Fiscal Year 2008
Annual Report
State Properties Commission

State Properties Commission ..................
Table of Contents
Commission Members. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 Mission & Core Values. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 Year in Review . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 Customer Service. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 Financial Report. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 Strategic Initiatives. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
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Commission Members
Governor Sonny Perdue
Chairman
Greg Griffin
State Accounting Officer Vice-chairman
Karen Handel
Secretary of State Board Secretary
W. Daniel Ebersole
Director, Office of Treasury and Fiscal Services Board Member
Kent Alexander
Citizen Member appointed by Governor
James B. Talley, Jr
Citizen Member appointed by Speaker of the House
Dr. George Snelling, III
Citizen Member appointed by Lieutenant Governor
Steve Stancil
State Property Officer
Rod Bowlden
Deputy Executive Director
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Introduction

The State Properties Commission (SPC) is the real estate portfolio manager for the State of Georgia.

The State Properties Commission provides services to State entities in the areas of asset, space and transaction management for all State-owned and leased space. Asset management consists of the evaluation of Stateowned facilities to determine optimal value; space management provides efficient workspace while maximizing utilization; and transaction management provides leasing and real property acquisition and disposition services on behalf of the state.
Services consist of real property inventory information for all of the State's facilities and property, owned

and leased. This compilation of 1,800 leases, 15,000 buildings and 1.1 million acres is readily accessible on the BLLIP database at www.realpropertiesgeorgia.org. Users are able to query by a number of factors, including location, State entity, square footage and use. Individual deeds and plats can also be downloaded and printed.
The SPC assists county and local governments when they have questions concerning the ownership, custody or location of State property in their jurisdictions. The ability to research this information in a timely manner is greatly enhanced by BLLIP, which is available to any user.

Vision, Mission & Values

Vision
To maximize the value and use of Georgia's real estate portfolio.

Mission
To be the leader in real estate portfolio management.

Core Values
Stewardship Accountability

Integrity Leadership

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Year-In-Review

Fiscal Year 2008 marked a successful year for the State Properties Commission (SPC). Key achievements included the development of a comprehensive portfolio management structure and the Phase II update to the BLLIP application to include Risk Management Services (insurance) information within one database for all State agencies.

Real Property Transformation (phase ii)
Building on the work accomplished from the statewide needs assessment and the study of Demand Management and Lease Administration, gaps were identified in the way SPC manages the State's real estate assets. It became evident that the State's organizational structure, business practices, processes, and performance management of its real property assets required a restructuring in order to implement leading industry practices.
The overall objective was to implement a comprehensive portfolio management structure that encompasses:
Portfolio Management - including Strategic and Tactical Planning
Asset Management - including evaluations, financial analyses, leased and owned property evaluations and Total Cost Of Occupancy determinations
Transaction Management - including Acquisitions, Dispositions, Leasing and Lease Administration
Space Management - including Demand and Supply management, Space Utilization analyses, technology applications and inventory management
Organizational Development - Performance Management, Service Level Definitions and Customer Satisfaction Evaluations
The execution of all of these elements of portfolio management has positioned SPC for effective management of the State's real property assets.
Reorganization
The SPC restructured the organization to provide comprehensive portfolio management services to the State of Georgia. The end result of this process produced an integrated organization that will deliver Asset Management, Space Management and Transaction Management services to the State's client agencies. Job descriptions were developed, positions were advertised and filled and the new SPC real estate Portfolio Management organization was in

place at the end of the 2007 calendar year. The SPC also began the process of developing service level definitions, data collection templates, and policies and procedures.
Strategic Plan
During Fiscal Year 2008, the State Properties Commission was engaged, for the first time, in an extensive strategic planning effort. The SPC staff developed a Strategic Plan that will be closely followed, beginning this year and providing a road map that will be followed for the next four to five years.
The SPC Strategic Plan includes steps for maximizing the utilization of the State's real property assets and reducing surplus State property; providing leased space needs to state agencies in a cost effective manner; and improving service, including access to services.
State Property Register (BLLIP Phase II)
Building upon the successful implementation of the statewide inventory of real property, SPC added a critical new function to the database that will better meet the needs of State agencies. The State Property Officer and the Commissioner of the Department of Administrative Services created an interagency workgroup, in coordination with the Carl Vinson Institute of Government's Informa-
Integrating the State Property Register into the BLLIP application was suggested by REMAT who requested one database to input vital State information.

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tion Technology Outreach Services, to implement the integration of the State Property Register (Risk Management Services) into the BLLIP application. This action was in response to suggestions made by members of the Real Estate Management Advisory Team (REMAT) who requested that they only go to one database to input vital State information.
This new version of the State Property Register was fully implemented in time for the State to go out to its underwriters in late Fiscal Year 2008.
Risk Management Services insures all assets for the State of Georgia. Building upon the BLLIP framework, information currently in BLLIP was enhanced by streamlining the process for data input on the part of the agencies' risk managers and providing a more efficient and cost effective process for ensuring that the State's assets real estate and general assets were properly insured. This new version of the State Property Register was fully implemented in time for the State to go out to its underwriters in late Fiscal Year 2008.
The SPC continues to develop and revise the BLLIP application. During Phase II, the Leasing database became editable, allowing the Transaction Management staff to input all lease information directly into BLLIP. This revision further ensures that up-to-date, accurate information is accessible for public review.
New fields were added to support SPC in managing the State's real estate portfolio. Attributes that are relevant to Space Management (usable square footage, rentable square footage, occupancy and utilization) are available for facility managers and leasing coordinators. With the addition of this information, SPC will be in a better position to advise State agencies as to where space is available, to negotiate better lease terms, to identify surplus or under utilized property and to provide better resource allocation for the taxpayers of Georgia.

Acquisition & Disposition of Properties
The development of the Offering Memorandum (OM) by SPC was for the sole purpose of providing information and materials which are relevant to the State's disposition of surplus properties. The OM contains information on assets which allow potential purchasers to make evaluations of an asset. The OM is posted on the SPC website, as well as other real property websites, and serves as a key marketing tool to advertise the disposition of surplus property by the State.
Surplus Property Dispositions
Under the direction of the State Property Officer and based upon the recommendation from the Commission for a New Georgia, SPC was tasked with disposing of $30 million of State assets over the next three years. SPC created a "Surplus Property Log" and has disposed of over $15 million of State assets since May 2007:
Dept. of Corrections detention center (7 acres) near downtown Savannah sold for $2,200,000;
Technical College System of Georgia Quick Start building (1.6 acres) near Savannah's airport sold for $1,151,000;
1.85 acres Pullman Yard sold for $1,354,000; 7.6 acre portion of the Ocean Terminal in Savannah
sold for $10,000,000; Dept. of Labor office (1.3 acres) in Valdosta sold for
$875,000;
Metro Plans/Co-Locations
The SPC engaged in a study of metropolitan planning using the city of Savannah as the pilot site. This effort brought to light the conditions of several leased properties housing State agencies and the potential opportunities for co-location of State agencies' field offices. Using the information gleaned from the Savannah Metro Plan Final Report, SPC has embarked on a process to inform facility managers and leasing coordinators (REMAT) of co-location prospects as soon as SPC receives the notification through the Space Action Form. It is anticipated that this process will result in increased cost-savings and greater efficiencies for State agencies and their clients.

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Currently, two State agencies' county offices will colocate in Pembroke when the Bryan County Development Authority constructs a new building. These opportunities are also being explored for State leased space.
Space Standards
The Space Management Program developed revised Space Standards which were adopted by the Commission in June 2008, for implementation beginning in Fiscal Year
The primary objective of the revised standards is to design efficient workspace while providing the best value to the State in maximizing occupancy.
2009. The SPC began with the best and current industry standards, reviewed other states' practices, and then developed a template that reflects the business of Georgia State government. The primary objective of the revised standards is to design efficient workspace while providing the best value to the State in maximizing occupancy.
These standards will apply to all those State entities for which SPC provides lease assistance, including GBAowned and State-owned space. In addition, we will apply the standards to GBA space, renovations and redesign, as well as to new construction either through GSFIC or public-private ventures through the "State Construction Manual" and the "Build-to-Suit" process.

Build-To-Suit Guide
The intent of the Build-to-Suit Guide is to outline four potential methods of obtaining new space for State agencies beyond the traditional capital outlay process. These four methods--all of which entail a form of "partnering" with the private sector--are generally referred to as:
The Landlord Lease Approach The Developer Build-to-Suit Approach The Public Entity Build-to-Suit Approach without
Developer Involvement The Public Entity Build-to-Suit Approach with a
Developer "Partner"
2008 Lease Highlights
The SPC accomplished the largest commercial lease deal executed in the City of Atlanta in 2007. The Department of Transportation (DOT) engaged the services of the SPC to secure a lease for their administrative office space. Using a competitive selection process, an advertisement ran for 30 days and six proposals were received. These were narrowed down to two, at which time "final and best offers" were requested. DOT and SPC both determined that the most advantageous offer for the DOT and the State
DOT will lease approximately 282,347 rentable square feet at an initial lease rate of $16 per square foot.
was that proposed by CP Venture Three LLC (Cousins Properties, Inc.) for office space at the One Georgia Center located at 600 West Peachtree St. in downtown Atlanta. The lease agreement has a term of 10 years. DOT will lease approximately 282,347 rentable square feet at an initial lease rate of $16 per square foot.

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Customer Service

Exceeding customer expectations remains a top priority for the State Properties Commission. In Fiscal Year 2008, SPC incorporated the Governor's customer service initiatives into the recruiting and orientation process. Customer service-related questions were added to all pre-employment interviews and new hires received training on the goals of the Office of Customer Service: Georgia will be recognized as the best managed state; Georgia will have the best customer service of any state in the nation; and, Georgia State government will be known as a great place to work.

SPC remained focused on providing customer service that is faster, friendlier and easier. Engaging employees in the philosophy of customer service and the spirit of teamwork continue to be the key to success at SPC. The customer service team, working in coordination with human resources, rolled out the "Art of Exceptional Customer Service," an educational program designed by the State's Office of Customer Service. Sev-

eral special projects and events were designed to build team spirit, including clothing and toy drives and participation in the American Cancer Society's breast cancer walk.
Additionally, the State Property Officer recognized all SPC employees at a special Employee Appreciation Day.

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Financial Report

The State Properties Commission is charged with the responsibility of managing certain State of Georgia properties along with obtaining authorization from the General Assembly for conveyances. The SPC leased State owned property and received lease payments in the amount of $7,962,688.15 and sale proceeds in the amount of $14,735,500 for Fiscal Year 2008. These funds were deposited into the State Treasury.

2008 Q20u07aQrutareterrlylIyncIomnecome
$2$,25,50000,0,00000 200720Q0u7arQ2t0eu0ra7lrytQeIrnulcyaorImtneecrolymIencome

$2,500,0$020,500,000$2,500,000
$2$,20,00000,0,00000

$2,000,0$020,000,000$2,000,000
$1$,15,50000,0,00000

$1,500,0$010,500,000$1,500,000
$1$,10,00000,0,00000

$1,000,0$010,000,000$1,000,000
$5$050000,0,00000

$500,00$0500,000 $500,000
$0$0

$0

$0

1st Quarter
$0

2nd QLeuasaesrter

3rEdaseQ/RLuA arter 4th Sales Quarter

Leases Ease/RLA Sales Leases Leases LeEases/RLEAase/RLA EasSea/RleLsA Sales

Sa le s

$3,238,051.5

2008 Income

$18,950.0

$7,962,688.15

TLOETAASLELSEASES TEOATSAEL/RELAAS/RLA TSOATLAELSSALES

Total $11,219,689.65

FY 2008 Budget

Expenses
Personal Services
Regular Operating Expenses Motor Vehicle Expenses Publications and Printing Supplies and Materials Repairs and Maintenance Equipment Freight, Express and Storage Other Operating Expenses Employee Travel Total Regular Operating Expenses
Other Operating Expenses Computer Charges Real Estate Rentals Telecommunications Contractual Services Payments to GBA Operations Total Other Operating Expenses
TOTAL EXPENSES

$ 1,137,524
1,000 1,200 39,300 2,300 6,000 1,700 34,500 15,000 101,000
86,500 61,000 12,300 500,000 1,250,000 1,909,800 $ 3,148,324

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Strategic Initiatives

Multi-Year Leasing
With the support of both the Governor and the Attorney General, SPC will be sponsoring a constitutional amendment during the 2009 Session of the General Assembly to permit multi-year leasing. Georgia currently expends significant financial resources and human efforts to deploy, manage, and maintain its $257 million leased portfolio. The State can unlock substantial value by electing to adopt leading industry practices and change the policy of annual leasing to multi-year terms. Ultimately these actions will enable Georgia to realize the following benefits:
Increase the State's leverage by securing significantly lower rental rates and more favorable tenant improvements
Develop comparative analyses for site selection and recommendations
Provide real transparency and accountability into the service delivery process
Gain access to market-driven transaction management and lease administration services, including the potential to retain commissions
Service Level Agreements
SPC will develop service level agreements for client agencies to describe the real estate services that will be provided as part of its overall Statewide portfolio management. These agreements will fall under the following four broad categories:
Portfolio Strategic Planning Asset Management Space Management Transaction Management These service level agreements describe, in measurable terms, the services that are to be provided, the standards to be attained in the execution of those services and the timing of these services. The objective is a results-oriented performance agreement that can be used as a baseline to measure performance and determine the quality of service.

Portfolio Plans
A portfolio plan is SPC's approach for maximizing portfolio utilization and upholding the highest and best use. Where the State Facilities Strategic Plan is a roll-up summary and comparison of agency plans, a portfolio plan is driven by the major functions within SPC: Asset Management, Space Management and Transaction Management. This is a unified vision of integrating SPC's activities to support portfolio optimization. During the coming year, SPC anticipates competing portfolio plans for its client agencies.

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State Properties Commission 47 Trinity Avenue, Suite G02, Atlanta, Georgia 30334
404-656-5602 Fax 404-651-8084 w w w. s p c . g e o r g i a . g o v November 2008