HB1438 Update& Statewide

Capital PlanningInitiative

Office of State FinanceDepartment of Central Services

November 8, 2011

Agenda

HB1438 Update: Real Property Reporting Review Status Opportunity

Capital Planning and Asset Management Strategic Shift Implementation Vision

HB1438 Update

Oklahoma State Government Asset Reduction and Cost Savings Program Annual Report: detailing state-owned properties Identify the 5% most underutilized properties

Describe Value of properties Assess potential for sale Describe impact on local tax rolls if sold to private entity

Promulgate Rules to establish reporting procedures Applies to Agencies, boards, commissions, trusts Report to be a data feed on data.ok.gov

HB1438 Update

Status Current property database

Extensive but not comprehensive Contains minimal data on each parcel Do not have property values

Rules Draft rules, simple approach Establishes survey process and compliance Determination of classification – utilized/underutilized

HB1438 Update

Initial Planning Where is the data and how to get it?

Information “silos” Agency surveys County courthouses, Commercial data systems, GIS

Assessment of data Determination of “underutilized” Identify analysis models Asset management approach Issues: donations, deed restrictions, disposition of income

Report generation

HB1438: Opportunity

Capital Planning & Asset Management Real Property Management: Lands and Facilities Long Range Planning Capital Planning Formalize budget process

Disposition of State Properties is a subset of Comprehensive Planning and Asset Management

Statewide Capital Planning Initiative

Strategic shift in the way the State of Oklahoma conducts facility planning, capital construction programming, budgeting, real property management and the delivery of construction and real estate services to state agencies.

Statewide Capital Planning Initiative

Current Model Decisions on facilities needs, acquisitions, disposals,

space leasing, new construction, planned renovation and maintenance are made in “silos” without consideration of efficiencies, long term costs or duplication of efforts

Proposed Efficiency Model Planning, construction, operations and maintenance

decisions are made by professionals with a 30,000 foot view and consider agency mission, facility inventory, condition, life cycle costs, return on investment, cost of ownership vs. lease, management of surface lands and mineral interests, income potential and value of lands to local jurisdictions.

Statewide Capital Planning Initiative

Centralized model would consider… Legislative policy Space needs to support Agency missions statewide Geography: location, proximity, owned and leased Current condition, energy use, feasibility, ROI Space Management: maximize space and eliminating

waste Programmed maintenance for life-cycle cost

management Income-expense analysis of state lands; surface lease

and easement management Highest and Best Use

Statewide Capital Planning Initiative

…and would result in 20-Year Master Plan for each state agency 5-Year Oklahoma Capital Plan 2-Year Capital Budget Cycle Annual Capital Plan approved by legislature – line

item management & control Business Decisions on Own vs. Lease, new

construction, planned renovation, energy upgrades, maintenance and repairs

Management and Disposition of State Lands for long range needs and maximum income potential

Statewide Capital Planning Initiative

Benefits of Comprehensive Asset Management Eliminate “silo” decisions and duplication of services Capitol facility spend consolidated into one annual

appropriation request Efficiency and cost effectiveness of strategic contracts Optimization of annual capital spend Business model decisions on Own vs. Lease Lower overall building operating costs Efficient use of current and programmed assets Increased market competition for annual construction spend Predictable fiscal impact of technology and facility decisions

Implementation

Utilize Current Organizational Assets Real Estate Services: property database State Leasing: agency space database Design and Construction: planning professionals

Build Organizational Capacity Form new “Planning & Asset Management” unit in

the Construction and Properties Division

Capital Planning Unit

Initial Responsibilities Implementation of HB1438 – Rules and Data

Acquisition Develop framework for implementing Capital

Planning Stakeholders – identify interests and concerns Data – where it is and how to get it Resources – identify requirements Processes – develop planning models Statutory – identify enablers and roadblocks

Capital Planning Strategy

Initial Output Updated real property database Underperforming properties: Identify low hanging fruit Agency facility database Template for agency master plans Process model for agency projects – request & budget cycle Prioritization model for capital spending requests Property Management model Construction spend model: analysis for strategic contracting

Expectations

Disposition of State Lands One-time income to state Maximize long term income to offset operational costs

Annual Construction Spend Management Example: 5% gain in efficiency = $5M for deferred

maintenance

Optimized and Predictable Facility Operations Costs

Preservation of State Assets

Risk mitigation and other tangible benefits

Vision

Each state agency will have in place a long range facility master plan.

Capital projects will be programmed based on a planning and asset management model.

Real estate and construction services will be delivered according to an annual capital budget as appropriated by the legislature.