Green Buildings and Green Leases
What Government Agencies Need to Know
Client Newsletter - December 2008
Summary: The Victorian government is committed to managing environment issues when it leases buildings and has developed ‘Green Lease Provisions’ to be incorporated into government leases. In this newsletter we explain the policies and considerations that apply to government agencies when dealing with ‘Green’ leases, whether as landlord or tenant, and the ratings that apply.
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Green Buildings and Green Leases
What is a National Australian Built Environmental Rating System?
Victorian Government's documents for 'Green' leases
Government as Tenant (New Building)
Government as Building Owner or Landlord
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Victorian Government policy strives to contribute to positive environmental change in an otherwise unregulated commercial tenancy market by self regulating and setting itself high standards.
There is currently no prescriptive legislation imposing ecological sustainability standards on landlords and tenants. The adoption of green leases in the commercial tenancy arena has, to date, been driven by market forces and commercial self interest.
The Victorian Government occupies more than 650,000 square metres of office accommodation. Government policy encourages departments to use their competitive market position to effect positive environmental outcomes when negotiating leases.
To this end, the Victorian government has developed policies that require its commercial tenancy premises to meet Ecological Sustainable Design (ESD) standards and encourages builders and landlords to incorporate them. Government policy requires that when government and agencies enter into leases, the terms and conditions in the lease or the subject building must to the greatest extent possible, meet these standards.
The law governing commercial leases is complex and technical. It is governed by the general law of contract and the law relating to landlord and tenant. Overlaying the general law is legislation that variously applies depending on the type of
lease. Relevant legislation includes:
- Landlord and Tenant Act 1955;
- Property Law Act 1958;
- Transfer of Land Act 1958;
- Retail Leases Act 2003; and
- Residential Tenancies Act 1997.
There are further special rules relating to Crown land leases required under other legislation including the:
• Land Act 1958; and
• Crown Lands (Reserves) Act 1978.
In addition, leases are subject to, depending on the nature of the tenancy, numerous other legislative requirements under various State and Commonwealth legislation in relation to issues, such as occupational health and safety, security, disability discrimination, as well as Building Codes and site/tenancy specific policy requirements.
Green Buildings and Green Leases
A ‘Green’ building is one that has been constructed or modified according to principles that minimise greenhouse emissions and adverse effects on the environment. They are buildings:
- that are designed and constructed according to ESD standards; or
- refurbished or refitted to incorporate ESD techniques.
A ‘Green’ lease is a lease containing conditions governing the management and operation of a building or tenancy to encourage environmentally sustainable operation of the building/tenancy, through control of the consumption of energy and water, and management of waste.
In the case of existing buildings, the lease conditions may include targets for improvements to the building or premises during the period of the lease to achieve higher ecologically sustainable outcomes. In essence, therefore, a ‘Green’ lease is a lease that has terms and conditions incorporated in it with the object of obtaining ecologically sustainable outcomes.
Although there are various rating systems that have been developed to determine and measure the environmental sustainable design capabilities and outcomes of office buildings, the two rating systems recommended in the Victorian Government Building Standard Guidelines are:
- Green Star Rating System, a scheme administered by the Green Building Council of Australia, which is a national nongovernmental organisation; and
- National Australian Built Environmental Rating System (NABERS), a government-run scheme.
The Green Star Rating measures the impact of newly constructed or refurbished buildings on the environment. Factors measured by the Green Star Rating include:
- construction materials and whether these are recycled or recyclable and what impact they have upon the planet’s resources;
- the impact the building has on its location and environment;
- whether commuting to and from the building by public transport, walking or cycling is convenient;
- the use of energy in the building and the use and reuse of rain water and grey water;
- the use of solar energy;
- the use of light and air within the building;
and - the configuration of the working and interaction spaces within the building.
What is a National Australian Built Environmental Rating System?
NABERS is a performance-based rating system that measures an existing building’s overall environmental performance during operation. In May 2008, NABERS incorporated the Australian Building Greenhouse Rating (ABGR). The ABGR has now been renamed NABERS Energy.
NABERS is a scheme that building owners and tenants can use to measure and benchmark their greenhouse performance.
NABERS rates a building on the basis of its measured operational impacts, including energy, refrigerants (greenhouse and ozone depletion potential), water, stormwater runoff and pollution, sewerage landscape, diversity, transport, indoor air quality, occupant satisfaction, waste and toxic
materials.
This rating measures the environmental impact of the management and operation of the building or tenancy. It measures use of energy, water, waste management, and control and use of energy and water, light and air conditioning, the capture of rainwater or solar energy (eg: solar hot water) and the re-use of grey water. The ratings range from 1 (low) to 5 (high).
Victorian Government's documents for 'Green' leases
Government has developed standard lease documentation for use when leasing the whole building or part of a building.
The terms and conditions of leases will depend on the building or premises and the circumstances of the tenancy from case to case.
Government has also developed a Green lease schedule of model terms and conditions to be included in leases for existing buildings with the object of improving environmental performance.
The schedule includes conditions that make provision for:
- improved environmental performance of the building;
- improved NABERS targets over the period of the lease;
- monitoring and improving energy consumption;
- monitoring and improving water management;
- waste management;
- cleaning;
- bicycle storage and shower facilities;
- building management;
- assessment and maintenance of Green Star rating; and
- tenant’s audits.
Government as Tenant (New Building)
If government is a tenant of a new building, it has the opportunity to obtain and will require a very high ESD standard. In the case of older buildings, including refurbished buildings, government policy requires departments and agencies to obtain and achieve the highest possible or best possible ESD outcomes against the ESD standards.
Where government is to be a tenant in an existing building, a best endeavours approach is encouraged to negotiate terms with prospective landlords which delivers maximum ecologically sustainable outcomes and provides for improvements to be made to the building during the term of the lease.
All government leased premises are required to satisfy access requirements under the Building Code of Australia and the Disability Discrimination Act 1992 (Cth).
Government as Building Owner or Landlord
The State of Victoria in 2008 entered into a Memorandum of Understanding with Clinton Climate Initiative, to reduce greenhouse gas emissions. Amongst other initiatives, government has committed to make its own buildings more energy efficient, and to encourage private building owners to retrofit buildings with energy saving technologies. Under the MOU, government has embarked upon a project to retrofit 11 CBD and 5 regional office buildings to meet ESD standards.
In summary, the Victorian Government’s current Green lease policies have been drafted to encourage and ensure that government departments and agencies enter into leases of premises that meet the requisite Green Star Rating and the NABERS rating.
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Further Information
For further information or legal advice on any leasing issues, contact:
Sue Nolen on 9947 1404
Assistant Victorian Government Solicitor
Rowan Ingpen on 9947 1424
Managing Principal Solicitor
Brendan McIntyre on 9947 1435
Principal Solicitor
Chitra Amaradasa on 9947 1428
Senior Solicitor
The VGSO is the primary source of legal services to the Victorian State Government and its statutory authorities, providing strategic advice and practical legal solutions.
