HB1438 Update & Statewide Capital Planning Initiative

1. HB1438 Update& Statewide Capital PlanningInitiative Office of State Finance Department of Central Services November 8, 2011

2. Agenda • HB1438 Update: Real Property Reporting • Review • Status • Opportunity • Capital Planning and Asset Management • Strategic Shift • Implementation • Vision

3. 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

4. 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

5. 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

6. 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

7. 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.

8. 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.

9. 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

10. 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

11. 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

12. 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

13. 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

14. 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

15. 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

16. 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.