ventilation and air conditioning (HVAC) equipment that is due for replacement and seek advice about energy efficient replacement options; B. check temperature sensor locations and move equipment (or sensors) if heating or cooling sources are interfering with HVAC settings; C. develop a preventative maintenance program and revise the operations and maintenance (O&M) manuals to reflect this; D. train the on-site building manager to carry out simple HVAC maintenance tasks, and highlight the tasks and the building manager s responsibilities in the O&M manuals; E. check that all preventative tasks relating to the maintenance of the HVAC system are included in the HVAC maintenance contract; F. aim for long-term maintenance contracts, recognising that a longer term can enable contractors to better diagnose problems and identify areas for improvement; G. encourage maintenance contractors to provide feedback on energy waste, and ensure this feedback is acted upon 8. alternative fuels A. prioritise energy efficiency initiatives over the purchase of alternative fuels, recognising that the purchase of alternative fuels can reduce the building s carbon emissions but will not reduce the building s actual energy consumption; B. seek advice from suppliers about the suitability of purchasing alternative fuels Page 5 of 8

GUIDANCE ON HOW ENERGY EFFICIENCY MIGHT BE IMPROVED TENANTS^^ Guidance about... To improve the energy efficiency of an area of a building, a tenant can: 1. lease negotiations A. ask the building owner to include energy efficiency clauses in the lease contract (a green 2. improvements to lighting energy efficiency lease); B. use the negotiation period for the green lease to establish procedures for collaborating with the building owner on energy saving initiatives A. discuss the results of the tenancy lighting assessment (that building owners are required to ^^ Source: Building Energy Efficiency Disclosure Determination 2011 arrange before entering a new lease) with the building owner to identify opportunities for improvement; B. replace old lights with energy efficient ones where they suit the existing fittings, and seek expert advice in the case of more complicated upgrades; C. label light switches with clear descriptions of the associated lighting areas; D. ask the building owner to adjust lighting controls so they suit the tenant s requirements; E. look for opportunities to install automatic lighting controls, such as timers or sensors, for areas that are not always occupied 3. building management A. arrange a site meeting with the building manager before installing or adjusting 4. energy efficiency policies and procedures supplementary heating or cooling systems; B. seek advice about temperature settings and other energy saving devices for IT server rooms; C. ask the lessor for an upgrade from normal tenant sub-metering to real-time or smart metering, and discuss the options and breakdowns for monitoring and reporting; D. ask the lessor for occupant-controlled master isolation switches so the last person to leave the office can switch off lighting and appliances; E. ask the building manager to provide a building user guide that includes instructions about using blinds, windows and doors, being a guide that explains how tenants can make shading and natural ventilation work with the heating, ventilation and air conditioning system rather than against it; F. ask the building manager for advice about the optimum location of appliances, such as fridges, that generate heat; G. set up procedures for the prompt reporting of complaints and feedback about building services; H. ask the building manager to make seasonal adjustments to indoor temperatures that are within the range of 20 22 C in winter and 23 25 C in summer A. develop and promote a corporate-wide energy management policy and action plan that includes targets, responsibilities and resources, and schedule regular progress reviews at senior management, executive or board meetings; B. check that all equipment and appliances are operating in low energy or standby mode; C. introduce a switch-off policy that requires staff to switch-off equipment when they leave the office or when the equipment is not in use; D. switch off printers, computers, monitors and other electronic equipment that consumes energy, even in standby mode, overnight; E. specify energy efficiency savings for all equipment and appliances in procurement guidelines; F. commission energy audits to be conducted by an independent third party, and check that the tenant s energy action plan is being implemented Page 6 of 8

Guidance about... To improve the energy efficiency of an area of a building, a tenant can: 5. education and awareness A. appoint a staff member to be an 'energy efficiency champion' and make the person responsible for implementing the energy action plan, including the switch-off policy mentioned in item 4; B. make the building user guide available to staff, and ensure it is covered by induction sessions for new staff; C. use information sessions, posters and signs to remind staff about saving energy and reducing the load on the air conditioning system; D. focus the awareness of staff on day-to-day activities that will improve comfort and allow building services to operate in the most energy efficient way, for example, activities such as: (i) opening and closing blinds to make the most of natural light or to block unwanted heat; (ii) switching off lights or hot water systems when they are not in use; (iii) switching off supplementary air conditioning systems in vacant rooms; (iv) using dishwashers only when they are full; E. make sure all staff members know how to use the building s air conditioning system correctly; F. check with the building manager about the most efficient way of using building services after hours; G. make a note if staff attempt to alter or supplement the heating, ventilation and air conditioning system, for example, by blocking diffusers or by using personal heaters, and, in each case: (i) asking the building manager for help in diagnosing the problem; and (ii) ensure action is taken to resolve it; H. ask staff to use hot water efficiently and immediately report hot water leaks 6. alternative fuels A. prioritise energy efficiency initiatives over the purchase of alternative fuels, recognising that the purchase of alternative fuels can reduce the building s carbon emissions but will not reduce the building s actual energy consumption; B. seek advice from suppliers about the suitability of purchasing alternative fuels Page 7 of 8

ATTACHMENT A DEFINITIONS Definitions and other information on how to interpret the tenancy lighting energy efficiency assessments are in accordance with the CBD Tenancy Lighting Assessment for Offices Rules, available from the CBD website at. Nominal Lighting Power Density (NLPD) The NLPD is calculated and reported for each assessed functional space. It is based on dividing the total power of the base lighting system in the assessed space by the Net Lettable Area (NLA) of that space. Existing Lighting System The existing lighting system, in an owner occupied functional space, refers to the lighting that might reasonably be expected to remain immediately prior to any subsequent lease or sublease. In a leased space, it refers to the lighting that might reasonably be expected to remain at the conclusion of the lease or sublease, disregarding the impact of any make good clause or any negotiations that may occur between the landlord and the tenant. It does not include desk mounted task lighting nor architectural or feature lighting installed by the owner, lessee or sublessee. All other lighting will generally be included. In an unoccupied functional space, it refers to the lighting that exists at the time the assessment is conducted. Control capacity Basic Most of the lighting within the functional space relies on manual switching to turn lights on and off or where switching zones are very large. Average At least 50% by area of the lighting within the functional space is managed by a time based lighting control system that ensures that lights are turned off outside of normal working hours, rooms are individually controlled and general switching zones are less than 250m². Sophisticated At least 50% by area of the lighting within the functional space is managed by an occupancy based control system that ensures that lights only operate when the space is occupied, rooms are individually controlled and general switching zones are less than 100m². Fully functioning lighting control systems may reduce the energy consumption of the installed lighting system by reducing the amount of time the lights are on or by reducing the operating power through dimming strategies. This assessment has identified the level of sophistication of the installed lighting controls but has not verified their functionality. Prospective tenants or owners should check the ongoing functionality of the installed lighting control system, its ability to be modified if required and whether it is fit for their requirements. Performance comment The performance comment describes any additional features of the lighting system that may affect its energy or functional performance. Proposed lighting system Proposed lighting refers to the lighting system as it may exist following either an owner/lessor proposed upgrade or resulting from a make good provision in an existing lease/sublease where the relevant work is expected to be completed within three months of the lighting assessment. Prospective buyers, lessees and sublessees should assume that the existing lighting remains in place in the absence of specific assurances from the seller or lessor that the work to install the proposed lighting has in fact been carried out. Reason for assessment Scheduled upgrade - Scheduled upgrade refers to works that, at the time of the assessment, were to be carried out within three months on the lighting system in the relevant functional space by the owner. Make good - Make good refers to works that, at the time of the assessment, were to be carried out within three months on the lighting system in the relevant functional space by the outgoing lessee or sublessee. DISCLAIMER The Australian and New South Wales governments do not guarantee the accuracy, reliability, or completeness of the materials and assumes no legal liability whatsoever arising from or in connection with the information contained in Part One and Part Two of this certificate. The Energy Efficiency Guidance for Building Owners and Tenants in Part Three provides general guidance only and does not take into account individual circumstances. The Australian and NSW governments recommend that users exercise their own skill and care with respect to the use of the information contained in this certificate and that users carefully evaluate the accuracy, reliability, currency, completeness and relevance of the certificate for their purposes, including seeking professional advice, as appropriate. ISSUING AUTHORITY Issued by the Department of Climate Change and Energy Efficiency, under the Building Energy Efficiency Disclosure Act 2010. Page 8 of 8