State Properties Commission : requested information on state space management policies

Special Examination 11-33

January 2012

Georgia Department of Audits and Accounts
Performance Audit Operations
Russell Hinton, State Auditor Leslie McGuire, Director

Why we did this review
The Senate Appropriations Committee requested a special examination to review state policies related to state owned and leased space. The Committee posed the following questions: (1) What is the balance and cost of space for state owned and state occupied, state owned and unoccupied, state owned and nonstate occupied, and non-state owned and state occupied? (2) What are the state's policies for determining location and space? Are there opportunities for an agency to relocate to a lower cost space and continue to serve clients? (3) How does the state manage tenant improvements? Would the state realize savings in rent costs if it self-funded tenant improvements?
Who we are
The Performance Audit Operations Division was established in 1971 to conduct reviews of state programs. The purpose of these reviews is to determine if programs are meeting their goals and objectives; provide measurements of program results and effectiveness; identify other means of meeting goals; evaluate the efficiency of resource allocation; and assess compliance with laws and regulations.
Website: www.audits.ga.gov Phone: 404-657-5220 Fax: 404-656-7535

State Properties Commission
Requested Information on State Space Management Policies
What We Found The State Properties Commission (SPC) is the state's real estate portfolio manager and is responsible for acquiring and disposing of real property, managing administrative space, and establishing/managing lease agreements for (non-exempt) state entities. SPC's expanded responsibilities resulted from recommendations made by the Commission for a New Georgia (CNG) in 2004 that the state create a central real estate authority and a central repository of real asset holdings.
In response to recommendations made by CNG, SPC developed the Building, Land, and Lease Inventory of Property (BLLIP) as the state's first single source inventory of state owned and leased real property. BLLIP records (as of August 2011) indicate that the state owns 15,050 buildings1 and has 1,678 active leases for non-state owned space. The largest property use type is office space, with 13 million square feet of owned space and 9.3 million square feet of leased space.
Inaccuracies and incompleteness in the BLLIP data significantly limited our ability to document the overall balance and cost of state owned and leased space and will continue to limit SPC's ability to fulfill its role as the state's real estate portfolio manager unless improvements are made. We found high error rates and missing values in data fields required to determine basic property attributes such as the primary use, the occupancy status, and the occupancy rate for a large percentage of state owned and leased space.
Additionally, BLLIP contains no data to calculate operations and maintenance costs of state owned buildings. SPC indicated that no
1 In BLLIP, a "building" is a facility owned by the state and/or by state entities and may include property used for a variety of purposes, including offices, storage buildings, housing, classrooms, and security facilities.

alternate single data source with operations and maintenance costs of state owned buildings exists. As a result, we were unable to identify or evaluate the cost to maintain and occupy state owned buildings. We were able to determine that state entities pay an average lease cost for office space of $15.52 per square foot (psf) to private property owners, $13.11 psf to other governments, (e.g., county, city, federal), and $11.73 psf to other state government entities.
Regarding policies for identifying location and space, SPC has established some formal policies and procedures; however, significant space and lease management activities are not documented or maintained in sufficient detail within case files to permit an effective review of operations. For example, analytical activities not documented in case files include the review of state owned property inventory in BLLIP, the methodology used to identify appropriate private property, and the cost-benefit decisions related to selecting a property among multiple options. The lack of documentation limited our ability to determine whether SPC's policies and procedures were followed.
Regarding opportunities for relocation to lower-cost space, we analyzed BLLIP lease cost data and identified cost outliers among properties managed by SPC and those managed by state entities exempt from leasing through SPC. We identified 39 leases/agreements managed by SPC and 29 leases managed by exempt state entities with a cost greater than $20 per square foot within the state. Within the metropolitan Atlanta area, we identified 40 leases managed by SPC and 24 properties managed by entities exempt from leasing through SPC that may be appropriate for renegotiation and reduced rents if above-market rates are not justifiable. Further data and analysis is necessary, however, to expand the analysis to other metropolitan areas and to determine whether or not the above-market rate is necessary to serve clients.
Regarding potential to reduce costs by self-funding tenant improvements (TIs), legal restrictions prevent the state from self-funding TIs in most instances. The Georgia Constitution prohibits state entities from paying for "permanent improvements to private property" unless the improvements can be removed and prohibits SPC and most state entities from entering into multi-year lease agreements. As a result of these two prohibitions, state entities are not legally permitted to pay substantial up-front costs for leased property TIs because the improvement will not depreciate within one year and cannot be removed.
Recommendations SPC should provide more comprehensive management oversight and control of BLLIP data to improve its usefulness for portfolio management.
SPC should establish stronger policies and procedures necessary to provide more transparency of space and lease management decisions.
SPC should conduct additional research related to leases that exceed average market rates to identify opportunities for cost savings.
In its response to this report, SPC noted that this limited data analysis does not reflect all the professional activities associated with real estate portfolio management. SPC provided additional information and explanations for what it thought were the causes of several of the problems identified in this report. In addition, SPC noted many corrective actions that it had already started implementing to address recommendations in this report. Additional information from SPC's response is included in the body of the report following pertinent sections.

State Space Management Policies

i

Table of Contents

Purpose of this Special Examination

1

Background

1

History of State Space Management Policies

1

Organization of the State Property Commission

3

Financial Information

5

Requested Information

What is the balance between state-occupied state owned spaces, unoccupied state

7

owned spaces, non-state occupied state owned spaces, and state-occupied non-state

owned spaces? What is the cost associated with each?

What polices does the state use in determining leased property location and space? 21 Please comment on any areas where an agency could relocate to a lower cost area and continue to serve clients.

How does the state manage tenant improvements for the spaces it leases? Would the 30 state realize savings in rent costs if it self-funded tenant improvements?

Appendix A: Objectives, Scope, and Methodology

33

Appendix B: Primary Use Categories

36

Appendix C: Primary Use Categories Identified as Blank, Vacant, Other Use, and Leased to 37 a Non-State Entity by Entity

Appendix D: Occupancy Status By Entity

38

Appendix E: Occupancy Status of Office Space by Entity

39

Appendix F: Occupancy Status of Office Space by City

40

Appendix G: SPC Space Standards

41

Appendix H: SPC-Managed Office Leases with Costs >$20 Per Square Foot

42

Appendix I: Agency-Managed Office Leases with Costs >$20 Per Square Foot

43

Appendix J: Office Leases Above Market Rates (Metropolitan Atlanta)

44

State Space Management Policies

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State Space Management Policies

1

Purpose of this Special Examination
Our review of state policies related to space management was conducted at the request of the Senate Appropriations Committee. Specifically, the committee asked for information related to the following questions:
What is the balance between state-occupied state owned spaces, unoccupied state owned spaces, non-state occupied state owned spaces, and state-occupied non-state owned spaces? What is the cost associated with each?
What polices does the state use in determining leased property location and space? Please comment on any areas where an agency could relocate to a lower cost area and continue to serve clients.
How does the state manage tenant improvements for the spaces it leases? Would the state realize savings in rent costs if it self-funded tenant improvements?
A more detailed description of the objectives, scope, and methodology used in this review is included in Appendix A on page 33. A draft of this report was provided to appropriate personnel within the State Properties Commission, and SPC's pertinent responses have been included throughout the report where appropriate.
Background
History of State Space Management Policies
As shown in Exhibit 1 on the next page, in 2004 former-Governor Sonny Perdue's Commission for a New Georgia (CNG) released a report on the state's space management practices (www.newgeorgia.org/spacemgmt.html). CNG concluded that the state's space management was too decentralized among state entities and improved strategic evaluation and management of real assets was necessary. To improve portfolio management, the task force recommended the state create a central real estate authority (headed by a portfolio management executive) and a central repository of real asset holdings.
In response to the recommendations put forth by CNG, the General Assembly passed legislation in 2005 that created a state property officer position and established the State Properties Commission (SPC) as the state's primary real estate portfolio manager. This legislation also separated SPC from the Department of Administrative Services (DOAS) and substantially reduced the number of state entities legally permitted to purchase and/or lease real property independently (i.e. "exempt entities"). In addition, the legislation expanded SPC's authority to manage the use of administrative space on behalf of state entities and charged SPC with helping non-exempt state entities find appropriate cost-effective space in either state owned or commercially owned property. SPC's stated mission is to advise, guide, and maximize Georgia's real estate portfolio by applying industry best practices in asset, space, and transaction management. In executing this mission for non-exempt state entities, SPC acquires and disposes of state owned real property, identifies appropriate space for entities to occupy, and executes their lease agreements.

State Space Management Policies

Exhibit 1 Significant Events Related to Property Management in Georgia

Spring 2004 Commission for a New Georgia releases report on
space management

Summer 2007 SPC finances study of other state governments'
leasing practices

Winter 2008 DOAS' Risk Management
Services transfers its database to BLLIP

Spring 2010 SPC completes Capitol Hill utilization report
(evaluates space utilization in 14 GBA-
owned buildings)

Spring 2011 External consultant completes report on strategic disposition
(identifies 131 properties for possible
disposition)

2004

2005

2006

2007

2008

2009

2010

2011

Spring 2005 Legislation passes, creating the state property officer position and making
the State Properties Commission responsible for managing state-wide
property, space, and asset management systems

Fall 2006 Building and lease portions of a real property database BLLIP (Building, Land and
Lease Inventory of Property) are completed

Fall 2007 External consultant completes Savannah
metro-plan

Source: SPC Records

Spring 2010 Governor issues Executive Order requiring state entities to complete all fields in
BLLIP

Summer 2011 Governor's Office issues memo requesting state entities complete BLLIP
data

2

State Space Management Policies

3

In 2006, the State Properties Commission (in conjunction with the Carl Vinson Institute of Government) developed the state's first statewide data repository for property--the Building, Land and Lease Inventory of Property (BLLIP). BLLIP data is publicly available from the internet: www.realpropertiesgeorgia.org.
In 2007, the State Properties Commission contracted with a consultant to conduct a survey of other state government leasing practices that identified Georgia's prohibition of multi-year lease terms as atypical. In addition, SPC contracted with a consultant to develop metropolitan strategic plans (metro-plans) for three cities to identify opportunities to consolidate space, renegotiate lease rates, and relocate state entities to more cost-effective locations. A metropolitan strategic plan of Savannah was completed; however, plans for additional cities were cancelled. SPC intends for in-house staff to conduct future metro-plans and will undertake a metro-plan for the city of Decatur during the fourth quarter of 2012.
In 2008, data records for state assets were expanded in BLLIP by incorporating insurance-related data maintained by the DOAS Risk Management Unit on state assets.
In 2010, an Executive Order was signed by the Governor requiring state entities to begin completion of all data fields in BLLIP records by July 1, 2010 to address problems with missing data in BLLIP. In addition, SPC conducted a physical verification of the occupancy status and vacancy rates of 14 GBAowned buildings.
In 2011, a joint memorandum was issued by the Governor's Office, the Office of Planning and Budget, and the State Property Officer reminding state entities of their obligation to complete records in BLLIP for all state owned and leased property. In addition, SPC financed a consultant study that identified 131 properties for potential sale/disposition.
Organization of the State Property Commission
The State Properties Commission (SPC) has a governing board that is chaired by the governor. Other members of the governing board include the secretary of state, state treasurer, state accounting officer, and three citizen members appointed by the governor, lieutenant governor, and speaker of the house. SPC's governing board authorizes acquisitions of state property, grants license agreements for use of state property, and approves sale contracts for dispositions authorized by the General Assembly.
The state property officer (SPO) is appointed by the governor and serves as the executive director of the State Properties Commission and the Georgia Building Authority (GBA). In addition, the SPO serves as the director of the construction division of the Georgia State Financing and Investment Commission (GSFIC). SPC currently has 12 full-time employees. While SPC's fiscal year 2009 budget recommended expanding SPC from 12 positions to 17 (adding five "portfolio management agents"), these positions were never funded, and in fiscal year 2012, SPC's official budgeted position count was reduced from 17 to 12. SPC has three divisions, as shown in Exhibit 2.

State Space Management Policies

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Exhibit 2 State Properties Commission
AAss ooff NNoovveemmbbeerr 22001111
State Properties Commission Governing Board

Georgia State Financing and Investment Commission Construction Division

State Property Officer / SPC Executive Director 1 Deputy Executive Director

Georgia Building Authority Administrative Assistant

Asset Management Division
(1 employee)

Space Management Division
(3 employees)

Transaction Management
Leasing Division Acquisition/Disposition (Land) Division

(4 employees)

(2 employees)

1 The state property officer serves as executive director of both SPC and GBA (which is attached to SPC for administrative purposes only) and as director of GSFIC's Construction Division.
Source: SPC Records

SPC's Asset Management Division is responsible for recommending strategic changes to improve the value of the state's property portfolio. Duties include establishing a value of state owned and leased real property assets, establishing core and non-core designation for each major asset in the portfolio, determining the total cost of occupancy, evaluating assets, and identifying properties for surplus. According to SPC, the asset management division will begin conducting agency-specific portfolio assessments in fiscal year 2012, with a portfolio plan of the Department of Public Health to be completed during the fourth quarter. In June 2011, a consultant completed a study to identify potential properties for sale/disposition. One-hundred thirty-one properties were initially identified for potential surplus. After consulting with appropriate state entities, SPC asset management division identified 38 properties that were valid sale candidates.
SPC's Space Management Division has authority to manage administrative space for most state entities (O.C.G.A. 50-16-41). Notable exempted entities include the Board of Regents (BOR), the Department of Labor (DOL), and certain authorities and commissions that are legally permitted to initiate and manage their own leases. The Division receives space requests from entities, develops square footage requirements and floor plans, and determines the most appropriate location (state government or private property owner) given the requesting entity's business needs and geographic

State Space Management Policies

5

requirements. In addition, the Division is also responsible for maintaining the state's central data repository of real property. The Building, Land, and Lease Inventory of Property (BLLIP) database was developed by SPC and the Carl Vinson Institute of Government's Office of Information Technology Outreach Services. In fiscal year 2011, the State Properties Commission received 1,072 space action requests (new lease requests, lease renewals, lease renegotiations, lease cancellations, etc.) from state entities. As of August 2011, BLLIP included 15,050 records of state owned buildings and 1,678 records of active leases of non-state owned spaces.2
SPC's Transaction Management Division provides oversight for the state's leased property portfolio and acquisition and disposition services for real property. Lease management involves renewing, renegotiating, or cancelling an existing lease agreement or locating and procuring new leased locations for requesting entities. Division personnel identify available properties that meet the client agency's business and geographic needs and present them to agency personnel. In addition, Division personnel negotiate tenant improvements and the final lease rate on behalf of the requesting entity. Among the 1,010 active leases managed by the State Properties Commission as of August 2011, a majority were for offices (68.2%). The active leases managed by SPC account for 7.9 million square feet and $117 million in annual rent, utilities, and janitorial expenses. The Land Management Division provides services to most state agencies to execute the purchase or sale of real property and/or real property rights. Notable exempted entities include the Board of Regents and the Department of Transportation. In fiscal year 2011, SPC obtained approval for 20 easements, 26 acquisitions, and 26 dispositions/conveyances. Acquisitions require SPC Board approval, dispositions require authorization from the General Assembly together with approval from SPC's Board, and revocable licenses require approval from the State Property Officer and/or the SPC board.

Financial Information
The State Properties Commission (SPC) revenues for fiscal year 2011 were $1.4 million, primarily coming from rents collected by the Georgia Building Authority (GBA) for GBA-owned properties in the Capitol Hill area. In addition, SPC received a one-time state appropriation of $180,000 to contract with a consultant to identify properties for potential disposition and approximately $39,000 from agency reimbursements related to property sales. SPC staff noted that its revenues typically are derived exclusively from GBA rents. The largest expense category for SPC was personal services, which accounted for 71% of expenditures. Exhibit 3 presents the State Properties Commission financial summary of revenues and expenditures for fiscal year 2011.

2 Lease count does not include 135 state leases of space in state owned buildings. BLLIP also contains records of state owned land and other insured assets (equipment), which were not included in this analysis.

State Space Management Policies

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Exhibit 3

State Property Commission Financial Information

Fiscal Year 2011

Description
Fund Sources State Appropriations1 Other Funds2
TOTAL

Amount
$ 180,000 1,232,913
$ 1,412,913

Expenditures

Personal Services

$ 1,006,158

Contracts

237,895

Real Estate Rentals

96,745

Regular Operating Expenses

29,096

Computer Charges

24,873

Telecommunications

11,286

Employee Travel

4,423

Other

2,437

TOTAL

$ 1,412,913

1 SPC received a one-time state appropriation of $180,000 to contract with an

outside consultant to identify properties for potential disposition. 2 The primary funding mechanism for SPC is a portion of GBA rents. In fiscal year

2011, GBA rents accounted for nearly $1.2 million of SPC funding.

Source: SPC Accounting Records

State Space Management Policies

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What is the balance between state-occupied state owned spaces, unoccupied state owned spaces, non-state occupied state owned spaces, and state-occupied non-state owned spaces? What is the cost associated with each?
Balance of State Owned and Leased Space The State Properties Commission (SPC) oversees the Building, Land, and Lease Inventory of Property (BLLIP) database. BLLIP is the state's central property data repository and is considered the most comprehensive data set of the state's real property. However, we found significant problems with the data in BLLIP, which limited our ability to fully answer this question. The problems with BLLIP data are discussed throughout this report, and specific recommendations to improve the data are presented on page 19.
BLLIP records (as of August 2011) indicate that the state owns 15,050 buildings3 and has 1,678 active leases of non-state owned space. Expressed as a percentage, 90% of the records in BLLIP are state owned buildings and 10% are active leases of non-state owned space. (See Exhibit 4.) BLLIP records also indicate that among the 15,050 state owned buildings, 5,420 are occupied by state entities and 141 are occupied by non-state entities.4 Over half of the state owned building records in BLLIP indicate the building is unoccupied (8,626 of 15,050). However, in more than half of the records listed as unoccupied (56.6%), the occupancy categorization is irrelevant given the use of the facility (e.g., laundries, radio towers, and water treatment plants). (See Appendix B.) In other instances, the occupancy information is deficient.
Our limited review of the state owned buildings found significant errors for properties listed as unoccupied. For example, several prominent and occupied Georgia Building Authority-owned buildings in the Capitol Hill area (such as the James H. "Sloppy" Floyd building and the Coverdell Legislative Office building) are listed as unoccupied in BLLIP records. In addition, 863 BLLIP records for state owned buildings had occupancy status values which we could not discern (i.e. occupied/unoccupied). We also noted that BLLIP data is largely self-reported by state entities. SPC is responsible for entering data for only a small percentage of properties in the BLLIP database (approximately 6%), those for which it is the leasing agent. SPC contends that the primary responsibility for the accuracy of BLLIP data is with the custodial entity. Finally, during the course of this examination, BLLIP database administrators discovered an issue that could result in a zero value in the "percent occupied" field if no data was entered in the other occupancy fields, which could impact the high number of buildings BLLIP shows as unoccupied.

3 A "building" is defined as a facility owned by the state and/or by state entities and may include property used for a variety
of purposes, including offices, storage buildings, housing, classrooms, and security facilities. 4 92% of the state owned buildings occupied by non-state entities are held by the Department of Natural Resources; most
of these buildings are located in Stone Mountain Park.

State Space Management Policies

8

Exhibit 4 Distribution of State Space
(As of August 2011)

Non-State Owned State-Occupied (1,678 Leases) 10.0%
.324
.10

32.4%

State Occupied (5,420 Buildings)

.008

0.8%

Non-State Occupied (141 Buildings)

.052

5.2%

Unknown Occupancy (863 Buildings)

51.6%

Indicates Building is Unoccupied1 (8,626 Buildings)

State Owned (90% - 15,050 Buildings)

.516

1At least one of two occupancy fields in BLLIP had a "0" entered.
SOURCE: Building, Land, & Lease Inventory of Property, SPC
Primary Use Categories of State Owned and Leased Space BLLIP records include a "primary use" field to identify the primary function of a space. Exhibit 5 presents the six most frequently recorded primary use types in state owned buildings and active leases of non-state owned space. (See Appendix B for a listing of all 44 reported primary use categories.)
We found significant problems with the primary use data that limited our ability to analyze how state owned buildings and leased non-state properties are used. For example, no primary use value is entered for approximately 23% of the BLLIP records. A large majority of these blank primary use values exist in state owned building records (3,792 of 3,859), though some records for leases of nonstate owned space have blank values as well (67). Among state entities with blank primary use values, the Department of Natural Resources accounts for approximately half and the Board of Regents approximately one-quarter. (See Appendix C for a list of all entities with blank primary use values.)
Among non-blank primary use categorizations, "office" is the most common with 1,715 total records (857 state owned buildings and 858 active leases of non-state owned space), "storage building warehouse" is the second largest category with 1,687 records, and "open sheds and pavilions" is the

State Space Management Policies

9

third largest category with 1,197 records. The other primary use categories (which account for 6,864 records) include a wide range of primary uses, such as radio towers, dormitories, and laundry facilities.

Exhibit 5 State Space By Primary Use Description
(As of August 2011)

39 Other Use Types (6,225 Buildings/639 Leases)
41.0%

23.1%

Blank (3,792 Buildings/67 Leases)

.231 .103

10.3%

Offices (857 Buildings/858 Leases)

.409

.101
.072 .044

.04
SOURCE: Building, Land, & Lease Inventory of Property, SPC

10.1%

Storage Building Warehouse (1,669 Buildings/18 Leases)

7.2% 4.4% 4.0%

Open Sheds or Pavillons (1,197 Buildings)
Residences (648 Buildings/96 Leases)
Maintenance Shops (662 Buildings)

State Entities Occupying State Owned and Leased Space BLLIP records identified 48 state entities that either have custody of a state owned building and/or have an active lease agreement for non-state owned space. Exhibit 6 presents the six entities with the highest number of state owned and leased non-state owned properties. (Appendix D provides details on the number and occupancy status of properties by state entity.)
As shown in Exhibit 6, the Department of Natural Resources (DNR) holds the largest number of state properties: 4,997 buildings and 248 leases. The Board of Regents (BOR) holds the second largest number of state properties: 3,406 buildings and 333 leases. As previously noted, BOR is exempt from SPC's authority and may acquire, dispose, lease, and manage space independently from SPC oversight. The Department of Corrections (DOC) holds the third largest number of state properties: 2,137 buildings and 117 leases. In addition, the Georgia Building Authority (GBA) (not

State Space Management Policies

10

shown in Exhibit 6) is the primary building owner and lease manager for property near Capitol Hill.
According to BLLIP records, GBA owns 54 buildings and manages 7.5 million square feet. GBA leases
space to state entities and manages these leases (via memorandums of understanding) independently from SPC.5

Exhibit 6 Owned and Leased State Space By Entity
(As of August 2011)

42 Other Entities (2,206 Buildings/887 Leases)
18.5%

31.4%

Department of Natural Resources (4,997 Buildings/248 Leases)

.314 .224

22.4%

State Board of Regents (3,406 Buildings/333 Leases)

.184

.135 .07

.034

.039

SOURCE: Building, Land, & Lease Inventory of Property, SPC

13.5%

Department of Corrections (2,137 Buildings/117 Leases)

7.0% 3.9% 3.4%

Department of Transportation (1,165 Buildings/1 Lease)
State Forestry Commission (637 Buildings/19 Leases)
Technical College System (502 Buildings/73 Leases)

Locations With State Owned and Leased Space State owned and leased properties are distributed throughout the state. Exhibit 7 presents the distribution of state owned buildings and active leases of non-state owned space by city and occupancy status. The state owns and/or leases property in all 159 counties and in 398 Georgia cities. In addition, the state owns or leases 61 properties outside of Georgia (e.g., Tokyo, Japan).
5 In most instances throughout this report, GBA-managed state owned space is reported with GBA as the entity with administrative custody, not the entity leasing the space. Exceptions are noted.

State Space Management Policies

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Among Georgia cities, Athens has the most properties overall, with 741. Atlanta has the largest number of leases, with 104.

Exhibit 7

Owned and Leased State Space by City

As of August 2011

State Owned

Non-State Total Properties Owned

City

State Non-State Indicates is Unknown Buildings

Occupied Occupied Unoccupied1 Occupancy Total

Leases Number %

Athens

589

0

93

5

687

Atlanta

274

2

151

11

438

Milledgeville

169

0

272

4

445

Savannah Reidsville

180

0

116

39

335

3

0

319

32

354

Tifton

254

0

63

18

335

Augusta

214

0

56

7

277

Eatonton

198

0

59

18

275

Valdosta

99

0

120

9

228

Waycross

47

0

177

11

235

Macon

79

0

121

9

209

Elberton

27

4

176

1

208

Columbus

84

0

67

16

167

Sapelo Island

50

0

147

0

197

Helen

102

0

77

7

186

Griffin

108

0

44

21

173

Rutledge

119

0

49

12

180

Rome

96

0

68

1

165

Cartersville

19

0

134

8

161

Brunswick

26

1

72

57

156

Statesboro

118

0

23

1

142

Cordele

19

0

137

6

162

Pine Mountain

6

0

161

0

167

Winder

6

1

150

0

157

Stone Mountain

3

119

34

2

158

Carrollton

86

0

44

14

144

Helena

14

0

119

12

145

Albany

88

1

25

2

116

Hardwick

0

0

135

9

144

Forsyth

13

0

124

1

138

Blairsville

78

0

50

2

130

Jackson

10

0

98

26

134

Dahlonega

56

0

38

12

106

Americus

76

0

24

8

108

Garden City

4

0

72

43

119

Warm Springs

13

0

24

79

116

Chatsworth

11

0

93

3

107

Dawsonville

12

0

95

0

107

Lavonia

5

0

96

0

101

Crawfordville All Others2

87 1,978

0

12

13

4,691

1

100

356

7,038

Grand Total

5,420

141

8,626

863 15,050

1At least one of two occupancy fields in BLLIP had a "0" entered.

2379 cities have less than 100 properties each; 21 of these cities are outside of Georgia.

Source: Building, Land, & Lease Inventory of Property, SPC

54 104
34 44
8 21 24 10 29 13 37 11 38
1 1 9 0 13 16 19 31 10 0 9 5 18 0 28 0 5 12 5 19 15 0 2 10 5 2 1
1,015
1,678

741 542 479 379 362 356 301 285 257 248 246 219 205 198 187 182 180 178 177 175 173 172 167 166 163 162 145 144 144 143 142 139 125 123 119 118 117 112 103 101
8,053
16,728

4% 3% 3% 2% 2% 2% 2% 2% 2% 1% 1% 1% 1% 1% 1% 1% 1% 1% 1% 1% 1% 1% 1% 1% 1% 1% 1% 1% 1% 1% 1% 1% 1% 1% 1% 1% 1% 1% 1% 1%
48%
100%

State Space Management Policies

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Additional Information on State Owned and Leased Office Space Office space represents the space use category with the most potential for cost savings. Office space is the primary use category with the largest number of BLLIP records, and office space is the largest primary use category for leased property by number, square footage, and total cost. In addition, office space is readily available in the private marketplace when compared to other property categories that have specialized use (e.g., dormitories, laboratories) or location (e.g., located within a state prison or within a state park).
According to BLLIP records, 22.3 million square feet are designated as office space for state entities. Thirteen million square feet are located in state owned buildings, and 9.3 million square feet are located in non-state owned leased property. Expressed as a percentage, 58% of the space with a primary use of office is located in state owned buildings and 42% is located in non-state owned leased property. (See Exhibit 8.) Non-state owned office space accounts for approximately $138.5 million in lease costs annually.

Exhibit 8 Distribution of State Office Space
(As of August 2011)
Non-State Owned State-Occupied (9,271,857 Leased Square Feet)
41.6%

State Owned (58.4% - 13,021,114 Square Feet)

.324

32.4%

State Occupied (7,217,218 Square Feet)

.0111.1%

Unknown Occupancy (237,545 Square Feet)

.415

Indicates Building is

.25

25.0%

Unoccupied1

(5,566,351 Square Feet)

1At least one of two occupancy fields in BLLIP had a "0" entered. SOURCE: Building, Land, & Lease Inventory of Property, SPC

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Significant deficiencies with BLLIP occupancy data (such as inaccurate or missing values for occupancy status, total occupant number, and total capacity) prevented us from conducting a comprehensive analysis of key cost and efficiency performance indicators for state office space such as occupancy rates, square footage per occupant, and cost per occupant. BLLIP records indicated that approximately 43% of state owned office buildings (by square footage) were unoccupied. However, our limited review of state owned buildings reported on BLLIP as unoccupied identified several prominent buildings that were actually occupied. For example, BLLIP data for the James H. "Sloppy" Floyd building and the Judicial building on Capitol Hill indicated that the buildings were unoccupied; however, a 2010 SPC utilization report for the buildings cited an occupancy rate of approximately 80% for the Floyd building and 90% for the Judicial building. In all, we identified 13 office buildings in the Capitol Hill area (encompassing 3.2 million square feet) that were leased to state entities but had BLLIP records indicating they were unoccupied. In addition, nearly all (821 of 858) of the BLLIP records of non-state owned leased office property had no value indicating the number of occupants in the space (a figure necessary to analyze occupancy rates, square feet per occupant, and cost per occupant). In instances when SPC was the leasing agent, BLLIP records had no value indicating the number of occupants for 655 of 689 leases.
BLLIP records identified 45 state entities that have administrative custody of state owned office buildings and/or have office lease agreements with non-state entities. Exhibit 9 shows the six entities with the most office space by square footage. (See Appendix E for a list of all entities and details on the occupancy status and square footage of office property.)
As shown in Exhibit 9, the Board of Regents (BOR) accounts for nearly one-third of the state's square footage used for office space. (As previously noted, BOR is exempt from SPC's authority and may acquire, dispose, lease, and manage space independently of SPC oversight.) The Georgia Building Authority (GBA) accounts for 17.1% of the state's square footage used for office space, which is comprised of 20 GBA-owned buildings in the Capitol Hill area. The Department of Human Services (which is required by state law to maintain an office in every county) accounts for 13.7% of the state's square footage used for office space.

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State owned office buildings and/or non-state owned leased offices are located in all 159 Georgia counties and in 264 Georgia cities. In addition, BLLIP identified 12 leases for office space located outside of Georgia. The six cities with the highest office square footage are shown in Exhibit 10. (See Appendix F for occupancy status and square footage by city).
As shown in Exhibit 10, BLLIP records indicate that Atlanta has the largest amount of office space by square footage (40.8%). Athens has the second largest amount of state office space (7.2%); these are largely properties associated with the University of Georgia.

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Exhibit 10

Owned and Leased

State Office Space By City

269 Other Cities (9,192,356 Square Feet)

(As of August 2011)

41.2%

.408

.412
.072
.033 .029 .023 .023
SOURCE: Building, Land, & Lease Inventory of Property, SPC

40.8%

Atlanta (9,095,888 Square Feet)

7.2%

Athens (1,611,375 Square Feet)

3.3% 2.9% 2.3% 2.3%

Augusta (740,340 Square Feet)
Milledgeville (639,339 Square Feet)
Savannah (509,847 Square Feet)
Decatur (503,826 Square Feet)

Cost of State Owned and Leased Space
State Owned Space Costs BLLIP records do not contain sufficient data to calculate the cost of state owned space. As a result, SPC is unable to track total cost of occupancy for state owned buildings. Consequently, the examination team was unable to identify or evaluate costs for state owned buildings.
Total Cost of Occupancy (TCO) analysis is a method used to establish and track the cost to occupy a property. TCO analysis requires data such as general operating expenses, utilities, and financing costs for a building or facility. The benefits of compiling and calculating TCO data are numerous. According to a recent study conducted by the Wisconsin Building Commission, TCO analysis provides the necessary data framework for "occupancy cost accounting, performance measurement, cost comparison, and benchmarking for strategic and facilities planning processes." SPC staff report that they have made inquiries with the State Accounting Office and the Governor's Office of Planning and Budget to determine whether data required for TCO analysis is available electronically and by

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facility. According to SPC, electronic data necessary to calculate TCO are not currently available at the facility level from a single data source, such as the state's accounting system.
Leased Space Costs A standard method of calculating and comparing lease costs is by converting them into a comparable metric of "cost per square foot" (psf). BLLIP records contain annual cost data for leased property in a form sufficient for analysis; however, users should consider the landlord type when evaluating lease costs since lease costs may not reflect true market rates when the landlord is a government (state, federal, or local). For example, the Georgia Department of Public Safety rents 10 state owned office buildings to the Department of Driver Services for $1.

Exhibit 11 presents the per square foot lease costs for state entities with at least 10 leased office properties. The data is divided into three categories based on landlord type: another state government entity,6 a non-state government entity, or a private landlord. As shown in Exhibit 11, the average statewide rental cost psf by landlord type is $11.73 to state government landlords, $13.11 to other public sector landlords, and $15.52 to private landlords. This analysis includes exempt state entities such as the Board of Regents and the Department of Labor.

Exhibit 11

Office Space Rental Charges by Entity1,2

As of August 2011

State Owned

Non-State Owned

State Owned and Leased to State Entity

Leased from Public Sector3

Leased from Private Sector

Entity Name

Square Number Feet Total

Rent Total4,5

Rent Per Square Foot6

Square Number Feet Total

Rent Total5

Rent Per

Square Number Square

Foot6

Feet Total

Rent Total5

Rent Per Square Foot6

Corrections, Department of

1 89,791 $ 1,116,105 $ 12.43

35 67,878 $ 362,089 $

5.33

68 333,708 $ 4,464,476 $ 13.38

Defense, Department of

13

36,941 $ 609,487 $ 16.50

Driver Services, Department of

14 29,554 $ 86,776 $

2.94

32 149,616 $ 623,573 $

4.17

9 127,861 $ 2,055,212 $ 16.07

Governor, Office of the

10 104,907 $ 1,334,026 $ 12.72

2

7,143 $ 153,186 $ 21.457

Human Services, Department of

3 325,354 $ 4,149,251 $ 12.75

88 1,693,783 $ 25,268,354 $ 14.92

146 1,371,068 $ 19,180,957 $ 13.99

Judicial Branch of Georgia

11 128,307 $ 1,655,382 $ 12.90

2

1,365 $ 12,554 $

9.20

4

28,188 $ 502,208 $ 17.82

Juvenile Justice, Department of

1 13,206 $

1$

0.00

23 45,006 $ 318,296 $

7.07

80 363,349 $ 5,426,326 $ 14.93

Labor, Department of

3 15,942 $ 235,484 $ 14.77

80 773,973 $ 13,293,637 $ 17.18

Natural Resources, Department of

5 121,769 $ 1,497,726 $ 12.30

8 167,555 $ 3,174,940 $ 18.95

Pardons and Paroles, State Board of

5 56,106 $ 606,303 $ 10.81

1

3,621 $ 53,715 $ 14.83

39 167,669 $ 2,105,665 $ 12.56

Public Health, Department of

6 34,133 $ 464,394 $ 13.61

4

37,452 $ 499,338 $ 13.33

Public Safety, Department of

29 87,434 $ 281,715 $

3.22

9 67,512 $ 134,051 $

1.99

2

4,058 $

71,564 $ 17.64

Regents, State Board of

5 91,936 $ 1,234,042 $ 13.42

1

2,221 $ 11,771 $

5.30

68 2,247,710 $ 36,036,988 $ 16.03

Revenue, Department of

2 106,076 $ 1,318,530 $ 12.43

12 507,743 $ 7,979,454 $ 15.72

Veterans Service, Department of

1 11,425 $ 142,008 $ 12.43

37 23,079 $ 23,357 $

1.01

8

6,571 $

68,342 $ 10.40

All Others8

38 1,633,098 $ 19,401,249 $ 11.88

13 119,020 $ 1,645,895 $ 13.83

61 867,692 $ 13,754,925 $ 15.85

Grand Total

125 2,798,964 $ 32,823,112 $ 11.73

250 2,223,176 $ 29,153,533 $ 13.11

604 7,048,681 $ 109,376,704 $ 15.52

1One lease in owned property (Secretary of State) and 4 leases in non-state owned properties (Labor, Regents (2), and Veterans Service) do not include square footage and were not included in

this table.

2Both SPC-administered and exempt agency-administered leases are included in this table. 3Includes the U.S. government and local governments.

4Rent in this category represents what the entity "pays" for rent and is not necessarily representative of the cost of the building. The rent (including utilities and janitorial) is $1 for approximately 20%

of these records.

5Rent shown includes the fields Rent Amount, Utilities, and Custodial. 6Rent Per Square Foot is Rent Total divided by Square Feet Total.

7The average for the Office of the Governor is somewhat skewed by OPB's lease in Washington, DC.

834 entities have less than 10 offices in these categories.

Source: Building, Land, & Lease Inventory of Property, SPC

6 State entity leases of state owned office space are included in this section for comparison purposes. However, the lease records are excluded elsewhere in the report, since the buildings are captured separately under the "state owned" category totals.

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Exhibit 12 presents the per square foot lease costs for cities with at least 10 leased office properties. Atlanta has the largest amount of state owned office space leased to state entities. This space is primarily GBA-owned space in the Capitol Hill area. In fiscal year 2011, GBA charged state entities $12.43 per square foot for standard office space and $14.23 for premier office space. Premier office spaces, such as the Health Building and the Trinity Washington Building, are few in number and have undergone major renovation more recently than standard office space. The private sector leases provide an indication of what the state pays private landlords in various cities. However, these rates may not equal average market rates because the leases may not be representative of the overall market, due to the location and quality of state space and the small number of leases in some cities.

Exhibit 12

Office Space Rental Charges by City1,2

As of August 2011

State Owned

Non-State Owned

City

State Owned and Leased to State Entity

Number

Square Feet Total

Rent Total4,5

Rent Per Square Foot6

Leased from Public Sector3

Number

Square Feet Total

Rent Total5

Rent Per Square Foot6

Number

Leased from Private Sector

Square Feet Total

Rent Total5

Rent Per Square Foot6

Americus

8 50,720 $ 368,481 $ 7.27

3

16,000 $ 142,084 $

8.88

Albany

3 111,871 $ 1,937,294 $ 17.32

8

52,470 $ 614,277 $ 11.71

Atlanta

69 2,606,726 $ 32,606,448 $ 12.51

4 192,900 $ 1,891,834 $ 9.81

52 2,724,698 $ 44,713,200 $ 16.41

Athens

2

5,547 $ 19,436 $

3.50

1 34,840 $ 246,433 $ 7.07

26 297,071 $ 4,976,996 $ 16.75

Augusta

1

1,478 $

1$

0.00

4 85,257 $ 1,217,554 $ 14.28

12

82,891 $ 1,030,740 $ 12.43

Brunswick

1

1,876 $

5,155 $

2.75

2

1,215 $

2 $ 0.00

10

71,402 $ 929,786 $ 13.02

Cartersville

1

980 $

1$

0.00

2

1,481 $ 8,305 $ 5.61

8

54,900 $ 838,398 $ 15.27

Columbus Dalton

1

5,578 $ 43,300 $

7.76

1

5,040 $ 10,816 $ 2.15

19 185,989 $ 2,596,490 $ 13.96

11

73,491 $ 970,758 $ 13.21

Decatur

5 137,578 $ 2,726,280 $ 19.82

9 173,935 $ 3,255,686 $ 18.72

Dublin

4 12,992 $ 127,106 $ 9.78

9

58,479 $ 714,623 $ 12.22

Forsyth

11 28,310 $

7,051 $

0.25

2

7,314 $ 104,788 $ 14.33

Gainesville

1

2,858 $

574 $

0.20

2 16,696 $ 298,369 $ 17.87

11

79,151 $ 1,281,906 $ 16.20

Macon

2

980 $

2$

0.00

6 206,059 $ 3,065,890 $ 14.88

16 120,210 $ 1,529,244 $ 12.72

Marietta

1

4,215 $ 6,746 $ 1.60

12 136,477 $ 2,325,688 $ 17.04

Moultrie

4 50,957 $ 829,097 $ 16.27

6

11,038 $ 119,000 $ 10.78

Newnan

1

2,384 $ 36,235 $ 15.20

5 24,899 $ 128,909 $ 5.18

4

35,648 $ 464,698 $ 13.04

Savannah

1 90,000 $

1$

0.00

4 11,805 $ 48,234 $ 4.09

9 272,648 $ 5,563,070 $ 20.40

Statesboro

1

1,800 $

1$

0.00

4 20,082 $ 408,371 $ 20.34

8

32,285 $ 321,773 $

9.97

Tifton

1

3,200 $ 12,000 $

3.75

6 37,862 $ 343,066 $ 9.06

8

38,856 $ 481,845 $ 12.40

Valdosta All Others7

3

4,253 $

4,083 $

0.96

29 42,994 $ 88,824 $

2.07

2 27,000 $ 318,601 $ 182 1,189,707 $15,172,147 $

11.80 12.75

8

62,778 $ 768,530 $

353 2,460,950 $ 35,633,126 $

12.24 14.48

Grand Total

125 2,798,964 $ 32,823,112 $ 11.73

250 2,223,176 $29,153,533 $ 13.11

604 7,048,681 $ 109,376,704 $

1One lease in owned property (Atlanta) and 4 leases in non-state owned properties (Athens, Macon, Millen, Sandersville) do not include square footage and were not

included in this table.

2Both SPC-administered and exempt agency-administered leases are included in this table. 3Includes the U.S. government and local governments.

15.52

4Rent in this category represents what the entity "pays" for rent and is not necessarily representative of the cost of the building. The rent (including utilities and janitorial) is $1 for
approximately 20% of these records. 5Rent shown includes the fields Rent Amount, Utilities, and Custodial. 6Rent Per Square Foot is Rent Total divided by Square Feet Total 7196 cities have less than 10 offices each in these categories. Of the 564 office leases in these cities, approximately 1/4 (159) are local DFCS offices.

Source: Building, Land, & Lease Inventory of Property, SPC

Problems with BLLIP Data
Improvements to the completeness and accuracy of BLLIP data are necessary to enable the State Properties Commission to fulfill its function as the state's real estate portfolio manager. Missing and incorrect values for key fields in BLLIP limit SPC's (and the examination team's) ability to determine the primary use of many properties, whether or not the property is occupied, the percentage of usable space that is/is not utilized or occupied, and the cost of the space.

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SPC needs to provide more comprehensive management oversight and control of BLLIP data. While SPC is responsible for maintaining the BLLIP database, primary responsibility for the accuracy and completeness of BLLIP inventory records remains with the state entities that hold state buildings and entities that manage leases independently of SPC. Of the 15,050 state owned buildings and 1,678 leases of non-state owned space in BLLIP, SPC is responsible for maintaining data for 1,010 leases (6% of BLLIP records). As of June 2011, approximately 775 employees from more than 50 state entities have permission to enter data into BLLIP.
SPC has not established quality control guidelines for entities that enter data into BLLIP to reduce varying data entry procedures and varied interpretations among users. SPC manages the BLLIP data repository by issuing access privileges (i.e. name and password) to employees of state entities, providing training to state entities and users who request it, and working with the Carl Vinson Institute to maintain the data system and resolve technical issues. Entities submit edited records to SPC personnel, who "approve" them in the system. However, the approval process does not include detailed reviews or verification of the data. SPC does not conduct periodic data quality reviews to identify obvious errors and gaps in the data.
To address holes and gaps in BLLIP data, an Executive Order and other communications have been issued to direct state entities to complete and update BLLIP data. In March 2010, an Executive Order required all state entities to begin completion of all fields in BLLIP by July 2010 (with particular attention to occupancy fields). In April 2010, SPC sent a memo to all state agency heads requesting agency BLLIP records be completed and updated to allow SPC "to identify surplus and underutilized properties, and to provide more cost efficient use of existing work space." Entity compliance was poor, and in August 2011, the Office of the Governor, together with the Office of Planning and Budget and the State Property Officer, issued another memo requesting record completion. This memo emphasized the importance of utilization and condition data "in developing the annual budget, recommending capital expenditures or outlays, and anticipating revenues to the State Treasury." SPC has not specifically targeted the handful of agencies that represent the majority of missing and inaccurate data.
The inadequate controls and management oversight have resulted in significant problems with BLLIP data. Specific problems with BLLIP data fields identified during this examination are summarized below:
Problems with Occupancy Data For 5.7% of buildings and 95.8% of leases in BLLIP, information was not available to accurately identify if the facility was vacant or occupied because there was no value in the applicable occupancy fields. In addition, 57.3% of buildings and 1.4% of leases in BLLIP data indicated facilities were unoccupied; however, many of those had facility categories (primary use categories) for which occupancy was not an appropriate factor. Examples include radio towers, storage sheds, boating facilities, rest stations, and water treatment plants. (See Appendix B for a complete list of primary use categories.)
Problems with Primary Use Data For 25.2% of buildings and 4% of leases in BLLIP, information was not available to identify the type of facility because the "primary use" field had no value entered. In addition, two primary use options comprising another 2% of the buildings in BLLIP had a primary use designation that was not a type of use

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("vacant" and "leased to a non-state entity"). Finally, our review of the 3.7% of buildings and 1.1% of leases classified as "other use" identified that this classification was used more often than necessary. A sample of 10% of properties classified as "other use" identified that 14% did not have a written use specified as required and 50% appeared to fit into one of the existing categories.
Problems with Occupancy Rate Data For Office Space For 66.9% of the office buildings and 100% of office leases in BLLIP, information was not available to identify the occupancy rate of the facility because one or more of the required fields were blank.
Problems with State Owned Buildings Cost Data There is no information on building cost for any of the 15,050 state owned buildings in BLLIP. Therefore, SPC cannot analyze the economy of these facilities in comparison to each other and to properties leased from non-state entities.

Recommendations For Improvement In order to effectively manage the state's real estate portfolio, SPC needs to improve the accuracy and completeness of the BLLIP database. SPC should:
o establish quality control guidelines and review procedures for BLLIP data entry to reduce varying procedures and field interpretations among the various users and entities with permission to edit BLLIP records.
o strengthen information system controls for critical fields in BLLIP to prevent entry of erroneous values and make certain fields mandatory for record submission, particularly those related to use, occupancy, cost, and square footage.
o conduct periodic data quality reviews to detect obvious errors and blank values in the data.
o work directly with the state entities that represent the majority of missing and inaccurate data to improve data completeness and accuracy.
o add a field to identify unused (vacant) versus used space and limit the use of occupancy rate fields to the primary use categories for which occupancy rate calculations are relevant (i.e. offices and not radio towers, storage buildings, etc.).
o determine the most efficient and effective way to collect and maintain data necessary to calculate costs associated with state owned buildings.

Agency response: SPC noted that to improve quality control and to reduce field interpretations related to data entry in BLLIP, it has reviewed the BLLIP user list and provided data entry training on numerous occasions. It also noted that it will develop more detailed written guidance that will be effective in July 2012 and that training will continue to be offered annually. It also indicated that it would review information system controls to reduce error rates in BLLIP data and identify mandatory fields for record submissions. Technical upgrades to BLLIP to implement these improvements will be made by July 2012. SPC noted that the occupancy fields in BLLIP were added in 2010 and that information on the number of occupants for SPC-managed leases is available in original lease request information contained in its lease files. While updates on occupancy figures were not previously required, SPC noted that it will start requiring annual occupancy updates effective January

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2012. In addition, SPC noted that it has added information on primary use for the leases it manages that did not have primary use information in BLLIP. SPC reported that it has contacted agencies with missing BLLIP data and is meeting with the eight agencies that have most of the missing data. SPC also reported that it is working on developing a new field in BLLIP to identify unused (vacant) space. Finally, SPC noted that it has been working on identifying building costs for two years and will continue to seek a TCO solution. It specifically noted that information on costs is not available in BLLIP because it is a data warehouse/inventory tool and not an asset management application. It also noted that it is working with GEFA to obtain data on total utility costs statewide and the number of utility meters the state owns to determine if additional investment in meters is needed. In addition, SPC noted that accurate TCO information will require an investment in metering, amending accounting systems, and changing how agencies categorize operating costs.

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21

What polices does the state use in determining leased property location and space? Please comment on any areas where an agency could relocate to a lower cost area and continue to serve clients.
Lease Policies Impacting Costs Policies related to facility location, facility quality, space standards, and methods for lease cost data review can all impact total lease costs. The two primary factors impacting lease costs are the property's cost per square foot and the amount of spaced leased by an entity. The lease cost per square foot of a facility is, in turn, influenced by both the location of the facility and the quality (or class) of the facility. For SPC-controlled leases, the area leased is determined by the space needed for an entity's employees and the space needed for other activities performed at a facility. In addition, systematic review of lease cost data can help identify potential opportunities for cost savings; SPC's policies related to these factors that may impact state lease costs are described below.
State Property Commission's Authority: SPC has the authority to provide leasing assistance to non-exempt state entities that request administrative space. It should be noted that exempt entities (including the Board of Regents, the Department of Labor, and various authorities and commissions) execute leases independently of SPC and this review did not examine the policies of exempt entities.
Non-exempt state entities submit a request for "space actions" (e.g., new space, lease renewal, lease cancellation, or lease renegotiation) to SPC's Space Management Division. The Space Management Division establishes the space needs of the requesting entity by analyzing information in the space utilization questionnaire, reviewing the inventory of state owned properties, and concluding whether appropriate space is available in state owned property. If the space management unit determines that state owned property is not available or not appropriate given the requesting entity's geographic or core-business needs, the request is forwarded to SPC's Transaction Management Leasing Division and a private lease is sought. As discussed on page 27, we found that exempted state entities had a higher proportion of higher-cost leases.
Property Location Policies Preference for State Owned Space: It is typically more cost effective to utilize existing state owned space than to lease property from private owners. SPC has established a written policy requiring that vacancies in state owned buildings should be given priority over privately owned space when locating state entities. Specifically, the policy requires that SPC will (a) review the inventory of state owned space as part of the space assignment process and (b) assign an entity to state owned space before leasing additional property in the private market if the state owned space satisfies both the "programming needs" and "geographic requirements" of the entity.
SPC has not, however, established procedures detailing the methods staff should use to conduct a review of state owned properties to identify potential vacancies or back-fill opportunities. SPC space management staff indicated that they first review records within the BLLIP inventory database and then conduct follow-up communications (as necessary) with state entities to determine whether or not state space is appropriate and available for

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22

locating the requesting entity.7 As noted in the previous finding, the poor data quality of primary use and occupancy status/rate for BLLIP records of state owned buildings significantly limits BLLIP's value for evaluation of the state owned space inventory. After a review of BLLIP data is conducted, staff indicate that they communicate with state entities with property in the general geographic area to determine whether opportunities exist to backfill under-utilized space.
Due to a lack of documentation maintained in the lease files, we were unable to confirm whether staff executed the methodologies reported. We reviewed all requests submitted to SPC for new space during fiscal year 2011 that resulted in locating an entity into a space. We found no consistent documentation of the analytical methods staff report that they conduct in inventorying existing state owned space. We did not find evidence of SPC backfilling state owned property. We did find evidence of SPC directing a requesting entity to GBAowned buildings. We also found instances when SPC co-located requesting entities into a single leased location. We were unable to determine the procedures or methodology used to make any of these decisions, however, due to a lack of documentation in the lease files.
Property Location Policies Requested Geographic Area: SPC has a written space demand policy that states that it will consider the programming needs and "any geographic requirements" necessary for the entity requesting space to provide services. SPC personnel indicate that they communicate with the requesting entity early in the search process to understand the entity's core business and geographic requirements. A requesting entity's geographic requirements could include things such as close proximity to Capitol Hill, an interstate highway, or other state offices.
SPC has not established formal policies or procedures to evaluate the merits of the requesting entity's stated geographic requirements. In addition, SPC staff indicated that no informal evaluation of the merits of a state entity's stated geographic requirements is conducted either. As such, the general geographic area within which SPC begins a search for space is determined by the self-reported geographic requirements of the requesting entity.
Property Location Policies Offering Multiple Alternatives: SPC has established a goal to provide a requesting entity with at least three potential properties to consider when available. However, SPC has not established a policy or procedure detailing the resources or the methods leasing staff should use to conduct a search for property. SPC leasing staff indicated that they use publicly-available real estate databases to initiate a search for property and may rely on prior knowledge of the geographic area under consideration. In addition, staff report that they may communicate with knowledgeable real estate persons in the area under review. SPC leasing staff indicated that they may visit the potential sites with the state entity requesting space to help make determinations about the appropriateness of the space. However, leasing staff are not required to maintain documentation of their methods or to justify why the lowest cost property was not selected.
We reviewed all requests submitted to SPC for new space during fiscal year 2011 that resulted in locating an entity into a space. We found no consistent documentation of the analytical methods staff report for identifying available properties in the geographic area of

7 If the space under consideration is managed by the Georgia Building Authority, SPC does not rely on BLLIP records but instead relies on vacancy reports maintained by the GBA.

State Space Management Policies

23

interest, the criteria used to select properties offered to the requesting entity, or justifications if the lowest cost property was not selected.
Property Quality (or Building Class) Policies: According to SPC staff, as a general rule, state agencies should not be leasing "premium" quality office space due to the high cost typically associated with it. However, SPC has not established formal, written policies restricting state agencies' location in premium space or outlining the steps necessary to justify exceptions to this policy. "Premium" space includes buildings located in prestigious areas and/or using above-standard materials, workmanship, and finishes that typically result in higher lease payments. Neither BLLIP records nor SPC lease files contain data identifying the relative quality or class of space leased by state entities. As a result, we could not specifically identify state entities that may be located in premium class space or evaluate if the premium class space was justified.
Property Space Standards Policies: SPC has established written space standards for state owned or leased office workspace that define the square footage appropriate for various position categories (e.g., manager, professional staff). (Appendix G provides the SPC space standards.) As part of the request for space action, state entities report the number and position category of current (and projected future) employees, as well as any client or ancillary space needs (e.g., bathrooms, storage rooms, conference rooms, break rooms). SPC uses this data to tabulate an approximate total square footage space requirement for the requesting entity. State law gives SPC the authority to manage the use of administrative space, which includes the ability to establish and enforce space standards and assign space based on these space standards. However, SPC does not have a written policy that requires staff to document whether or not all applicable space standards were met when locating a state entity, and due to data access limitations, we were unable to determine the degree to which SPC adheres to its space standards.
We attempted to analyze whether SPC complies with its space standards in all applicable instances. However, the data necessary to analyze space standard compliance (including square footage used for administrative space and position categories) is not available as an electronic data set, and the time required to manually review and extract the data for the 689 office space leases that SPC currently manages prevented us from compiling a complete data set.
As a result of this data access constraint, we conducted a limited review of SPC's compliance with space standards for 10 requests submitted to SPC for new space during fiscal year 2011 that resulted in locating an entity into a space. To determine whether SPC complied with its space standards, we assessed whether the state entity was placed in a space that was no greater than 10% larger than the space identified from the space management unit's space standard report. Our review of the 10 files identified that seven were in compliance with space standards and three were not in compliance with the standards. The three files that were not in compliance did not have any justification for deviating from the standards.
Policies for Periodic Reviews of Lease Costs in Geographic Areas: A metropolitan strategic plan (also known as metro-plan) is a systematic study of the state's inventory of state owned and leased property within a limited geographic area (i.e. a city or county). The overall goal of a metro-plan is to evaluate local real estate markets to identify opportunities to consolidate space, renegotiate lease rates, or relocate state entities to more cost-effective locations. Metro-plans are labor intensive; however, they are an effective

State Space Management Policies

24

means to conduct a thorough and comprehensive analysis of an entire metropolitan area. Metro-plans require a real estate expert to conduct a physical inspection of properties and analyze local market lease rates. While SPC has no policies for implementing metro-plans, in the Commission for a New Georgia's 2010 Implementation Progress Reports 2004 2010, SPC indicated intentions to conduct a pilot metro-plan and noted the benefits of doing so:
SPC will conduct a pilot metro-plan to evaluate all state owned and leased space for state agencies in a defined geographical area. The purpose of such a plan is to assess the space needs of agencies and to determine the most cost efficient method to provide the space. Often, the results of such an analysis lead to the consolidations of leases, colocation of state agencies sharing program requirements and the recommendation to dispose of surplus and/or underutilized real property. The primary goal is to improve asset management and to increase utilization by reducing costs to the state.
We found that SPC has made use of a metro-plan in the past. In 2007, the State Properties Commission contracted with a private real estate consultant to conduct a metro-plan of Savannah for a cost of approximately $60,000. The report took approximately five months to complete and identified the following potential cost savings and facility upgrade opportunities.
o Consolidations The consultant identified an opportunity to consolidate a state entity from three separate suites into a single suite and estimated a potential savings of $21,700 per year in rent costs.
o Relocations The consultant identified opportunities to relocate two state entity offices to improve space from sub-standard facilities and reduce total office space from approximately 28,000 square feet to 18,000 square feet. The consultant estimated that moving costs and tenant improvement costs would break even after 13 years, but that the move would result in a significant qualitative improvement for the entities from substandard office space.
o Renegotiations The consultant identified two rental rates that were greater than 10% higher than market rental rates and suggested that SPC review the cost effectiveness of these leases before renewing them. The consultant estimated an annual savings of approximately $500,000 per year from these renegotiations.
SPC implemented recommendations from the study, including consolidating office space and relocating state entities to improve work environments from sub-standard office space.
SPC staff indicated that they intend to complete metro-plans in the future, with one for the City of Decatur planned for the fourth quarter of fiscal year 2012. It is not clear whether additional staff are necessary to execute this policy goal. It should be noted that SPC staff did conduct a physical inspection of GBA-owned buildings in 2010 to evaluate opportunities to consolidate space.
Policies for Periodic Analysis of BLLIP Data: SPC does not have formal policies for periodically evaluating existing leases to identify potential cost savings. For example, SPC does not periodically collect local market lease

State Space Management Policies

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rates and compare them in aggregate to existing lease costs to identify high-cost property (by geographic region, state entity, or some other attribute). In the next section of this report, for example, we present the results of an analysis of high-cost lease records we identified with current BLLIP data.
Policies for Annual Lease Renewals: SPC has not created any policies or procedures for reevaluating lease costs when the lease comes up for renewal. A state entity may choose to have its lease renegotiated when it submits a space action form for annual renewals. In addition, SPC leasing agents indicated that they may also consider whether a lease cost seems too costly, but SPC has not created any policies or procedures to standardize the cost review process.
Policies for Multi-Year Leases: SPC is not permitted to enter into multi-year lease agreements due to restrictions imposed by the state Constitution (Article VII, Section IV, Paragraph VIII). However, SPC has indicated that multi-year lease agreements may offer opportunities to reduce rents by extending the term during which costs (such as tenant improvement costs) can be amortized and making the state a more attractive tenant for landlords.

Recommendations For Improvement The State Properties Commission needs to develop stronger policies and procedures related to the factors that impact the state's lease costs. Specifically, SPC needs to:
Consider requesting more statutory authority over leases negotiated by exempt entities. For example, SPC could provide independent oversight over high-cost leases that exceed defined limits and could work with agencies to establish parameters for reviewing costs.
Improve its analysis of backfill opportunities in state owned space before leasing private space. SPC should (a) establish policies and procedures to define staff requirements for assessing state owned property inventory and (b) require documentation of the analysis to be maintained as part of the lease file.
Write procedures explaining the goals and standards related to leasing. Specifically, SPC should establish procedures detailing the data collection and analysis techniques that staff should execute to identify private property for state entities to lease.
Adopt criteria to evaluate the merits of a requesting entity's stated geographic location requirements and adopt procedures to formally document SPC staff considerations of general geographic area (and the associated cost implications) as part of the lease file.
Obtain information on market lease rates for geographic areas throughout the state and establish procedures for evaluating market rates and including market rate evaluations in lease files.
Establish working definitions to classify the quality of space occupied by state entities. SPC should also require that state entities provide written justification for leases of "premium" class space and consider requiring formal SPC approval for leases of premium space.
Require that lease files include justification when space standards are exceeded by 10% or more.

State Space Management Policies

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Develop a strategy for performing metro-plans in the future. The strategy should prioritize locations with the greatest potential for cost savings.
Establish policies and procedures for conducting periodic, systematic analysis of BLLIP data records to identify areas for potential cost savings.
Develop a strategy for reevaluating lease costs when leases come up for renewal. The strategy should prioritize leases with the greatest potential for cost savings.
Determine cost savings that might result from executing multi-year lease agreements, including the tenant improvement costs that will be amortized over the term of a multi-year agreement.
Agency response: SPC noted that it would modify its internal tracking system to include two check boxes to document staff consideration of vacancies in state owned space and other back-fill opportunities, which will be effective in January 2012. It also reported that it would develop new policies related to presenting multiple possible locations to agencies that will be published in January 2012. The new policies will provide that leasing staff will make a recommendation regarding location and the agency must provide justification in writing if the recommendation is not accepted. Regarding geographic location, SPC noted that it relies on the agency to determine the best location that will serve its program requirements. It also noted that it would continue to capture market rate data on an annual basis and that its Asset Management Division will use this benchmark to highlight leases for potential renegotiation. It was also noted that SPC reviewed the three leases that exceeded space standards and the variances were justified, and that the two leases that identified by the Savannah Metro Plan that were more than 10% greater than market rates could not be renegotiated. SPC also noted that it was working with a number of agencies to correct key fields in BLLIP and that written procedures for periodic review of BLLIP data will be in place and published in January 2012. New leasing procedures published in January 2012 will also clarify polices for reevaluating leases when they come up for renewal. Finally, SPC estimated that the state could save $37 million over a 10-year period if SPC had the ability to use multiyear leases (however, this estimate does not include potential savings related to exceptional tenant improvements).

Areas Where Lease Costs Could Be Lowered To identify leases where costs could be lowered, we analyzed BLLIP data records to identify "highcost" office leases which had higher than $20 per square foot costs. In addition, we identified higher than average costs in specific geographic areas by comparing available information on market lease rates (as provided by a private real estate firm through SPC) with current state rates for office leases from private property owners. The results of these reviews are presented below.
Highest Cost Per Square Foot Leases: Of the 940 office leases in BLLIP,8 we identified 68 leases of property that were for more than $20 per square foot (see Appendix H and Appendix I for listings of leases for more than $20 per square foot). Information is not typically maintained in lease files to justify relatively high lease rates, and SPC is not required to specifically approve higher than typical lease rates. We requested information from the leasing agencies with higher cost leases and received the comments provided in Exhibit 13 below. While these comments provide insight regarding justification for some of the higher lease rates, more detailed independent review and analysis of the factors impacting the individual lease costs are needed to adequately evaluate the justifications for the higher lease costs. We also noted that only 5.1%
8 Includes only offices in Georgia. Includes subleases that were excluded elsewhere in the report.

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(39 of 761) of the leases executed by SPC had a cost greater than $20 psf, while 16.2% (29 of 179) of the leases executed by entities other than SPC had a cost greater than $20 psf. The significantly higher percentage of higher than $20 psf leases for which SPC is not the leasing agent may suggest that more independent oversight and review of leases could help to control lease costs at exempt entities. However, additional analysis of the specific justifications for the higher lease costs at these entities is needed.

Exhibit 13 Statements on Leases with >$20 PSF Costs

Department of Human Services

Ten of 16 high-cost DHS leases are "maintenance-in-lieu-of-rent" agreements that were-- according to SPC leasing agents--executed without SPC's oversight. Specifically, multiple high-cost leased properties now occupied by DHS were initially established as build-to-suit properties financed by the local county governments and occupied by DHS under maintenance-in-lieu-of-rent (MIL) agreements. For these properties, the state is not able to renegotiate lease costs until the bond issued to construct the property is satisfied. SPC officials currently have a list of DHS MIL properties with dates when the bond will be satisfied. SPC leasing agents indicate that once the bonds are paid, they intend to renegotiate rates. According to SPC, some are currently being renegotiated.

Non-Exempt Agencies

Department of Defense

According to SPC leasing agents, the DoD has a "geographic need" to be located near high-traffic retail locations to conduct recruiting. In addition, some of these properties were classified as "small offices," which were noted as a contributing factor for high-cost leases.

Department of Driver Services

SPC leasing agents indicated that the cost per square foot is artificially inflated because the land lot is likely included in the price. (Land lots are used for conducting driving tests.)

Department of Economic Development

According to SPC leasing agents, these properties host meetings for investment and tourism and represent the image of Georgia for the world. SPC leasing agents indicated agreement with the idea that the business needs of this entity justify higher-end expenditures for the properties.

Exempt Agencies

Board of Regents

BOR reported that many of the high-cost BOR leases either are private-public ventures, function as special purpose facilities (i.e. research facility), or have high-cost business needs (e.g., UGA's Executive MBA Center in Buckhead).

Department of Labor Source: Survey of State Entities

Agency did not verify the accuracy of lease component costs (e.g., utility or janitorial costs). Therefore, the examination team could not conduct analysis of trends and patterns in the cost per square foot for DOL leases.

Higher Than Average Costs In Specific Geographic Areas: We also performed a geographic analysis to identify relatively high-cost office leases in comparison with market rates specific to individual cities. Although SPC does not currently subscribe to any real estate data provider to collect city-specific market data, SPC did receive some information on current metro Atlanta area market rates from a private real estate firm during the examination. The results of the comparison are shown in Exhibit 14. (See Appendix J for details on the leases with above-market rates.)

Leases managed by exempt entities had a higher proportion of above-market rates than SPCmanaged leases. One-third of SPC leases analyzed (40 of 121) were above the market rate, while 46% of agency-managed leases (24 of 52) were above average market rates. This trend could signal that independent oversight by SPC contributes to lower rates. However, more analysis is needed since characteristics of office space held by these exempt entities (Board of Regents and Department of Labor) may justify higher lease rates.

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Exhibit 14

Comparison of State Lease Rates to Market Rates in Metro Atlanta

As of September 2011

Market Rate1

City

(Cost Per

Leases2

% of Leases Range of Lease Costs

Above

Above Market Rate

Square Foot) Below Above Total Market Rate From

To

SPC-Managed Leases

81

40

121

33%

Atlanta

$

20.22

23

6

29

21% $ 20.87 $ 29.28

Canton

$

23.40

1

1

0%

Cartersville

$

21.50

7

7

0%

College Park $

13.84

2

2

100% $ 16.07 $ 16.63

Conyers

$

15.25

1

4

5

80% $ 15.74 $ 23.07

Covington

$

13.32

4

4

0%

Cumming

$

16.98

2

1

3

33% $ 17.74 $ 17.74

Dallas

$

7.28

3

3

100% $ 12.37 $ 13.16

Dawsonville $

18.88

1

1

0%

Decatur

$

19.29

6

1

7

14% $ 22.28 $ 22.28

Douglasville $

16.59

1

1

0%

East Point

$

16.31

2

2

0%

Fayetteville

$

16.64

3

1

4

25% $ 19.52 $ 19.52

Gainesville

$

18.50

5

3

8

38% $ 19.79 $ 21.37

Hapeville

$

11.50

1

1

2

50% $ 19.19 $ 19.19

Jonesboro

$

13.82

3

1

4

25% $ 20.60 $ 20.60

Lawrenceville $

19.11

4

1

5

20% $ 22.76 $ 22.76

Lithonia

$

19.01

1

1

100% $ 24.37 $ 24.37

Marietta

$

14.33

2

7

9

78% $ 16.05 $ 28.99

McDonough $

17.52

3

3

0%

Morrow

$

18.59

2

2

0%

Newnan

$

17.76

2

2

0%

Norcross

$

13.77

1

1

2

50% $ 24.37 $ 24.37

Roswell

$

15.66

1

1

100% $ 23.28 $ 23.28

Stockbridge $

15.65

2

2

100% $ 23.50 $ 68.75

Tucker

$

16.63

1

2

3

67% $ 18.50 $ 18.57

Villa Rica

$

16.00

1

1

100% $ 17.30 $ 17.30

Winder

$

21.00

6

6

0%

Woodstock $

16.67

1

1

100% $ 16.69 $ 16.69

Agency-Managed Leases3

28

24

52

46%

Atlanta

$

20.22

11

12

23

52% $ 20.25 $ 32.62

Canton

$

23.40

1

1

0%

Cartersville

$

21.50

1

1

0%

College Park $

13.84

1

1

100% $ 18.52 $ 18.52

Conyers

$

15.25

1

1

0%

Covington

$

13.32

1

1

100% $ 14.80 $ 14.80

Cumming

$

16.98

1

1

100% $ 18.60 $ 18.60

Dallas

$

7.28

1

1

100% $ 14.00 $ 14.00

Decatur

$

19.29

1

1

2

50% $ 21.75 $ 21.75

Douglasville $

16.59

1

1

0%

Gainesville

$

18.50

3

3

0%

Jonesboro

$

13.82

1

1

100% $ 21.86 $ 21.86

Kennesaw

$

17.17

4

4

0%

Lawrenceville $

19.11

1

1

100% $ 21.66 $ 21.66

Marietta

$

14.33

3

3

100% $ 16.16 $ 19.84

Newnan

$

17.76

2

2

0%

Norcross

$

13.77

1

1

100% $ 22.51 $ 22.51

Peachtree City $

17.34

1

1

100% $ 22.57 $ 22.57

Tucker

$

16.63

3

3

0%

Grand Total

109

64

173

37%

1Market rates for metro Atlanta were provided to SPC by a national real estate firm. We were unable to verify the accuracy of these rates or determine if the averages consist of properties similar to the state's office properties in location and quality.

2Only leases for office space with private sector landlords are included here. 3Agency-managed leases are executed by an entity other than SPC. Some state entities (e.g.,Department of Labor and Board of Regents) have a statutory exemption to SPC leasing authority.

Source: SPC and Building, Land, & Lease Inventory of Property (BLLIP data as of August 2011)

State Space Management Policies

29

Recommendations For Improvement The leases over $20 per square foot and the leases that exceed average market rates represent possible opportunities for cost savings. Further research is needed to determine which lease agreements have a cost that is above market rates and is not justified in order to provide services for clients. Although the methodologies adopted to conduct these analyses are relatively simple, they should be systematically incorporated into SPC's standard operating procedures to identify the potential for cost savings.
To ensure that the state is not paying higher than necessary lease rates for properties, SPC should periodically collect market rate data for cities and compare those figures to the cost per square foot figures for existing leases. To ensure that higher than average lease costs are reviewed and justified, SPC should establish a policy and procedure for permitting and documenting the decision to execute a lease at rates that are higher than the established market norm. To facilitate this process, SPC should periodically review BLLIP data for material cost outliers and ensure that those leases have been reviewed.
Agency response: SPC reported that it has reviewed the list of SPC-managed leases with greater than $20 per square foot costs compiled by the examination team and determined that 12 of the 39 leases are candidates for renegotiation. SPC will attempt to renegotiate these leases as they come up for renewal. SPC also indicated that a written leasing procedure will be in place and published by January 2012. It will periodically review leases to ensure high cost leases have been justified per the written procedure. SPC also noted that it has no authority over exempt agency leases that are high-cost.

State Space Management Policies

30

How does the state manage tenant improvements for the spaces it leases? Would the state realize savings in rent costs if it self-funded tenant improvements?
Tenant improvements (TIs) are changes made to a property to accommodate the needs of a tenant. TIs may include things such as floor and wall coverings, ceilings, partitions, telecommunication wiring, air conditioning, and access control. As discussed below, tenant improvements are included in negotiated lease costs and cannot be self-funded by the tenant due to legal restrictions.
Tenant Improvement Policies, Procedures, and Management Tenant improvement costs are included in the negotiated lease cost of buildings. Landlords typically set lease rates to cover a standard level of finish for build-out of office walls, paint, carpet, etc. included in SPC's specifications and guidelines. SPC provides prospective landlords with a seven-page "Specifications and Guidelines" document which defines minimal space and building requirements for factors such as the quality of mechanical and finish materials. SPC noted that requiring multiple bids provides a constraint on landlord charges for tenant improvements and its "specifications" help ensure that leasing agents are comparing "apples to apples" when evaluating bids. However, our review of 10 lease projects processed in fiscal year 2011 identified that five had records of only one bid, two had records of two bids, and two had records of three or more bids.9
SPC estimates that approximately 95% of its leases involve typical tenant improvements that are made by landlords each time they bring in a new tenant or to maintain space occupied by longtime tenants. The remaining 5% involve higher-cost improvements related to the special needs of the tenant, such as a laboratory building requiring specialized wiring and plumbing. SPC does not have any written policies or procedures for handling the estimated 5% of leases that may involve above-standard TI costs. Currently, landlords incorporate the additional extraordinary TI costs into their lease charges. According to SPC leasing agents, the exact cost of non-standard TIs is not typically maintained separately from the overall lease cost.
The Georgia Constitution has two provisions that restrict the possibility of self-funding tenant improvements of the majority of state entities that lease property. First, SPC and most state entities are legally restricted to 1-year lease agreements and are prohibited from entering into multi-year lease agreements. The basis for this prohibition is Article VII, Section IV, Paragraph VIII of the Georgia Constitution, which prohibits the pledging of the state's credit. The Attorney General (AG) has interpreted this clause as preventing multi-year leases, since appropriations of future fiscal years would be committed to such lease agreements. Second, state entities are prohibited by the Georgia Constitution (Article III, Section VI, Paragraph VI) from paying for "permanent improvements to private property," unless the improvements can be removed. When applied to lease agreements, this effectively prohibits the state from self-funding material tenant improvements to private property unless the improvements can be removed upon termination of the lease. Taken together, these legal restrictions effectively prevent state entities that are not
9 One lease was excluded that involved expansion into an adjacent building.

State Space Management Policies

31

exempt from the single-year lease restriction from even considering self-funding tenant improvements.
A limited number of state entities (such as the Georgia Building Authority) have enabling legislation that permits them to enter into multi-year leases. Because of this, GBA may lease a space from the landlord and subsequently sublease it to a state agency. In fiscal year 2011, GBA held 11 multi-year lease agreements on behalf of state entities, but this practice is limited. The identification of all state entities eligible to enter multi-year lease agreements or the relative cost impact that these legal permissions on tenant improvements was not included in this review. However, SPC has indicated that multi-year lease agreements may offer opportunities to reduce rents by extending the term during which costs (such as tenant improvement costs) can be amortized, making the state a more attractive tenant for landlords.
Hypothetical Savings By Self-Funding Non-Standard Tenant Improvements As previously discussed, legal restrictions effectively prohibit most state entities from considering self-funding tenant improvements. However, it is worth noting the theoretical costs and benefits of having the landlord finance or the state self-fund above-standard tenant improvements. Below are three hypothetical scenarios in which the relationship between rental costs, multi-year lease options, and tenant improvements are presented over a 10-year period (see Exhibit 15). In these simplified scenarios, we assume an annual base rental cost of $100,000 ($10 per square foot) and an up-front tenant improvement expenditure of $100,000. The TI charges include construction management charges of 15% (or $15,000) financed over five years at 10% (total interest cost of about $31,600), resulting in total TI costs of about $146,600 (rounded to $150,000). Three ways of handling above-standard TI costs include: (1) costs are incorporated under renewable 1-year lease agreements (current policy), (2) costs are amortized under a 5-year lease agreement (multi-year lease option), and (3) costs are self-funded by the state. It should be noted that this is a simplified example (not based on actual or average costs) and does not incorporate the time cost of money. It is presented only to illustrate the theoretical impact of different ways of handling tenant improvement costs.
o Scenario 1 (Current Policy): The landlord incurs the cost of tenant improvements, and the state does not have the ability to enter into multi-year lease agreements. The landlord has additional risk because a multi-year lease is not allowed and seeks to amortize TI costs over five years. The lease rate is set at $13 per square foot or $130,000 annually, and the rate is not reduced when the TI costs are recovered after five years.
o Scenario 2 (5-Year Lease Policy): The landlord incurs the cost of tenant improvements, but the state has the ability to enter into a 5-year lease agreement. The lease agreement specifically identifies that the cost of tenant improvements are amortized during the term of the first lease ($130,000 per year for five years). The annual cost when the lease is renewed is reduced as the tenant improvement cost is eliminated to $100,000 per year for the second five years.
o Scenario 3 (Self-Funded Tenant Improvement Policy): The state incurs the cost of tenant improvements ($100,000) and the annual rental costs only reflect the base lease cost ($100,000 per year). The state does not have to pay the landlord for construction management or interest costs; however, it has to utilize personnel to manage the

State Space Management Policies

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construction project and has to fund the entire cost of exceptional TI construction in the first year.

Exhibit 15

Comparison of Different Ways of Handling Tenant Improvement Costs

Scenario 1

Scenario 2

Scenario 3

Year

Annual

Annual

Tenant Improvement

Total

Annual

Tenant Improvement

Total

Rent

Rent

Cost

Payment

Rent

Cost

Payment

1

$130,000 $100,000

$30,000

$130,000

$100,000

$100,000

$200,000

2

$130,000 $100,000

$30,000

$130,000

$100,000

$100,000

3

$130,000 $100,000

$30,000

$130,000

$100,000

$100,000

4

$130,000 $100,000

$30,000

$130,000

$100,000

$100,000

5

$130,000 $100,000

$30,000

$130,000

$100,000

$100,000

6

$130,000 $100,000

$100,000

$100,000

$100,000

7

$130,000 $100,000

$100,000

$100,000

$100,000

8

$130,000 $100,000

$100,000

$100,000

$100,000

9

$130,000 $100,000

$100,000

$100,000

$100,000

10

$130,000 $100,000

$100,000

$100,000

$100,000

TOTAL

$1,300,000 $1,000,000

$150,000 $1,150,000 $1,000,000

$100,000 $1,100,000

Note: Presentation includes hypothetical figures presented for illustration purposes only. Cost figures for risk premiums and

tenant improvements were not available for analysis.

Source: Department of Audits and Accounts

As previously noted, data on above-standard tenant improvement costs was not available to determine if actual savings are possible under these theoretical scenarios. In theory, the state could potentially reduce the cost of TIs by specifically identifying TI costs in leases and amortizing the costs over the period of a multi-year lease or by self-funding TIs. However, as previously discussed, multi-year leases are not available to most state entities, and self-funding TIs that involve permanent improvements to private property are not constitutionally allowed.

Recommendations For Improvement SPC should ensure that it uses (and documents) multiple bids to constrain TI costs. It should also develop specific policies for handling and documenting above-standard TI costs. Based on better tracking of exceptional TI costs, SPC could identify if significant TI cost savings might result from the ability to use multi-year leases or from self-funding TIs. This information could then be presented to the General Assembly so it could decide if the potential savings justify the financial risks associated with multi-year leases and self-funded improvements to leased property. In addition, separately documenting above-standard TI costs funded by the landlord could facilitate renegotiation of lease costs once improvements have been paid off.

Agency Response: SPC noted that uniqueness of TIs make them difficult to separate from lease rates but that the cost of some non-standard TI's are maintained in lease files. It also noted that it has re-introduced legislation to authorize SPC to enter into multi-year lease agreements on behalf of state entities. Finally, SPC noted that self-funded tenant improvements are not an industry best practice. Tenants very rarely fund improvements for office space and landlords rarely break-out TI cost from the rental rate. There is little merit to self-funding tenant improvements and self-funding tenant improvements is unconstitutional.

State Space Management Policies

33

Appendix A
Objectives, Scope, and Methodology
The Senate Appropriations Committee requested this special examination of the state policies related to space management. The specific questions that we addressed are discussed below along with the methodology for our analyses.
We conducted this project in accordance Performance Audit Division policies and procedures for non-GAGAS engagements. These policies and procedures require that we plan and perform the engagement to obtain sufficient, appropriate evidence to provide a reasonable basis for our findings and conclusions based on our objectives. We believe the evidence obtained provides a reasonable basis for our findings and conclusions based on our project objectives.
General Scope and Methodologies The Building, Land and Lease Inventory of Property (BLLIP) and State Properties Commission (SPC) lease files provided the primary data sources for this examination. We reviewed applicable SPC policies and procedures, interviewed appropriate SPC personnel and personnel from exempted agencies such as the Board of Regents, Department of Labor, and the Department of Transportation. We also reviewed the Georgia Constitution, state law, attorney general opinions, and executive orders. We reviewed relevant management studies and industry best practices related to leasing, tenant improvements, and asset management.
Special Examination Questions What is the balance between state-occupied state owned spaces, unoccupied state owned spaces, non-state occupied state owned spaces, and state-occupied non-state owned spaces? What is the cost associated with each? We received a data extraction of the BLLIP data set on August 18, 2011 from SPC personnel who received it from administrators at the Carl Vinson Institute of Government Information Technology Outreach Services (ITOS). Our review examined only the building and lease subsets of BLLIP. Some leases were for fiscal year 2011, and some were for fiscal year 2012.
BLLIP is considered the most comprehensive single data source for state properties. However, the data (as noted throughout this report) contains significant errors and missing data in fields required to fully answer the research objectives established by the Senate Appropriations Committee. We conducted data reliability testing to ensure that the set was complete. However, we conducted only a limited data accuracy testing which focused mostly on the extreme data outliers. Individual agencies (such as the Board of Regents and the Georgia Building Authority) may have additional data sets for properties in their custody; however, these sources were not collected or incorporated into the analysis due to time constraints.
BLLIP Data Set Cleaning: The BLLIP data set included 15,079 buildings and 1,867 leases. To ensure that each record represented a unique space in the appropriate ownership category (state owned and non-state owned), we excluded records that represented a duplication of space. In consultation with SPC, we determined that 29 records in the state owned buildings data set were duplicate records or required deletion (because the property had been sold or demolished). In the lease data set, 135 records represented state entity intergovernmental agreements (leases) of state owned space, such as GBA-owned space on Capitol Hill. These intergovernmental agreements were not included in our inventory count of space, but were included in cost analyses. In addition, 41 subleases were excluded that would have resulted in double counting of rent and square footage, and 13 leases were excluded because the lease was invalid or no longer active. In total, 189 leases were identified as invalid or duplicate. After excluding these records, the count of unique spaces was 15,050 state owned buildings and 1,678 leases of non-state owned space. This data set was used for the majority of analysis of BLLIP inventory.

State Space Management Policies

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Occupancy Categorization: BLLIP data contains three fields related to occupancy: "total capacity," "total occupancy," and "percent occupied." A significant number of these fields contained blank values, a value of 0, and/or inconsistent logic between values (for example, one record showed 1,446 for total capacity, 95 for total occupancy, and 100% for percent occupied). To categorize property as either occupied, unoccupied, or of an unknown occupancy status, we adopted the following methodology.
o Records categorized as "occupied" are records with a nonzero value for either "total occupancy" or "percent occupied" fields, regardless of whether the values were consistent. For example, if a record had a value of 0 in "total occupancy" and a value of 100% in "percent occupied," the property was categorized as occupied.
o Records categorized as "indicates unoccupied" are records where either the "total occupancy" and the "percent occupied" fields both contain a value of 0, or one field has a value of 0 and the other is blank.
o Records categorized as "unknown occupancy" are records where both "total occupancy" and "percent occupied" have no values inputted.
o Records categorized as "non-state-occupied" are records where the "primary use" field indicates a state owned building is "leased to a non-state entity." In these instances, occupancy fields were not considered.
What policies does the state use in determining leased property location and space? Please comment on any areas where an agency could relocate to a lower cost area and continue to serve clients. We reviewed all written State Properties Commission policies and procedures related to space management and lease management. We conducted a review of internal controls related to activities to establish a requesting entity's lease location and space assignment. We conducted a file review of all properties for which a space request for new space was initiated and an entity was located during fiscal year 2011.
We identified the leases from within BLLIP inventory records with a primary use of "offices" with a cost per square foot that was greater than $20 psf. We selected a $20 psf threshold because it represented properties that were approximately 33% above private market lease rate averages for SPC and non-SPC managed leases. We solicited comment from the leasing entity (e.g., the State Properties Commission, the Board of Regents, the Department of Labor) to confirm the accuracy of the reported data in BLLIP and to comment on the reasons why the high cost property was justified.
We received from SPC a schedule of current market lease rates for cities within the metropolitan Atlanta region. The market averages were provided to SPC by a national real estate firm. We were unable to confirm the methodology used to collect this benchmark schedule. We compared current lease costs in BLLIP to the stated market averages to identify leases that were higher than the stated averages for metropolitan Atlanta cities. (The example provided in this report is an illustration of the type of normative standards and methods that SPC should adopt to periodically review the costeffectiveness of lease agreements and should not be considered a definitive benchmark of current market rates.)
We attempted to evaluate cost-saving opportunities by reviewing the SPC lease files but found that the files did not contain sufficient data for us to assess whether occupied properties were the lowestcost options that satisfied both geographic and business needs of the requesting state entity. We concluded that, due to time limitations and requisite real estate expertise, we could not conduct numerous comprehensive metropolitan strategic plan(s) to identify cost saving opportunities for a region (such as collocation, renegotiation, and relocation actions).

State Space Management Policies

35

How does the state manage tenant improvements for the spaces it leases? Would the state realize savings in rent costs if it self-funded tenant improvements? To review current SPC policies and procedures for managing TIs, we requested policies, interviewed leasing staff, and reviewed files for all the requests submitted to SPC for new space during fiscal year 2011 that resulted in locating an entity into a space. We limited our review of tenant improvement procedures to those of the State Properties Commission for leased properties; we did not examine tenant improvement procedures for state entities exempt from using SPC services to secure a lease (e.g., the Board of Regents, the Department of Labor).
We found that SPC does not have any written policies or procedures to define the objectives of TI management, nor does SPC have any written procedures establishing the tasks that leasing staff should execute in identifying necessary TIs on behalf of the requesting entity, negotiating the cost of TIs, or conducting site visits to ensure the TIs are completed. Therefore, we relied on staff to explain the tenant improvement procedures typically executed. In addition, we conducted a review of state law as it relates to the potential to self-fund tenant improvements. Specifically, we reviewed sections of the Georgia Constitution, state law, and attorney general opinions related to the "gratuities clause" and the "credit clause." The figures used to illustrate the concept of tenant improvement costs under various funding scenarios (including the estimation of a risk premium) are hypothetical and are not based on empirical data.

State Space Management Policies

36

Appendix B Primary Use Categories
As of August 2011

Primary Use Category

Occupancy Relevant?

(blank)

Offices

Yes

Storage building warehouse

Open sheds or pavillions for work, storage, display,

sales, recreation

Residences, house apartments

Yes

Maintenance and custodial operations, shops

Other use (specify)

Classrooms with faculty offices, etc.

Yes

Animal care facilities, kennels, pig parlors, stables,

veterinary facilities

Security facilities, fire stations, patrol posts, fire

towers, guard posts

Yes

Detention housing support (offices, food service,

instructions, security,etc.)

Laboratories

Yes

Boating facilities

Detention housing

Yes

Hotels, motels, short-term occupancy housing

Athletic facilities

Dormitories

Yes

Comfort stations and rest stations

Water/sewage treatment plants, other utilities

Radio Antenna/Towers

Land/acreage

Garages or repair shops

Vacant

Armories

Museums, historic sights, monuments

Leased to a non-state entity

Hospitals, medical centers, nursing homes, medical

examiner autopsy facilities

Yes

Greenhouses

Parking facilities

Student unions, recreation, or entertainment

buildings

Yes

Special training facilities

Yes

Boiler, chiller plants or generating plants

Auditorium conferences facilities

Non-structure, metered energy using system; i.e.,

security lights, camp sites

Libraries

Instructional shops

Laundries

Cafeterias, restaurants, dining halls

Broadcasting facilities

State Occupied
1,158 557 399
175 228 338 116 340
391
29
113 334
14 58 102 194 138 53 13
3
46 10 123 24
94 88 33
54 7
49 42
2 37 12 11 12

State Owned

Non-State Owned

Total Properties

Non-State Indicates Unknown Buildings Occupied Unoccupied1 Occupancy Total

Leases2

Number

%

2,239 279
1,185

395

3,792

21

857

85

1,669

67 3,859 858 1,715
18 1,687

23.1% 10.3% 10.1%

997

25

1,197

1,197

7.2%

405

15

648

96

744

4.4%

293

31

662

662

4.0%

384

59

559

19

578

3.5%

45

3

388

101

489

2.9%

80

9

480

480

2.9%

296

76

401

7

408

2.4%

242 15
291 231 189
74 111 202 209
43 1
120 142
27 114 141

22

377

349

305

17

306

3

294

4

272

249

4

259

20

242

1

47

1

2

168

7

159

150

8

146

141

377

2.3%

10

359

2.1%

23

328

2.0%

6

312

1.9%

1

295

1.8%

10

282

1.7%

26

275

1.6%

259

1.5%

242

1.4%

146

193

1.2%

186

187

1.1%

168

1.0%

2

161

1.0%

150

0.9%

1

147

0.9%

141

0.8%

20

3

117

5

122

0.7%

31

119

119

0.7%

40

73

37

110

0.7%

26

3

83

26

109

0.7%

73

2

82

82

0.5%

22

5

76

1

77

0.5%

19

1

62

1

63

0.4%

39

12

53

53

0.3%

4

41

41

0.2%

17

2

31

10

41

0.2%

27

1

39

39

0.2%

22

34

4

38

0.2%

11

19

30

2

32

0.2%

Golf shop, cart maintenence or club house facilities

7

Manufacturing plants

Retail stores

4

Food processing plants, canneries, abbatoirs,

dairies, etc.

Aircraft facilities, hangars, passenger buildings

5

Computer operations

7

Grand Total

5,420

141

1At least one of two occupancy fields in BLLIP had a "0" entered.

2Subleases of state owned or leased properties were excluded from the list of leases.

Source: Building, Land, & Lease Inventory of Property, SPC

17 17
9
14 4
8,626

1

25

4

21

13

3

17

9

7

863

15,050

25

21

8

21

5 2 1,678

17 14
9 16,728

0.1% 0.1% 0.1%
0.1% 0.1% 0.1% 100.0%

State Space Management Policies

37

Appendix C

Primary Use Categories Identified as Blank, Vacant, Other use, and

Leased to a non-state entity by Entity

As of August 2011

Primary Use Category and State Entity Name

Number of Buildings

(blank)

Natural Resources, Department of Regents, State Board of Technical College System of Georgia Labor, Department of Defense, Department of Agriculture, Department of Forestry Commission, State Human Services Ports Authority, Georgia Public Safety, Department of Corrections, Department of Administrative Services, Department of Juvenile Justice, Department of Community Affairs, Department of Herty Foundation Transportation, Department of Veterans Service, Department of Workers' Compensation, State Board of Building Authority, Georgia Behavioral Health and Developmental Disabilities, Department of Education, Department of Georgia Public Defender Standards Council Public Health, Department of Investigation, Georgia Bureau of Driver Services, Department of Road and Tollway Authority, State Soil & Water Conservation Commission, State
Total Blank
Other use (specify)

1,959 1,049
409 80 77 59 49
19 17 13 12 10
3 7 6 6
5 2 3
3 2 1 1
3,792

Natural Resources, Department of

395

Ports Authority, Georgia

66

Forestry Commission, State

38

Regents, State Board of

12

Behavioral Health and Developmental Disabilities, Department of

20

Agriculture, Department of

7

Corrections, Department of

7

Transportation, Department of

6

Public Safety, Department of

5

Economic Development, Georgia Department of

1

Technical College System of Georgia

1

Veterans Service, Department of

1

Total Other use

559

Vacant

Juvenile Justice, Department of

51

Behavioral Health and Developmental Disabilities, Department of

45

Natural Resources, Department of

23

Transportation, Department of

23

Regents, State Board of

5

Building Authority, Georgia

4

Corrections, Department of

4

Labor, Department of

2

Public Safety, Department of

2

Total Vacant

159

Leased to a non-state entity

Natural Resources, Department of

130

Transportation, Department of

5

Building Authority, Georgia

2

Forestry Commission, State

2

Labor, Department of

2

Number of Leases 1 11 7
31 1 5 6 1 3
1 67
19
19
2
2

Total Properties
1,960 1,060
416 80 77 59 49 31 19 17 14 12 10 8 7 6 6 6 5 3 3 3 3 2 1 1 1
3,859
395 66 38 31 20 7 7 6 5 1 1 1
578
51 45 23 23
7 4 4 2 2 161
130 5 2 2 2

Total Leased to a non-state entity Grand Total 1123 DNR properties in this category are at Stone Mountain Park.
Source: Building, Land, & Lease Inventory of Property, SPC

141 4,651

141

88

4,739

State Space Management Policies

38

Appendix D Occupancy Status by Entity
As of August 2011

State Owned

State Entity

State Non-State Indicates Unknown Buildings Occupied Occupied Unoccupied1 Occupancy Total

Natural Resources, Department of

834

130

3,895

138

4,997

Regents, State Board of

2,847

336

223

3,406

Corrections, Department of

12

1,894

231

2,137

Transportation, Department of

428

5

720

12

1,165

Forestry Commission, State

44

2

591

637

Technical College System of Georgia

366

136

502

Behavioral Health and Developmental Disabilities, Department of

209

306

3

518

Juvenile Justice, Department of

282

60

342

Defense, Department of

268

60

328

Human Services, Department of

Labor, Department of

14

2

34

83

133

Ports Authority, Georgia

1

59

140

200

Agriculture, Department of

170

28

198

Public Safety, Department of

9

108

3

120

Education, Department of

130

130

Community Affairs, Department of

34

8

42

Administrative Services, Department of

13

15

28

Veterans Service, Department of

1

12

1

14

Investigation, Georgia Bureau of

32

6

38

Building Authority, Georgia

2

2

50

54

Driver Services, Department of

7

3

10

Pardons and Paroles, State Board of

Public Health, Department of

7

2

9

Revenue, Department of

Economic Development, Georgia Department of

5

5

World Congress Center Authority, Georgia

12

12

Herty Foundation

9

1

10

Lottery Corporation, Georgia

Audits & Accounts, Department of

Georgia Public Defender Standards Council

Workers' Compensation, State Board of

Governor, Office Of The

3

2

5

Secretary of State, Office of the

1

1

Soil & Water Conservation Commission, State

2

2

Judicial Branch of Georgia

Banking & Finance, Department of

Correctional Industries Administration, Georgia

2

2

Superior Court Clerks' Cooperative Authority, Georgia

Community Health, Department of

Georgia Firefighters' Pension Fund

1

1

Georgia Peanut Commission

1

1

Insurance, Department of

Law, Department of

Road and Tollway Authority, State

1

1

Sheriffs' Retirement Fund of Georgia

Student Finance Commission, Georgia

1

1

Subsequent Injury Trust Fund

Teacher's Retirement System of Georgia

1

1

Grand Total

5,420

141

1At least one of two occupancy fields in BLLIP had a "0" entered.

2Subleases of state owned or leased properties were excluded from the list of leases.

8,626

863

15,050

Source: Building, Land, & Lease Inventory of Property, SPC

Non-State Owned
Leases2
248 333 117
1 19 73 48 106 15 265 86
1 64
4 24 33 46 17
43 40 10 13
7
10 8 8 8 2 6 5 6 5
2 1
1 1
1
1
1,678

Total Properties

Number

%

5,245 3,739 2,254 1,166
656 575 566 448 343 265 219 200 199 184 134
66 61 60 55 54 53 40 19 13 12 12 10 10
8 8 8 7 7 7 6 5 2 2 1 1 1 1 1 1 1 1 1 1
16,728

31.4% 22.4% 13.5%
7.0% 3.9% 3.4% 3.4% 2.7% 2.1% 1.6% 1.3% 1.2% 1.2% 1.1% 0.8% 0.4% 0.4% 0.4% 0.3% 0.3% 0.3% 0.2% 0.1% 0.1% 0.1% 0.1% 0.1% 0.1% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%
100.0%

State Space Management Policies

Appendix E Occupancy Status of Office Space by Entity
As of August 2011
State Owned

Non-State Owned

Total Properties

State Entity

Occupied

Number

Square Feet

Indicates Unoccupied1 Unknown Occupancy

Buildings

Buildings Square Feet

Number Square Number Square

Total

Total2

Feet

Feet

Leases

Number

Square Feet2

Properties Square Feet % of

Total

Total2

Square Feet

Regents, State Board of

269 4,667,477

3

81,146

Building Authority, Georgia

2 134,252

18 3,669,844

Human Services, Department of

Transportation, Department of

120 763,860

24 423,740

Labor, Department of

14 174,672

5 276,457

Corrections, Department of

16 209,798

Behavioral Health and Developmental Disabilities, Department of

25 560,122

2

20,122

Revenue, Department of

Natural Resources, Department of

57 256,040

35

76,453

Forestry Commission, State

32

74,424

126 394,844

Juvenile Justice, Department of

6

18,305

1

15,367

Driver Services, Department of

6

23,000

3

11,187

Ports Authority, Georgia

19 169,047

Public Safety, Department of

1

2,500

3 112,176

Pardons and Paroles, State Board of

Investigation, Georgia Bureau of

13 118,235

Community Affairs, Department of

1

77,050

Public Health, Department of

2

62,052

Technical College System of Georgia

1

9,446

Secretary of State, Office of the

Teacher's Retirement System of Georgia

1 110,293

Governor, Office of the

3

99,806

Lottery Corporation, Georgia

Economic Development, Georgia Department of

1

3,150

Student Finance Commission, Georgia

1

46,486

Georgia Public Defender Standards Council

Defense, Department of

Agriculture, Department of

15

34,911

Correctional Industries Administration, Georgia

2

34,160

Veterans Service, Department of

1

2,044

Judicial Branch of Georgia

Banking & Finance, Department of

Administrative Services, Department of

2

6,900

Audits & Accounts, Department of

Soil & Water Conservation Commission, State

2

10,696

Superior Court Clerks Cooperative Authority, Georgia

Law, Department of

Education, Department of

1

7,862

Georgia Firefighters' Pension Fund Subsequent Injury Trust Fund

1

10,300

World Congress Center Authority, Georgia

1

7,697

Georgia Peanut Commission

1

7,648

Community Health, Department of

Workers' Compensation, State Board of

Sheriffs' Retirement Fund of Georgia

Grand Total

557 7,217,218

279 5,566,351

1At least one of two occupancy fields in BLLIP had a "0" entered.

22 buildings (Transportation) and 4 leases (Labor, Regents (2), and Veterans Service) do not include square footage.

Source: Building, Land, & Lease Inventory of Property, SPC

5 168,637

3

19,397

1

160

12

49,351

21 237,545

277 4,917,260 20 3,804,096

144 1,187,600

22

470,526

17

209,958

27

580,244

92

332,493

158

469,268

7

33,672

9

34,187

31

218,398

4

114,676

13

118,235

1

77,050

2

62,052

1

9,446

1

110,293

3

99,806

1

3,150

1

46,486

15

34,911

2

34,160

1

2,044

2

6,900

2

10,696

1

7,862

1

10,300

1

7,697

1

7,648

857 13,021,114

71 2,249,931

234 3,064,851

1 282,347

84 789,915

103 401,586

6

25,704

12 507,743

8 167,555

103 408,355 41 277,477

11

71,570

40 171,290

6

44,074

6

68,742

10

71,585

5 114,477

5 110,528

2

7,143

5 111,879

6

55,331

5

38,911

13

36,941

1

250

46

29,650

6

29,553

5

27,198

1

17,834

8

23,415

4

9,389

2

16,581

1

14,888

3

6,602

1

9,374

1

7,100

1

1,800

1

288

858 9,271,857

348 20
234 145 106 120
33 12 100 158 110 50 31 15 40 19
7 12
6 5 1 5 5 7 1 5 13 16 2 47 6 5 3 8 6 2 1 4 1 1 1 1 1 1 1
1,715

7,167,191 3,804,096 3,064,851 1,469,947 1,260,441
611,544 605,948 507,743 500,048 469,268 442,027 311,664 218,398 186,246 171,290 162,309 145,792 133,637 123,923 110,528 110,293 106,949 111,879
58,481 46,486 38,911 36,941 35,161 34,160 31,694 29,553 27,198 24,734 23,415 20,085 16,581 14,888 14,464 10,300
9,374 7,697 7,648 7,100 1,800
288
22,292,971

32.2% 17.1% 13.7%
6.6% 5.7% 2.7% 2.7% 2.3% 2.2% 2.1% 2.0% 1.4% 1.0% 0.8% 0.8% 0.7% 0.7% 0.6% 0.6% 0.5% 0.5% 0.5% 0.5% 0.3% 0.2% 0.2% 0.2% 0.2% 0.2% 0.1% 0.1% 0.1% 0.1% 0.1% 0.1% 0.1% 0.1% 0.1% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%
100.0%

39

State Space Management Policies

40

Appendix F Occupancy Status of Office Space by City
As of August 2011

State Owned

Non-State Owned

Total Properties

City

Occupied

Number

Square Feet

Indicates Unoccupied1

Number

Square Feet

Unknown Occupancy

Number

Square Feet

Buildings Buildings Square
Total Feet Total2

Leases

Number

Square Feet2

Properties Square Total Feet Total2

% of Square
Feet

Atlanta

46 1,620,590

26 4,402,978

1 154,722

73 6,178,290

56 2,917,598

129 9,095,888

40.8%

Athens

66 1,277,664

1

1,800

67 1,279,464

28 331,911

95 1,611,375

7.2%

Augusta

32 476,861

6 95,331

38 572,192

16 168,148

54 740,340

3.3%

Milledgeville

32 597,872

3 15,201

1 4,842

36 617,915

5

21,424

41 639,339

2.9%

Savannah

21 189,397

4 21,416

5 14,581

30 225,394

13 284,453

43 509,847

2.3%

Decatur

10 157,603

2 34,710

12 192,313

14 311,513

26 503,826

2.3%

Albany

14 287,577

4

6,348

18 293,925

11 164,341

29 458,266

2.1%

Macon

6 58,747

3

6,468

1

160

10

65,375

23 326,269

33 391,644

1.8%

Tifton

18 301,543

2

5,572

20 307,115

14

76,718

34 383,833

1.7%

Columbus

11 152,892

4

9,006

15 161,898

19 185,989

34 347,887

1.6%

Statesboro

22 286,216

1

325

23 286,541

12

52,367

35 338,908

1.5%

Brunswick

5 89,800

6 15,603

5 36,918

16 142,321

12

72,617

28 214,938

1.0%

Forsyth

3

7,244

13 193,882

16 201,126

2

7,314

18 208,440

0.9%

Marietta

3 29,446

2 11,913

5

41,359

13 140,692

18 182,051

0.8%

Lawrenceville

1 13,400

1

7,400

2

20,800

8 151,731

10 172,531

0.8%

College Park

1

7,439

1

7,439

4 157,430

5 164,869

0.7%

Thomasville

5 93,614

3

3,024

8

96,638

7

65,269

15 161,907

0.7%

Covington

2

7,614

1

4,605

3

12,219

6 148,045

9 160,264

0.7%

Kennesaw

4 158,073

4 158,073

0.7%

Gainesville

6 49,555

1 10,327

7

59,882

13

95,847

20 155,729

0.7%

Garden City

11 135,890

4 3,125

15 139,015

15 139,015

0.6%

Americus

8 66,951

2

3,252

10

70,203

11

66,720

21 136,923

0.6%

Rome

8 54,590

1 12,042

9

66,632

5

66,495

14 133,127

0.6%

Conyers

2 14,300

1

600

3

14,900

9 111,830

12 126,730

0.6%

Stone Mountain

2

6,368

2

6,368

2 118,743

4 125,111

0.6%

East Point

2 121,149

2 121,149

0.5%

Waycross

5 59,583

2

4,125

7

63,708

7

56,516

14 120,224

0.5%

Tucker

1 46,486

1

46,486

6

72,557

7 119,043

0.5%

Thomaston

6 83,387

2

4,512

8

87,899

6

20,278

14 108,177

0.5%

Dalton

4 28,278

1

1,039

5

29,317

12

78,531

17 107,848

0.5%

Jonesboro

6 103,766

6 103,766

0.5%

Valdosta

3

5,186

4

5,917

7

11,103

10

89,778

17 100,881

0.5%

Cartersville

5 29,750

1 10,513

6

40,263

10

56,381

16

96,644

0.4%

Fort Valley

8 80,921

1

2,384

9

83,305

3

17,942

12 101,247

0.5%

Cochran

8 85,737

3

5,457

11

91,194

1

4,880

12

96,074

0.4%

Jesup

9 48,680

2

8,853

11

57,533

7

35,550

18

93,083

0.4%

Douglas

3 38,086

1

900

1 4,000

5

42,986

9

47,238

14

90,224

0.4%

Dublin

3 16,909

3

16,909

13

71,471

16

88,380

0.4%

Moultrie

1

4,596

2 20,313

3

24,909

10

61,995

13

86,904

0.4%

Clarkston All Others3

3 74,710 176 773,994

1

7,862

160 500,928

2 8,684

4

82,572

338 1,283,606

449 2,232,288

4

82,572

787 3,515,894

0.4% 15.8%

Grand Total

557 7,217,218

279 5,566,351

21 237,545

857 13,021,114

858

1At least one of two occupancy fields in BLLIP had a "0" entered.

22 buildings (Atlanta, Douglasville) and 4 leases (Athens, Macon, Millen, Sandersville) do not include square footage.

3The 235 remaining cities each have less than 75,000 square feet of office space.

9,271,857

1,715 22,292,971 100.0%

Source: Building, Land, & Lease Inventory of Property, SPC

State Space Management Policies

41

Appendix G SPC Space Standards

Position Category Types
Constitutional Officers, Commissioners, University/College Presidents

Open (O) or Closed (C) C

Executive Directors/Directors,

Deputy Commissioners,

C

University/College Vice-Presidents,

Chief Operating or Finance Officers

Division Directors,

Deputy Directors,

C

Regional Managers,

University/College Directors

Managers,

County Managers

C

Supervisors,

Special Function Professionals,

C/O

Faculty/Instructors

Caseworkers

Team Leaders,

Administrative Staff

O

Professional Staff,

Administrative Staff

O

Hoteling/Visitor Workspace

O

Source: State Properties Commission, Space Standards and Guidelines

Allocated Square Footage 300 250
175
150 120
96 84 36

State Space Management Policies

SPC LEASING AGENT Lease # Entity Name 7702 Corrections, Department of

Address 1 8 Southern Oaks Court

Appendix H SPC-Managed Office Leases with Costs >$20 Per Square Foot
(As of August 2011)

City Savannah

Original Figures Updated Figures Cost Per Sq Ft Cost Per Sq Ft

Additional Comments

$

23.18 $

23.18 See #7208. Savannah Metro Plan recommendation, Co-location of two agencises into one space - Savings to the State by both agencies sharing common and ancillary spaces (lobby, restroom, drug testing lab, breakroom, conference rooms, et cetera.)

6202 6431 6747
6005 6708
6746

Defense, Department of Defense, Department of Defense, Department of
Defense, Department of Defense, Department of
Defense, Department of

2505 Chastain Meadows Parkway 5244 North Henry Boulevard 875 Mansell Road
1820 Ga. Hwy. 20 905 Parkside Walk Lane
3010 Washington Road

Ma ri etta

$

Stockbri dge

$

Ros wel l

$

Conyers

$

La wrencevi l l e

$

Augus ta

$

28.99 $ 23.50 $ 23.28 $
23.07 $ 22.76 $
21.13 $

6745
7315 6043 5937
5936 6009 6422
6126
7279
6091 5454 6035
5262 5366 5414 5356 5834 5260 3534 4829
5688 4001 5174
5253
6001
6067
5784
7271

Defense, Department of
Defense, Department of Driver Services, Department of Driver Services, Department of
Driver Services, Department of Driver Services, Department of Economic Development, Georgia Department of Economic Development, Georgia Department of Human Services, Department of
Human Services, Department of Human Services, Department of Human Services, Department of
Human Services, Department of Human Services, Department of Human Services, Department of Human Services, Department of Human Services, Department of Human Services, Department of Human Services, Department of Human Services, Department of
Human Services, Department of Human Services, Department of Human Services, Department of
Human Services, Department of
Investigation, Georgia Bureau of
Judicial Branch of Georgia
Juvenile Justice, Department of
Juvenile Justice, Department of

1075 Whitlock Avenue
6201 Veterans Parkway 149 Riverview Park Road 2800 Canton Road
8040 Rockbridge Road 2211 Beaver Ruin Road 75 Fifth Street, N.W.
75 Fifth Street, N.W.
92 Cohen Walker Drive
446 W. Crogan St., One Justice Square 975 Taylor Street, S.W. 761 Wheaton Street
41 Pulaski Highway 1220 South First Street 92 Cohen Walker Drive 17234 Roosevelt Highway 5710 Stonewall Tell Road 178 Ernest Biles Drive 311 Green Street, N.W. 465 E. E. Butler Parkway
1287 Spur Ga. Hwy. 138 178 Sams Street 100 County Loop Road
201 South Barnes Street
Confi denti a l
104 Marietta Street, N.W.
3408 Covington Highway
3588 Riverside Drive

Ma ri etta

$

Col umbus

$

Ja c ks on

$

Ma ri etta

$

Li thoni a

$

Nor c r os s

$

Atl a nta

$

Atl a nta

$

Warner Robins

$

La wrencevi l l e

$

Conyers

$

Savannah

$

Sta tes bor o

$

Jes up

$

Warner Robins

$

Greenvi l l e

$

College Park

$

Ja c ks on

$

Ga i nes vi l l e

$

Ga i nes vi l l e

$

Jones bor o

$

Decatur

$

Cedartown

$

Qui tma n

$

Atl a nta

$

Atl a nta

$

Decatur

$

Macon

$

21.00 $
20.50 $ 25.35 $ 24.49 $
24.37 $ 24.37 $ 28.71 $
20.87 $
168.00 $
25.58 $ 24.62 $ 24.15 $
23.33 $ 23.15 $ 22.98 $ 22.25 $ 22.06 $ 22.05 $ 21.37 $ 21.01 $
20.60 $ 20.58 $ 20.51 $
20.44 $
21.52 $
20.10 $
22.28 $
23.22 $

4426
7314 7208

Natural Resources, Department of
Natural Resources, Department of Pardons and Paroles, State Board of

4244 International Parkway, Atl. Tradeport Atlanta

Int. Center

400 Martin Palmer Drive

Bruns wi ck

8 Southern Oaks Court

Savannah

$

21.34 $

$

20.05 $

$

23.18 $

28.99 Small office(1550 s.f.)in high traffic retail location(utilities put rate over $20) SPC got reduced significantly in FY 11 and FY 12. 23.50 Small office(1600 s.f.)in high traffic retail location. 23.28 Used for recruiting. Geographic needs of business dictated location near shops.
Premises is in a retail strip center. Rent is based on retail rental rates, not office rental rates in the area. 23.07 Small office(1183 s.f.)in high traffic retail location(utilities put rate over $20) 22.76 Relatively small office(2200 s.f.)in high traffic retail location.
SPC renegotiated for slight reduction in FY 12. 21.13 Small office(1500 s.f.)in high traffic retail location. Premises is in a retail strip center. Rent is based on retail rental rates, not office rental rates in the
area. Center is located at Washington Road at Interstate 20.

21.00
20.50 25.35 24.49

Small office(1375 s.f.)in high traffic retail location(utilities put rate over $20). Agreement terminated as of 1/1/12. Small office(1200 s.f.)in high traffic retail location(utilities put rate over $20) 6 acres of land included in rent(utilities put rate over $20) Lease likely includes acreage for testing. Premises is in a retail strip center. Rent is based on retail rental rates, not office rental rates in the area.

24.37 24.37 29.28
20.87

Lease likely includes acreage for testing Lease likely includes acreage for testing- Landlord likely put in a good bit of TI Full service lease in Class A space-Midtown Atlanta - LL did significant TI. Additional office space needed by Economic Development for other groups to aid in the promotion of Georgia. Corporate headquarters for Econ. Development. "Crown jewel" of state property used to promote Georgia to the investment/tourism to the world.

257.60 MOU between Aging and DHS for workstations in DFCS office - $4200 per work station. DHS-DFCS is subleasing space to a sister division DHS-Aging.

25.58 24.62 24.15
23.33 23.15 22.98 22.25 22.06 22.05 21.37 21.01
20.60 20.58 20.51
20.44
21.52
14.30
22.28
17.86

Lease with County - includes some furniture - SPC currently working on relocating. MIL done without SPC involvment. Build-to-suit project with participation from County. Led to the creation of the Build to Suit manual at SPC. OPB had budget for the building, SPC oversaw construction. SPC did not oversee construction, just the drafting of the agreement. Build-to-suit. MIL done without SPC involvment. Build-to-suit project with participation from County. MIL done without SPC involvment. Build-to-suit project with participation from County. MIL done without SPC involvment. Build-to-suit project with participation from County. MIL done without SPC involvment. Build-to-suit project with participation from County. MIL done without SPC involvment. Renegotiation to a significantly lower rate for FY 13 has begun. MIL done without SPC involvment. Build-to-suit project with participation from County. Extremely small office(666 s.f.)in Gainesville - (utilities put rate over $20) Fairly nice office space in downtown Gainesville (utilities put rate over $20). Agency is moving to new location in first quarter of Fiscal Year 2013. High traffic retail area - SPC currently working on relocating to cheaper space(utilities put rate over $20) MIL done without SPC involvment. Build-to-suit project with participation from County. MIL done without SPC involvment-currently renegotiating to a standard lease with a lower rate. SPC renegotiating to lower rate for FY 13. MIL done without SPC involvment-currently renegotiating to a standard lease with a lower rate. SPC renegotiating to lower rate for FY 13. Full service lease - SPC got reduced from $27 to $21 for FY 12. Likely extensive build-out paid for by landlord. Full Service lease - SPCcurrently working on getting reduced from $20 to $14.30 for FY 12. Reduced from $20.00 to $14.30. Build to suit unit. DJJ executed without going through SPC. Agency Headquarters, Build-to-suit project with participation from local Development Authori ty. Heavy tenant improvement required to make usable for office work. Recently renegotiated. Property should be removed from list, typographical error in the Utilities paid caused this property to be on your list. Error has been corrected.

21.34 Laboratory space.

20.05 23.18

Build to suit. Flex space 1/2 office, 1/2 warehouse. Full service lease. 95% office space. Model of collocating two entities. Smaller space, but higher per square foot than two leases. Full service lease. Savannah Metro Plan recommendation, Co-location of two agencises into one space - Savings to the State by both agencies sharing common and ancillary spaces (lobby, restroom, drug testing lab, breakroom, conference rooms, et cetera.)

42

6999 Sheriffs' Retirement Fund of Georgia

3000 Ga. Hwy. 42 North

Stockbri dge

$

68.75 $

68.75 Done without SPC Involvment - Sherrifs Retirement Fund pays $1350 for small of in Ga Sherrifs HQ.

Extremely small space thus high rate per sq. ft. Extremely small space thus high rate per sq. ft.

7274 Subsequent Injury Trust Fund

285 Peachtree Center Avenue, N.E.

Atl a nta

$

21.03 $

21.03 Entity is located to workers compensation office for business needs. Commissioner-level office space.

Agency Headquarters, Build-to-suit project with participation from local Development Authority.

6165 Technical College System of Georgia

75 Fifth Street, N.W.

Atl a nta

$

25.46 $

25.46 Quick start program works with the Econ. Development program (See #6126). Entity wants to work next to Econ. Development HQ.

Notes: Original figures were taken from data extracted from BLLIP data set on 8/18/2011. Updated figures are derived from efforts by DOAA staff to confirm the accuracy of square footage and cost from the leasing entity.

State Space Management Policies

NON-SPC LEASING AGENT Lease # Entity Name

Address 1

Appendix I Agency-Managed Office Leases with Costs >$20 Per Square Foot
(As of August 2011)

Original Figures Updated Figures

City

Cost Per Sq Ft Cost Per Sq Ft

Additional Comments

8389 6636 6544 6633 6634 7393 6572 6545 6565 6606 7036 7293

Driver Services, Department of Labor, Department of Labor, Department of Labor, Department of Labor, Department of Labor, Department of Labor, Department of Labor, Department of Labor, Department of Labor, Department of Lottery Corporation, Georgia Regents, State Board of

6670 7499 7539

Regents, State Board of Regents, State Board of Regents, State Board of

7900 6166 5964
7472

Regents, State Board of Regents, State Board of Regents, State Board of
Regents, State Board of

6049 Regents, State Board of

7390 5819 5957
7506 6015

Regents, State Board of Regents, State Board of Regents, State Board of
Regents, State Board of Regents, State Board of

400 Aquatic Circle
1551 Juliette Road
1700 Century Circle
450 Mall Boulevard
450 Mall Boulevard
150 Evelyn C. Neely Drive
2211 Beaver Ruin Road
151 Ellis Street, CARE Building
2450 Mt. Zion Parkway
755 Commerce Drive
250 Williams Street, American Cancer Society Center 3100 Gentian Boulevard
75 Fifth Street, N.W. 75 Fifth Street, N.W. PPV - Research - Yamacraw
75 5th Street 3475 Lenox Rd., N.E. PPV - Office - Technology Square/EDI
1200 Commerce Drive
75 Fifth Street, N.W.
2350 Sever Road 1095 College Station Road PPV - Office - Tech Square-College of Management 1454 Greene Street 34 Peachtree Street, N.W.

Cummi ng

$

20.65 $

Stone Mountain $

23.34

Atl a nta

$

23.01

Savannah

$

23.00

Savannah

$

23.00

Athens

$

22.69

Norc ros s

$

22.51

Atl a nta

$

22.50

Jones bor o

$

21.86

Decatur

$

21.75

Atl a nta

$ 2,182.66 $

Col umbus

$

54.00 $

Atl a nta

$

Atl a nta

$

Atl a nta

$

Atl a nta

$

Atl a nta

$

Atl a nta

$

Peachtree City

$

32.62 $ 29.46 $ 28.91 $
27.58 $ 23.97 $ 22.65 $
22.57 $

Atl a nta

$

22.30 $

La wrencevi l l e

$

Athens

$

Atl a nta

$

Augus ta

$

Atl a nta

$

30.81 $ 21.34 $ 21.27 $
21.17 $ 22.98 $

17.65 DDS couldn't verify the utilities and janitorial component of costs from BLLIP. Noted that cost includes asphalt needed for parking, a motorcycle training course, the driver's license testing course, and a 400x400 pad on which we conduct commercial driver's license exams.
N/A DOL was unable to confirm overall cost figures due to uncertainty of the source for the portion of costs attributable to utilities.
N/A DOL was unable to confirm overall cost figures due to uncertainty of the source for the portion of costs attributable to utilities.
N/A DOL was unable to confirm overall cost figures due to uncertainty of the source for the portion of costs attributable to utilities.
N/A DOL was unable to confirm overall cost figures due to uncertainty of the source for the portion of costs attributable to utilities.
N/A DOL was unable to confirm overall cost figures due to uncertainty of the source for the portion of costs attributable to utilities.
N/A DOL was unable to confirm overall cost figures due to uncertainty of the source for the portion of costs attributable to utilities.
N/A DOL was unable to confirm overall cost figures due to uncertainty of the source for the portion of costs attributable to utilities.
N/A DOL was unable to confirm overall cost figures due to uncertainty of the source for the portion of costs attributable to utilities.
N/A DOL was unable to confirm overall cost figures due to uncertainty of the source for the portion of costs attributable to utilities.
17.18 Original figure incorrect.
54.00 Single office GIT is leasing as part of larger suite. Rate includes full service reception and support services. SF does not include access to conference, work, and break rooms, and reception.
32.62 No comment provided. 29.46 UGA subleases three rooms from EDA at existing EDA rate. 28.91 High-end research and technical facility in Midtown Atlanta.
Rent includes parking not reflected in sf. 27.58 No comment provided. 25.72 UGA's Executive MBA Center in Buckhead; Need for Class A space. 22.65 Public Private Venture
22.57 This lease was terminated on August 31, 2011. Operation moved to 100 World Dr., Peachtree City (lease # 8352) at $19.75 PSF
22.30 This is accurate. GATV and EII administrative offices. Need to be situated close to these functions on floors 1 4 of this building.
21.66 Tenant improvement allowance included in prior numbers has been fully paid. 21.34 This is accurate. Limited alternatives close to campus that are less expensive. 21.27 Public Private Venture
21.17 This is accurate. Small business development office 21.09 Lease will expire and not be renewed as of 6/30/2013. Operations moving to Sun Trust Building at 25 Park Place.

7477 6060 7924 6784 6785 7495 5520

Regents, State Board of Regents, State Board of Regents, State Board of Regents, State Board of Regents, State Board of Regents, State Board of Regents, State Board of

5 Public Square 255 E. Hancock Avenue 1150 South Milledge Avenue 1800 Century Place, N.E. 1800 Century Place, N.E. 1100 Brampton Avenue 111 East Liberty Street

Ca rters vi l l e Athens Athens Atl a nta Atl a nta Sta tes boro Savannah

$

20.65 $

$

20.55 $

$

20.49 $

$

20.25 $

$

20.25 $

$

20.14 $

$

20.01 $

20.65 This is accurate. Lease of two offices which includes use of shared conference and break room not part of the leased SF. 20.55 This is accurate. Plan to terminate when Health Science Campus can accommodate. 20.49 This is accurate. Limited alternatives close to campus that are less expensive. 16.30 Square footage was incorrect in original BLLIP data record. 20.25 This space has been vacated 20.14 This is accurate. Small space for a small business development office 20.01 This is accurate. Lease of small suite which includes use of shared conference and break room not part of the leased SF.

5994 6669

Regents, State Board of Regents, State Board of

501 Glouchester Street 3391 Town Point Drive

Bruns wi ck Kennes a w

$

25.22 $

15.09 Updated figure

$

51.38 $

13.00 Prior entry was calculated on a 92,998 SF office building. KSU taking down space as it becomes available; square footage indicated is original take-

down, but rent assumes entire building. Pay $13 PSF for occupied space.

Notes: Original figures were taken from data extracted from BLLIP data set on 8/18/2011. Updated figures are derived from efforts by DOAA staff to confirm the accuracy of square footage and cost from the leasing entity. N/A = Updated figure not reported in time for publication.

43

State Space Management Policies

44

Appendix J

Office Leases Above Market Rates (Metropolitan Atlanta)
September 2011

City
Atlanta
Atlanta
Atlanta
Atlanta
Atlanta Atlanta College Park College Park Conyers Conyers Conyers Conyers Cumming Dallas Dallas Dallas Decatur Fayetteville Gainesville Gainesville
Gainesville
Hapeville
Jonesboro Lawrenceville Lithonia Marietta Marietta Marietta Marietta Marietta Marietta Marietta Norcross Roswell Stockbridge

SPC-Managed Leases

Entity Name
Economic Development, Georgia Department of Economic Development, Georgia Department of Investigation, Georgia Bureau of

Address
75 Fifth Street, N.W. 75 Fifth Street, N.W. Confidential

Lease Number
6422

Rentable Square Footage
4,304

6126 6001

32,599 7,303

Natural Resources, Department of Subsequent Injury Trust Fund

4244 International Parkway, Atl. Tradeport Int. Center 285 Peachtree Center Avenue, N.E.

4426 7274

77,292 9,374

Technical College System of Georgia 75 Fifth Street, N.W.

6165

22,846

Defense, Department of

510 Plaza Drive

4868

2,483

Pardons and Paroles, State Board of 4830 Old National Highway

6758

8,208

Corrections, Department of

365 Salem Gate Drive, S.E.

6710

4,763

Defense, Department of

1820 Ga. Hwy. 20

6005

1,183

Human Services, Department of

997 Commerce Drive

5409

3,378

Pardons and Paroles, State Board of 997 Commerce Drive

5421

2,891

Juvenile Justice, Department of

104 Pilgrim Village Drive

5803

2,500

Corrections, Department of

250 Butler Industrial Drive

7272

4,699

Human Services, Department of

101 Bainbridge Way

6707

3,995

Juvenile Justice, Department of

101 Bainbridge Way

7169

5,252

Juvenile Justice, Department of

3408 Covington Highway

5784

98,220

Human Services, Department of

385 North Glynn Street

4684

2,400

Human Services, Department of

311 Green Street, N.W.

3534

666

Human Services, Department of

465 E. E. Butler Parkway

4829

5,620

Human Services, Department of Revenue, Department of

447 EE Butler Parkway, Gainestown 5848 Office Park 4245 International Parkway, Highwoods 5913 Ctr. III at Tradeport

3,700 43,414

Human Services, Department of

1287 Spur Ga. Hwy. 138

5688

6,400

Defense, Department of

905 Parkside Walk Lane

6708

2,200

Driver Services, Department of

8040 Rockbridge Road

5936

11,320

Corrections, Department of

590 Commerce Park Drive, S.E.

7160

7,500

Corrections, Department of

2275 Northwest Parkway

5272

6,720

Defense, Department of

2505 Chastain Meadows Parkway

6202

1,550

Defense, Department of

1075 Whitlock Avenue

6745

1,375

Driver Services, Department of

2800 Canton Road

5937

9,630

Human Services, Department of

325 Fairground Street

3223

49,000

Human Services, Department of

590 Commerce Park Drive, S.E.

5638

9,818

Driver Services, Department of

2211 Beaver Ruin Road

6009

14,861

Defense, Department of

875 Mansell Road

6747

1,500

Defense, Department of

5244 North Henry Boulevard

6431

1,600

Total Rent

$ 123,551

$ 680,487

$ 157,161

$ 1,649,740

$ 197,135

$ 581,691

$

39,900

$ 136,514

$

75,235

$

27,292

$

56,176

$

45,490

$

44,338

$

61,849

$

49,415

$

69,081

$ 2,188,176

$

46,848

$

14,234

$ 118,067

$

73,210

$ 833,115

$ 131,848

$

50,074

$ 275,913

$ 139,350

$ 122,640

$

44,940

$

28,875

$ 235,844

$ 788,136

$ 157,572

$ 362,215

$

34,918

$

37,600

Cost Per Square
Foot
$ 29.28
$ 20.87
$ 21.52
$ 21.34
$ 21.03 $ 25.46 $ 16.07 $ 16.63 $ 15.80 $ 23.07 $ 16.63 $ 15.74 $ 17.74 $ 13.16 $ 12.37 $ 13.15 $ 22.28 $ 19.52 $ 21.37 $ 21.01
$ 19.79
$ 19.19
$ 20.60 $ 22.76 $ 24.37 $ 18.58 $ 18.25 $ 28.99 $ 21.00 $ 24.49 $ 16.08 $ 16.05 $ 24.37 $ 23.28 $ 23.50

Market % Above Rate1 Market

$ Above Market

$ 20.22

45% $ 38,994

$ 20.22
$ 20.22
$ 20.22
$ 20.22 $ 20.22 $ 13.84 $ 13.84 $ 15.25 $ 15.25 $ 15.25 $ 15.25 $ 16.98 $ 7.28 $ 7.28 $ 7.28 $ 19.29 $ 16.64 $ 18.50 $ 18.50
$ 18.50

3% $
6% $
6% $
4% $ 26% $ 16% $ 20% $
4% $ 51% $
9% $ 3% $ 4% $ 81% $ 70% $ 81% $ 15% $ 17% $ 16% $ 14% $
7% $

21,335
9,494
86,896
7,593 119,744
5,535 22,915
2,599 9,252 4,662 1,402 1,888 27,640 20,331 30,847 293,513 6,912 1,913 14,097
4,760

$ 11.50
$ 13.82 $ 19.11 $ 19.01 $ 14.33 $ 14.33 $ 14.33 $ 14.33 $ 14.33 $ 14.33 $ 14.33 $ 13.77 $ 15.66 $ 15.65

67% $
49% $ 19% $ 28% $ 30% $ 27% $ 102% $ 47% $ 71% $ 12% $ 12% $ 77% $ 49% $ 50% $

333,854
43,400 8,032
60,720 31,875 26,342 22,729
9,171 97,846 85,966 16,880 157,579 11,428 12,560

Stockbridge Sheriffs' Retirement Fund of Georgia 3000 Ga. Hwy. 42 North

6999

288 $

19,800 $ 68.75 $ 15.65 339% $ 15,293

Tucker Tucker

Behavioral Health and Developmental 100 Crescent Centre Parkway Disabilities, Department of

Law, Department Of

2100 East Exchange Place

6069 4960

10,452 $ 14,888 $

194,094 $ 275,428 $

18.57 $ 16.63 18.50 $ 16.63

12% $ 11% $

20,277 27,841

Villa Rica

Audits & Accounts, Department of 150 Stone Street

7481

1,448 $

25,046 $ 17.30 $ 16.00

8% $

1,878

Woodstock
City Atlanta

Banking & Finance, Department of
Entity Name Labor, Department of

645 Molly Lane

5390

3,131

Agency-Managed Leases

Address

Lease Number

Rentable Square Footage

1700 Century Circle

6544

26,553

$

52,267

Total Rent $ 610,985

$ 16.69
Cost Per Square
Foot $ 23.01

$ 16.67

0% $

73

Market % Above Rate1 Market

$ Above Market

$ 20.22

14% $ 74,083

Atlanta

Labor, Department of

151 Ellis Street, CARE Building

6545

10,472 $ 235,620 $ 22.50 $ 20.22

11% $ 23,876

Atlanta

Regents, State Board of

75 Fifth Street, N.W.

6670

48,790 $ 1,591,530 $ 32.62 $ 20.22

61% $ 604,996

Atlanta

Regents, State Board of

75 Fifth Street, N.W.

7499

500 $

14,730 $ 29.46 $ 20.22

46% $

4,620

Atlanta

Regents, State Board of

PPV - Research - Yamacraw

7539

200,459 $ 5,795,550 $ 28.91 $ 20.22

43% $ 1,742,269

Atlanta

Regents, State Board of

75 5th Street

7900

2,555 $

70,476 $ 27.58 $ 20.22

36% $ 18,814

Atlanta

Regents, State Board of

3475 Lenox Rd., N.E.

6166

33,385 $ 800,184 $ 25.72 $ 20.22

27% $ 183,618

Atlanta

Regents, State Board of

PPV - Office - Technology Square/EDI 5964

36,429 $ 825,000 $ 22.65 $ 20.22

12% $ 88,406

Atlanta Atlanta Atlanta

Regents, State Board of Regents, State Board of Regents, State Board of

75 Fifth Street, N.W. PPV - Office - Tech Square-College of Management 34 Peachtree Street, N.W.

6049 5957 6015

32,740 $ 730,086 $ 188,872 $ 4,018,000 $
80,207 $ 1,843,348 $

22.30 $ 20.22 21.27 $ 20.22 21.09 $ 20.22

10% $ 5% $ 4% $

68,083 199,008
69,780

Atlanta

Regents, State Board of

1800 Century Place, N.E.

6785

2,591 $

52,468 $ 20.25 $ 20.22

0% $

78

College Park Labor, Department of

1630 Phoenix Boulevard

6553

48,539 $ 898,942 $ 18.52 $ 13.84

34% $ 227,162

Covington

Regents, State Board of

PPV - Office Space - Newton Campus 6766

105,000 $ 1,553,753 $ 14.80 $ 13.32

11% $ 155,153

Cumming

Labor, Department of

100 Colony Park Drive

6602

3,376 $

62,794 $ 18.60 $ 16.98

10% $

5,469

Dallas

Labor, Department of

101 Bainbridge Way

6604

3,939 $

55,146 $ 14.00 $ 7.28

92% $ 26,470

Decatur

Labor, Department of

755 Commerce Drive

6606

4,148 $

90,219 $ 21.75 $ 19.29

13% $ 10,204

Jonesboro

Labor, Department of

2450 Mt. Zion Parkway

6565

32,544 $ 711,412 $ 21.86 $ 13.82

58% $ 261,654

Lawrenceville Regents, State Board of

2350 Sever Road

7390

60,000 $ 1,848,681 $ 21.66 $ 19.11

13% $ 153,000

Marietta

Labor, Department of

465 Big Shanty Road

6568

27,000 $ 535,680 $ 19.84 $ 14.33

38% $ 148,770

Marietta

Labor, Department of

877 Franklin Road

7461

7,875 $ 127,260 $ 16.16 $ 14.33

13% $ 14,411

Marietta

Regents, State Board of

1640 Powers Ferr Road, N.W.

7520

1,920 $

32,676 $ 17.02 $ 14.33

19% $

5,162

Norcross

Labor, Department of

2211 Beaver Ruin Road

6572

37,040 $ 833,763 $ 22.51 $ 13.77

63% $ 323,722

Peachtree City Regents, State Board of

1200 Commerce Drive

7472

10,567 $ 238,486 $ 22.57 $ 17.34

30% $ 55,255

1Market rates for metro Atlanta were provided to SPC by a private real estate firm. We were unable to verify the accuracy of these rates or determine if the averages consist of properties

similar to the state's office properties in location and quality.

Source: SPC and Building, Land, & Lease Inventory of Property (BLLIP data as of August 2011)

For additional copies of this report, call 404-657-5220 or visit www.audits.ga.gov/rsaAudits