Environmental Upgrade Agreements Scott Bocskay, CEO 8 November, 2018

Environmental Upgrade Agreements About Sustainable Melbourne Fund Environmental Upgrade Agreements We work with customers to identify the commercial opportunities in ‘sustainability’ through EUAs and direct investments Investments We are an investor in innovative approaches to achieve ‘sustainability’ outcomes since 2002 Services for Councils SMF – owned by Local Government Servicing Local Government Enabling parties to communicate about EUAs…… We are a third party administrator – enabling Councils to offer cost effective programs for EUAs

How Does An EUA Work?

WHY EUAs? Building Owners No requirement for additional upfront capital or security to be provided to the financier Statutory charge = reduced re-financing risk More significant upgrades can be achieved with no or minimal cash flow implications Sharing of upgrade costs with tenants

54% of Victorian SMEs are tenants WHY EUAs? 54% of Victorian SMEs are tenants Source: VECCI 2015

Case Study : SMF Solar Finance 30kW Solar PROJECT DETAILS Streamlined credit approval EUA 30kw Solar array for a commercial kitchen with large cool rooms 100% tenant pass through BENEFITS Immediate cash-flow benefits with $9,000 annual decrease in electricity bills, being greater than the annual debt repayments Increase in capital value of the building

How An EUA Works – Building Owner SMF Solar Finance 30kW Solar project on a commercial building Lease EUA Loan Amount $40,740 (ex GST) $45,474 (inc GST) Interest Rate 9.3% 7.1% Years of loan 7 10 Payments Per Year 12 4 Annual Payment (P & I) -$7,940 -$6,463 Annual Savings $0 $6,463 Project Simple Payback (yrs) N/A Net Annual Cost Cash – flow Benefit NPV (pre tax) -$41,340 +$3,758 Tenant Contributions

How An EUA Works – Tenants’ Benefits SMF Solar Finance 30kW Solar project on a commercial building Tenant project NPV = $52,212

Estimated EUA Opportunities in Victoria 239,563 Buildings* $4.8 Billion Additional Investment* 916 MW Solar# 18,000 Extra Jobs* Source: EUA Finance for the Regions, EAGA. 2013 #Manufacturing, Warehouse, Distribution and Storage industry sector only

The Benefits For Your Council Unlock private finance in your region Stimulate local economic activity Improve business profitability Assist local businesses and landlords Achieve sustainability objectives

Using SMF As Your Third Party Administrator SMF Third Party Administration services to establish and operate an EUA program for local Government includes: PROGRAM ESTABLISHMENT SMF works with your rates department to establish and document systems and processes for EUA administration using our current program and template documentation PROGRAM DELIVERY SMF receives and processes applications Creates executable contract for the municipality (with documentation) Monitors contract performance Origination, communication and market education PROGRAM REPORTING SMF provides quarterly reporting on program activities and transactions

Scott Bocskay, CEO scott.bocskay@sustainablemelbournefund.com.au www.sustainablemelbournefund.com.au +61 3 9658 8740 Facebook: sustainablemelbournefund Twitter: @SMFAus