Municipal Real Estate Management. A Conceptual Framework for Italian Municipalities

1. 16th ERES Conference, Stockholm Royal Institute of Technology24-27th June 2009 Municipal Real Estate Management. A Conceptual Framework for Italian Municipalities dr. Carlo Vermiglio University of Reggio Calabria Faculty of Law carlo.vermiglio@unirc.it

2. Purpose of the research Define a theoretical model leading Local Governments (LGs) at defining a “real estate property management strategy”;

3. Background Background • Administrative decentralisation and reduction of State transfers in favour of LGs; • Internal Stability Pact and NAO recommendations on debt constraints; • Financial crisis that affected the overall productivity and effectiveness of the institutional system.

4. Basic Arguments of the Research Idee di fondo della ricerca • NAO has often underlined poor knowledge of property asset and a lack of efficiency in their management; • Systematic distortion of the decision-making processes. • Inherently Strategic Decisions systematically assumed and managed as Routine Decisions; • Those are not tactical solutions but strategical issues: • They shape the effectiveness and the overall performance of LGs in the mid-long term; • The adopted strategy it substantially irreversible in the short term; • The processes of municipal real estate management might be reconducted in the field of strategic management processes regardless the relevance of any decision on asset mgt.

5. Evidences from the Italian Context Le ragioni di fondo della ricerca In the last decades there was an increasing number of disposal Processes: • Disposal assumed always as a “ first best solution”; • Low attention to the strategic value of Real Estate Management Processes; • Poor level of knowledge and skills throughout LGs organizational structure; • Inadequate accounting systems; • Lack of clarity in asset register and inventory processes; • Absence of a “systemic and processual approach” that might assess the risks and the criticism related to public real estate management strategies.

6. Strategic Issue: In order to obtain financial resources, there are several alternatives that result more sustainable and convenient than the disposal of public real estate assets? YES NO The decisional process start with the selection of the alternatives Alternative assumed as the best one: Disposal Alt 1 Alt 2 Alt 3 Alt .. n • Financial crisis • No reduction of • public service qlt. • Short term needs • Budgetary • constraint Disposal

7. Strategic Issue: In order to obtain financial resources, there are several alternatives that result more sustainable and convenient than the disposal of public real estate assets? YES NO The decisional process start with the selection of the alternatives Alternative assumed as the best one: Disposal Alt 2 Alt 3 Alt .. n Alt 1 • Financial crisis • No reduction on • public service • Short term needs • Budgetary • constraint Disposal Only through a deep and integrated analysis of the mentioned variables, the process of public real estate management might assume a “systemic character” that allows public managers to verify, from a strategic perspective, if the selected alternatives sound reliable convenient and sustainable across the listed aspects.

8. The multidimensional approach of analysis Selection of different alternatives Institutional - Organizative - Social Aspects - Economical convenience Financial sustainability Risk assessment Choice

9. Concluding Remarks Conclusion remarks • “Systemic and Integrated Approach” to strategic issues instead than political approach; • Multi-dimensionality of the analysis; • Decisions adopted only in answer to financial problems might be vulnerable in the mid-long term. • The Italian literature on public management has been less concerned with the topic of Public Real Estate Management. Times are ripe to reconsider the strategic importance of Public Real Estate Assets for Public Administration success.

10. Future Perspectives and Limitations Prospettive future • Enriching the model of the guiding lines and tools to be used in each of the phases identified (decision-making, etc.)