November 8, 2011Oklahoma House Government Modernization Committee

Oklahoma City, OK

Leonard GilroyDirector of Government ReformReason Foundation | reason.org

Knowing What You Own:Knowing What You Own:Best Practices in Real Property Best Practices in Real Property

Inventories & Asset ManagementInventories & Asset Management

What is a Real Property Inventory?What is a Real Property Inventory?• A central record of government-owned land and assets.

• RPI should answer 5 basic questions: What do we own? Where is what we own located? What is the condition of what we own? What is the value of what we own? What is the best use of what we own?

• Three key components: Land: The best RPIs map all land down to the parcel level. Assets: Improvements to the land (e.g., buildings, bridges, heavy

equipment, etc.), plus maintenance costs and requirements. GIS Mapping: Map parcels and integrate asset info, deed records

and historical info into digital GIS databases to create an RPI.

• Tool to assess potential value of divesting an asset or property. Generate revenues for government; leveraging existing

assets. Divesting underutilized or unnecessary land or assets will

lower maintenance and operations costs. Selling/leasing assets to private sector can increase proper

management, encourage economic growth.

• Tool to potentially lower lease and maintenance costs through space consolidation.

• Inventory information helps state and local budgets to plan with more precision, efficiency and cost effectiveness. Increases officials’ ability to monitor the use of taxpayer $$.

The Value of Real Property InventoriesThe Value of Real Property Inventories

Challenges in Real Property Challenges in Real Property ManagementManagement

• Growing awareness of need for better asset management: 16 states have well-functioning inventory systems. 17 states are developing an RPI. 17 states (plus Washington D.C.) lack an RPI.

• Managing real property can often be considered a mundane chore.

• Lack of standardized reporting methods at agencies and departments Agencies often have their own monitoring and tracking methods;

many are not compatible or interoperable.

• Inventory development alone is insufficient; active management and analysis of that data is key to gaining full benefits from RPIs. Key economic value is the ability to lower operational costs or

generate revenues from divesting unused and underused assets.

#1: Take the Initiative to Build an Inventory Governors, legislatures & state agencies must support project.

#2: Conduct an “Inventory of Inventories” Coordinating existing state agency asset inventories; creating

common metrics to provide a benchmark for RPI.

#3: Use GIS Technology to Map and Catalogue Data Ubiquitous use in government; most accurate baseline to locate,

label and catalogue property and future changes to the property.

#4: Centralize the Management of Real Property Data Decentralized accounting methods offer little to no accountability

for keeping good records.

12 Recommendations Based on12 Recommendations Based onState Best PracticesState Best Practices

#5: Standardize Reporting Methods for All Agencies Require compatibility among agency data, reporting and metrics to

make processing more efficient and make management easier.

#6: Put the Inventory Online for Public Access An RPI is fundamentally a transparency and accountability tool. Allows citizens to suggest ways of more efficient management, or

allows developers to suggest divestiture opportunities.

#7: Manage the Inventory Beyond Mapping Success depends on active management; RPI alone is insufficient.

#8: Make the Inventory Continual and Dynamic Assets must be constantly monitored/updated to ensure efficiency.

12 Recommendations Based on12 Recommendations Based onState Best PracticesState Best Practices

#9: Divest Land and Assets Sooner Than Later Seek early opportunities to build momentum, success.

#10: Utilize the Wide Range of Private Sector Expertise Explore commercial solutions; vendor-developed tools for

inventory and space management administration.

#11: Build the Inventory to Fit Prescribed Policy Goals Identify policy goals upfront; develop the RPI to achieve them.

#12: Look Beyond Financial Benefits Inventories also provide non-financial benefits (e.g., emergency

management, legal compliance).

12 Recommendations Based on12 Recommendations Based onState Best PracticesState Best Practices

Transforming Asset Management: Transforming Asset Management: GeorgiaGeorgia

• Former Gov. Sonny Purdue's “Commission for a New Georgia”: state should centralize management of capital assets to improve efficiency, reduce lease costs, generate $$ through divestiture, lower costs of capital construction. Most agencies handled their own space management—little or no

opportunity for comprehensive management. State’s $10.5B inventory of >11,000 facilities was losing value due to

poor maintenance, emerging safety issues, and underutilization.

• 2005: Executive order created state's first State Property Officer (SPO) & restructured State Property Commission. Established to bring overlapping, multi-agency management of real

estate into one portfolio, with central manager. Ordered first comprehensive, enterprise-wide asset inventory. Codified into statute by legislature later that year.

Transforming Asset Management: Transforming Asset Management: Georgia (cont’d)Georgia (cont’d)

• Results through FY2010: Developed comprehensive, GIS-based inventory of government land

and facilities (www.realpropertiesgeorgia.org).• Building, Land and Lease Inventory of Property (BLLIP). • Web-based GIS; citizens can create maps, download info to

Excel, Access databases. $43.2 million in revenues from surplus properties sold, returned to

county tax rolls. $8.5 million saved through renegotiation & consolidation of leases. Uniform construction guidelines adopted.

• Gov. Perdue: "Five years ago, nobody in government could say with certainty how many buildings the state owned. Today, anyone can go to a public website to look up detailed records on every single government building, piece of land, or lease.”

Moving the Ball Forward: VirginiaMoving the Ball Forward: Virginia

• House Bill 2003 signed into law in spring 2011

Requires Dept. of General Services to develop criteria for and conduct a comprehensive real property inventory by 1/1/2012.

Requires annual updates to inventory—active, dynamic management.

Requires DGS to post web listing of surplus real property. Focus on accelerating the regular divestiture of

unused/underused property.

• 50% of net proceeds from the lease/divestiture directed to the State Park Acquisition and Development Fund.

• Challenge: less centralized than Georgia; dependent on department heads to properly classify property.

Questions?

Leonard Gilroy, AICPDirector of Government Reform

Reason Foundation

leonard.gilroy@reason.org(713) 927-8777www.reason.org