Building Upgrade Finance
Author: Cherry Energy Solutions
NSW local councils now offer Building Upgrade Finance (BUF)
- City of Sydney
- Lake Macquarie City
- North Sydney
- City of Parramatta
Businesses across NSW can now access exclusive funding for LED lighting and solar projects.
Cherry Energy Solutions is the leading provider of council-based financing for energy efficiency upgrades
Building Upgrade Finance (BUF) is a council-based financing mechanism enabling business owners, tenants and investors to better access long term finance for environmental upgrades, including LED lighting and solar energy, to existing commercial and non-residential buildings on attractive terms.
From September 2018, City of Parramatta has waived fees for the next 10 agreements. Businesses in the City of Parramatta and beyond can now access:
- 100% private finance with flexible payment terms
- $0 upfront costs for cash flow positive solutions
- Extremely attractive 10-year funding at competitive rates, with the security of fixed interest finance
How does BUF work?
- The building owner and tenant agree to carry out environmental upgrade works such as an LED lighting or solar PV upgrade.
- The building owner, council and finance provider voluntarily enter into a BUF agreement.
- The finance provider agrees to advance funds for the environmental upgrade works.
- The council collects repayments for the environmental upgrade works through the rates system and then passes the repayments on to the finance provider.
- The building owner can ask tenants to contribute towards the cost of the upgrade through the savings achieved with the energy efficiency upgrade.
What are the benefits of BUF for businesses?
- Reduce operating costs by cutting energy bills
- Reduce the risk associated with increasing energy costs
- Increase renewable energy uptake
- Increase building value
- Reduce greenhouse gas emissions
- Improve working conditions
Hussey & Co’s 604kW solar PV system was financed through a BUF and now saves them $99,000 annually!
Building Upgrade Finance is a win-win for all stakeholders
|BUILDING OWNERS & LANDLORDS||TENANTS|
|With BUF, a lender provides finance to a building owner using the land or building as security and the local council collects repayments through the rates system.
Security The use of the council rates system means that a BUF loan is prioritised over other debts attached to the land or building. The loan is therefore highly secure, making it possible to access capital at competitive rates over a longer period of time.
No Upfront Costs Upgrades can be made at zero upfront cost, with lower monthly repayments than previous energy costs, resulting in dramatically improved cash flow.
Flexibility The BUF is tied to the property and does not increase the personal debt of the building owner. If the property is sold, the BUF charge may be transferred to the new owner.
Win-Win BUF provides a mechanism to address differing incentives between landlords and tenants. Landlords can share the costs of improving the building in agreement with tenants who will benefit from the funded works through reduced energy bills. New South Wales Legislation requires tenant consent before this can occur.
|The tenant stands to benefit from day one of their environmental upgrade.
Energy Efficiency Tenants can enjoy the benefits of a more comfortable, ambient and environmentally friendly tenancy with reduced operating costs and energy bills.
Win-Win If the tenant is asked to contribute money towards BUF, they can simply redirect some of the money currently being spent on energy towards a better performing tenancy. They will remain cash flow positive as the loan repayments will be lower than the energy savings.
|BUF can be used by councils to encourage business owners to increase the performance of their building and to save water, energy and emissions. The council’s role is to levy the BUF loan repayments through the council rates system and remit the payments to the finance provider.
Reduced Environmental Impacts Upgraded buildings attract investment, reduce environmental impacts, reduce pressure on infrastructure and increase the competitiveness and livability of local building stock.
Opportunities Building upgrades can boost local jobs and business opportunities for efficiency products and services.
For more information visit https://www.cityofparramatta.nsw.gov.au/business-development/building-upgrade-finance
Disclosure Cherry Energy Solutions does not provide advice in relation to accounting, tax or other implications for entering into any financial instruments. Terms, conditions, fees and charges apply and are available on application. Loans subject to normal lending criteria and approval. The information may contain forward-looking statements.