State Properties Commission is Sold on Best Deals for Taxpayers

September 26th, 2011 by Leave a Comment

By Steve Stancil

Innovation is nothing new for Georgia’s State Properties Commission. As the state’s real estate portfolio manager, the agency with its staff of 12 is responsible for the management of all state-owned and leased space and the acquisition and disposition of all state-owned property.

Since its reorganization in 2005, the commission has applied strategies and approaches to improve state services in space, asset and transaction management. This includes a Web site to identify potential sites for state agencies’ space needs and an electronic tracking system. Additionally, an interactive, Web-based data warehouse includes more than 1,900 leases, 15,000 buildings and 1.1 million acres of owned and leased land.

Last year, the commission began a study of underutilized and surplus properties to determine ways to generate revenue for the state; reduce maintenance, operations and insurance costs; and provide benefit to local governments by potentially adding to their tax digests.

The commission applied filters in the data warehouse inventory to highlight buildings with square footage greater than 2,500 square feet, occupancy of less than 50 percent and insured value of at least $85,000. In addition, the commission reviewed land greater than five acres outside metropolitan areas and one acre within metro areas. The review identified more than 100 properties (buildings and land) with an estimated value of up to $43 million for potential sale.

Commission officials have been meeting since the spring with state agencies about disposal or re-purposing of the identified properties and to identify any hurdles, such as outstanding bonds. While the commission is preparing the “disposition pipeline,” it’s not as easy as posting “for sale” signs and waiting for offers. In fact, the process can take the better part of 18 months, which often delays market demand and revenue and incurs ongoing maintenance expenses.

First, the commission must formally request approval from the General Assembly to sell property. Once the resolution is passed, the State Properties Commission Board must approve the sale. Next, two appraisals and any due diligence must be competed before the property can be put out for bid. Then the commission board must meet again and approve the recommended bid. Finally, the Attorney General’s office must approve the sale.

The challenge is the existing process treats all properties alike, whether the estimated value is $10 million or $10,000. The sealed bid process does not allow for negotiation, nor does it allow for the industry practice of marketing and bidding – otherwise known as “best and final offers.”

For these reasons, the commission is now surveying best practices in the nation’s seven other AAA bond-rated states that could streamline the process in Georgia. The commission also received responses from 11 other states that completed a survey by the National Association of State Facilities Administrators. After the survey is completed in the late fall, the commission plans to propose legislation that ensures the process better serves Georgia’s taxpayers by leveraging its position in the real estate market.

The proposals could include making the commission board the sole authority to approve the sale of state property. They may also include simplifying the approval process; engaging third-party real estate professionals to actively market and network properties to national and international investors; linking up with local economic development councils to increase interest, and adopting the standard practice of “best and final offers” used in the private sector.

The State Properties Commission is cautiously optimistic that the real estate market will strengthen in the next 18 months or so. The commission intends to not only dispose of surplus property and generate revenue for Georgia’s taxpayers, but also to fulfill its vision of being a national leader by exemplifying stewardship, accountability and integrity.

 


Steve Stancil, Georgia’s State Property Officer, leads the Georgia Building Authority and State Properties Commission and wrote this commentary for the Georgia Public Policy Foundation. The Georgia Public Policy Foundation is an independent think tank that proposes practical, market-oriented approaches to public policy to improve the lives of Georgians. Nothing written here is to be construed as necessarily reflecting the views of the Georgia Public Policy Foundation or as an attempt to aid or hinder the passage of any bill before the U.S. Congress or the Georgia Legislature.

© Georgia Public Policy Foundation (September 2, 2011). Permission to reprint in whole or in part is hereby granted, provided the author and his affiliations are cited.

 

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