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

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

3. HB1438 Update Oklahoma State Government Asset Reduction and Cost Savings Program Oklahoma State Government Asset Reduction and Cost Savings Program Annual Report: detailing state-owned properties Annual Report: detailing state-owned properties Identify the 5% most underutilized properties Identify the 5% most underutilized properties Describe Value of properties Describe Value of properties Assess potential for sale Assess potential for sale Describe impact on local tax rolls if sold to private entity Describe impact on local tax rolls if sold to private entity Promulgate Rules to establish reporting procedures Promulgate Rules to establish reporting procedures Applies to Agencies, boards, commissions, trusts Applies to Agencies, boards, commissions, trusts Report to be a data feed on data.ok.gov Report to be a data feed on data.ok.gov

4. HB1438 Update Status Status Current property database Current property database Extensive but not comprehensive Extensive but not comprehensive Contains minimal data on each parcel Contains minimal data on each parcel Do not have property values Do not have property values Rules Rules Draft rules, simple approach Draft rules, simple approach Establishes survey process and compliance Establishes survey process and compliance Determination of classification – utilized/underutilized Determination of classification – utilized/underutilized

5. HB1438 Update Initial Planning Initial Planning Where is the data and how to get it? Where is the data and how to get it? Information “silos” Information “silos” Agency surveys Agency surveys County courthouses, Commercial data systems, GIS County courthouses, Commercial data systems, GIS Assessment of data Assessment of data Determination of “underutilized” Determination of “underutilized” Identify analysis models Identify analysis models Asset management approach Asset management approach Issues: donations, deed restrictions, disposition of income Issues: donations, deed restrictions, disposition of income Report generation Report generation

6. HB1438: Opportunity Capital Planning & Asset Management Capital Planning & Asset Management Real Property Management: Lands and Facilities Real Property Management: Lands and Facilities Long Range Planning Long Range Planning Capital Planning Capital Planning Formalize budget process Formalize budget process Disposition of State Properties is a subset of Comprehensive Planning and Asset Management 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. 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 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 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 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. 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… Centralized model would consider… Legislative policy Legislative policy Space needs to support Agency missions statewide Space needs to support Agency missions statewide Geography: location, proximity, owned and leased Geography: location, proximity, owned and leased Current condition, energy use, feasibility, ROI Current condition, energy use, feasibility, ROI Space Management: maximize space and eliminating waste Space Management: maximize space and eliminating waste Programmed maintenance for life-cycle cost management Programmed maintenance for life-cycle cost management Income-expense analysis of state lands; surface lease and easement management Income-expense analysis of state lands; surface lease and easement management Highest and Best Use Highest and Best Use

10. Statewide Capital Planning Initiative …and would result in …and would result in 20-Year Master Plan for each state agency 20-Year Master Plan for each state agency 5-Year Oklahoma Capital Plan 5-Year Oklahoma Capital Plan 2-Year Capital Budget Cycle 2-Year Capital Budget Cycle Annual Capital Plan approved by legislature – line item management & control 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 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 Management and Disposition of State Lands for long range needs and maximum income potential

11. Statewide Capital Planning Initiative Benefits of Comprehensive Asset Management Benefits of Comprehensive Asset Management Eliminate “silo” decisions and duplication of services Eliminate “silo” decisions and duplication of services Capitol facility spend consolidated into one annual appropriation request Capitol facility spend consolidated into one annual appropriation request Efficiency and cost effectiveness of strategic contracts Efficiency and cost effectiveness of strategic contracts Optimization of annual capital spend Optimization of annual capital spend Business model decisions on Own vs. Lease Business model decisions on Own vs. Lease Lower overall building operating costs Lower overall building operating costs Efficient use of current and programmed assets Efficient use of current and programmed assets Increased market competition for annual construction spend Increased market competition for annual construction spend Predictable fiscal impact of technology and facility decisions Predictable fiscal impact of technology and facility decisions

12. Implementation Utilize Current Organizational Assets Utilize Current Organizational Assets Real Estate Services: property database Real Estate Services: property database State Leasing: agency space database State Leasing: agency space database Design and Construction: planning professionals Design and Construction: planning professionals Build Organizational Capacity Build Organizational Capacity Form new “Planning & Asset Management” unit in the Construction and Properties Division Form new “Planning & Asset Management” unit in the Construction and Properties Division

13. Capital Planning Unit Initial Responsibilities Initial Responsibilities Implementation of HB1438 – Rules and Data Acquisition Implementation of HB1438 – Rules and Data Acquisition Develop framework for implementing Capital Planning Develop framework for implementing Capital Planning Stakeholders – identify interests and concerns Stakeholders – identify interests and concerns Data – where it is and how to get it Data – where it is and how to get it Resources – identify requirements Resources – identify requirements Processes – develop planning models Processes – develop planning models Statutory – identify enablers and roadblocks Statutory – identify enablers and roadblocks

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

15. Expectations Disposition of State Lands Disposition of State Lands One-time income to state One-time income to state Maximize long term income to offset operational costs Maximize long term income to offset operational costs Annual Construction Spend Management Annual Construction Spend Management Example: 5% gain in efficiency = $5M for deferred maintenance Example: 5% gain in efficiency = $5M for deferred maintenance Optimized and Predictable Facility Operations Costs Optimized and Predictable Facility Operations Costs Preservation of State Assets Preservation of State Assets Risk mitigation and other tangible benefits Risk mitigation and other tangible benefits

16. Vision Each state agency will have in place a long range facility master plan. 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. 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. Real estate and construction services will be delivered according to an annual capital budget as appropriated by the legislature.