Real Property Asset Management Principles and Practice

1. Real Property Asset ManagementPrinciples and Practice April Heinze, P.E. Director, General Services 14 September 2007

2. San Diego County Facts • Charter County est. 1850 • 5 Districts & Supervisors • County Administrative Officer w/ 5 Deputies • Budget $4.68 billion (FY07/08) • Full-time equivalents: 17,026 • Population: 3,066,820 • 2,601,267 in 18 incorporated cities • 465,553 in unincorporated area • Size: 4,261 Sq Miles • 3,572 Sq Miles in unincorporated areas • 3rd most populous CA County • 4th most populous U.S. metropolitan area Real Property Asset Management

3. COSD Real Property Assets • Land • 35,290 acres (not including easements) • 10,321 acres leased (parks, libraries, DPW bins, parking) • Buildings & Structures • 1,103 owned: 7.9 Million Gross Sq Ft • 115 leased: 1.35 Million Gross Sq Ft • Total Replacement Value of Improvements (not including land) estimated at $3.6 Billion Real Property Asset Management

4. Real Property Asset Management • County Real Property Assets are vital to the accomplishment of the County’s mission • Challenges in managing real property include: • Deteriorating facilities • Increasing under-performing assets • Limited capital investment funds • Reliance on costly leasing • Unreliable data for strategic asset management • Multiple departments responsible for management • Asset Management promotes the efficient & economic use of real property through sound management principles Real Property Asset Management

5. Linkage to COSD Strategic Plan • Required Disciplines linked to asset management • Essential Infrastructure • Fiscal Stability • Customer Satisfaction • Skilled, Competent and Diverse Workforce Real Property Asset Management

6. COSD Asset Management Responsibility Real Property Asset Management

7. Real Property Asset Management Principles • Support mission & strategic goals • Use benchmarks & best practices • Employ life-cycle cost benefit analysis • Promote full & appropriate utilization • Dispose of unneeded assets • Provide appropriate levels of investment • Accurately inventory & describe assets • Employ balanced performance measures • Advance customer satisfaction • Provide for safe, secure & healthy workplaces Real Property Asset Management

8. Advantages of Asset Management • Establishes a systematic & economical method for periodically updating asset conditions • Avoids surprise equipment or systems failure • Determines critical maintenance requirements for physical assets • Optimizes operations & maintenance dollars to maximize return on investment • Develops sound, defensible budgets based on goals & objectives rather than physical condition alone • Ensures consistency of methodology among facility manager requests • Allocates maintenance & repair dollars among competing requirements & organizations Real Property Asset Management

9. Capital Asset ManagementFacility Life Cycle Only 15% of cost incurred before occupancy Total cost of Ownership 85% of all cost incurred after construction Real Property Asset Management

10. Appropriate Levels of Investment • Annual investment in maintenance • (Basic + Major Maintenance) * 100 Replacement Value • Target 2-4% used by IFMA • 2% for Basic Maintenance (does not include services) • 1-2% for Major Maintenance • Capital Outlay investment Real Property Asset Management

11. Capital Asset Management • Accurate Inventory – some holes in data • Condition Assessment – underway • Requirement Standards – quantity & quality • Gap Analysis based on defined goals = • Major Maintenance Requirements System • MMRS = 5-yr forecast maintain/repair • Capital Improvement Needs Assessment • CINA = 5-yr forecast replace/rehab Real Property Asset Management

12. Facility Condition Assessment • Standardized inspection process to produce accurate, consistent & repeatable results • Detailed inspection of facilities, infrastructure, & fixed equipment • Standardized cost data to determine repair & replacement cost • IMS to prioritize current & anticipated maintenance requirements to maximize resource utilization & ROI Real Property Asset Management

13. Benchmarks & Best Practices • Facilities Condition Index (FCI) $ Maintenance Req’d = FCI $ Replacement Value • Target of .05 used by Universities • No current target for County • Outcome of current condition assessment will be used to establish 1st County goal Real Property Asset Management

14. Facility Condition Assessment • CAC completed in FY04/05 • Sheriff detention completed in FY06/07 • Sheriff non-detention ready to start • All other facilities underway with completion scheduled for Jan 2008 (40% complete with inspections as of 7 Sep) • Final reports will be distributed as received • Results will better define Maintenance & Capital needs • Remaining useful life of facilities & components • Recommended repairs & replacements by year • Budget estimates • Recurring inspections recommended every 3-5 years depending on facility type • Cost approximately $0.20-$0.24/SF Real Property Asset Management

15. MMIP DEVELOPMENT MODEL Project Identification and Review Dept of General Services (Facilities & PM) County Departments Dept. MM Work Orders START Routine & Preventive Maintenance /Operations EMERGENT REQUIREMENT $$ REQUEST • Annual Inspection • Summary /MM • Project • Requests Facility Planning Board Review MMRS Developed By DGS Approval Recommendation for Major Maintenance made to the GM’s Dept. MM/ Requests Real Property Asset Management

16. MMIP DEVELOPMENT MODEL Funding approval and Implementation Group General Managers Review & Approve MMIP Approval Recommendation for Major Maintenance made to the GM’s START DGS prepares Spending Plans for Each Approved project DGS Develops MMIP document Op Plan Instructions Include Approved projects DGS/CDM report Quarterly on Status of projects MMIP Central Projects & Acct’g Section (CPAS) facilitates Spending plan approval DGS Executes Major Maintenance Program Upon receipt Of approved Spending plan, Encumber funds Real Property Asset Management

17. CINA DEVELOPMENT MODEL Step I Process Initiated GM’s Review, Prioritize and Authorize Projects for Step II Action Call for Projects Issued By the Chief Financial Officer Commence Step II Facility Planning Board Reviews, prioritizes, and Recommends Projects and Funding source County Depts. Prepare Required Forms to Include Justification and Prioritization forms DGS Prepares the “Call For Projects” Responses for Review DGS Capital Planning Assists in Preparation of Necessary Forms & Associated Operating & Maintenance Cost Estimates Real Property Asset Management

18. CINA DEVELOPMENT MODEL DGS Prepares the CINA Facilities Planning Board Reviews & Recommends Adoption GM’s Review, Prioritize and Approve the CINA Commence Step II County Depts. Complete Required Step II Forms to Include Funding Sources & Construction Cost Estimates GM’s s Approve and the CINA to the BOS for approval Group Review & Action $$$ Work Authorizations $$$ Spending Plans Op Plan Instructions Include Approved projects CINA DGS Capital Planning Assists in Preparation of Necessary Forms & Associated Construction Cost Estimates DGS/CPAS report Quarterly on Status of projects DGS Executes CIP Real Property Asset Management

19. CINA Project Score Sheet Real Property Asset Management

20. CINA Timeline • Aug-DGS prepares instructions, CFO issues call for projects, departments prepare draft forms identifying capital requirements • 24 Sep-Departments submit draft forms for new or changed projects • Oct-DGS prepares or updates preliminary estimates & submits budget proposals to FBP • Nov-FPB reviews current submissions & existing CINA, funding requirements, establishes priorities & prepares recommendations for GMs • Jan/Feb-CINA requirements submitted to CFO for consideration as part of annual budget allocation • Mar/Apr-FPB revises program allocations based on the established budget, CINA is modified and published • May-CINA approved as part of budget • Jun-Departments submit program requirements to DGS to initiate design for approved projects Real Property Asset Management