|Budget Issue:||Sacramento long-range planning study|
|Program:||Department of General Services|
|Finding or Recommendation:||Approve $1.5 million--from the Service Revolving Fund rather than the General Fund--for the office planning study update and facility condition assessments components of the Governor's proposal. Reject about $1 million in funding for the sequencing and funding plan components. Also, request that DGS report at budget subcommittee hearings on its plan for ongoing facility condition assessments.|
Sacramento Office Space. In the Sacramento region, the Department of General Services (DGS) administers leases for roughly eight million net square feet (NSF) of privately-owned office space and controls over eight million NSF of state-owned office space in 34 buildings. Roughly half of the state-owned office space in the Sacramento area is over 25 years old.
Facility Condition Information. The DGS maintains some information on the condition of existing state facilities. For example, it annually compiles a five-year special repair plan identifying proposed special repairs at state facilities. Also, as the budget allows, the department conducts infrastructure and site feasibility studies of individual buildings and sites. These studies often provide detailed information on the condition of building systems (such as boilers), as well as analyses and cost estimates for building renovations or replacement.
Facility Planning Activities. The DGS currently engages in various facility planning efforts. For example, DGS completed a Sacramento Region State Office Planning Study in 2008. This study focused on identifying opportunities for constructing one or more new state office buildings in the region. It identified long-term state office space needs in Sacramento, examined opportunities for reuse of state-owned assets, and identified areas that could accommodate the development of state office space (including state-owned and privately-owned sites). Additionally, DGS periodically creates regional facilities plans for areas with high concentrations of state buildings such as Sacramento. These plans focus on identifying office space consolidation opportunities and developing long-term strategies for meeting the state’s office space needs. The DGS updated the most recent Sacramento Regional Facilities Plan in 2001.
The Governor is proposing $2.5 million from the General Fund for the development of a long-range planning study for the Sacramento region. This amount includes $216,000 for DGS staff time for project oversight and other professional services. The remaining $2.3 million would support the following consultant-provided services:
General Fund Not Most Appropriate Funding Source. Assessing facility maintenance needs and planning for repairs and upgrades should be a routine part of operating and maintaining state facilities. Historically, these costs have been funded through the Service Revolving Fund (SRF), which is funded in part by rent payments made by departments utilizing state office space. Thus, it is unclear why the administration proposes to fund updated facility condition assessments and planning studies from the General Fund. The DGS notes that funding this proposal from the SRF would result in an increase to its rental rates. However, we estimate that it would only result in less than a 1 percent increase in rates, assuming the costs were spread across all agencies occupying state office space.
Sequencing and Funding Plans Are Premature. We also find that it is unnecessary to undertake the proposed sequencing and funding plans in the budget year. This is because the need and scope of such plans will depend heavily on the Legislature’s priorities and funding constraints, which might be influenced by the results of the updated office planning study and facility condition assessments. If the facility condition assessments reveal that the state’s facility needs are less urgent than expected or are confined to a small number of buildings, it may not be necessary to conduct the full sequencing and financing plans that are proposed by the Governor.
Unclear How Future Facility Condition Assessments Will Be Completed. The DGS indicates that in future years it plans to perform regular facility condition updates for all state buildings in the Sacramento region, as well as in other parts of the state. We find this to be a worthwhile goal in order for DGS to make informed facility investment decisions. However, the department has not developed a plan for carrying this out, including the cost and schedule. We note that DGS indicates that it will not need additional resources to update the Sacramento area assessments.
Use SRF for Office Planning Study and Facility Condition Assessments. We find that there is value in understanding the condition of state facilities and development opportunities. Accordingly, we recommend approving about $1.5 million for the office planning study update and facility condition assessments components of the proposal. This would include the DGS staff costs associated with these two components of the proposal. However, we recommend that these studies be funded from the SRF, which would be the most appropriate source of payment to ensure that those entities that benefit from the studies—state agencies that occupy state-owned facilities under DGS’ management—pay the associated costs.
Reject Funding for Sequencing and Funding Plans. We recommend that the Legislature reject the $1 million in funding for sequencing and funding plans at this time. We believe it is premature to fund these portions of the proposal since the results of the updated office planning study and facility condition assessments are not yet complete.
Request Reporting on Ongoing Plan for Facility Condition Assessments. We recommend that the Legislature require DGS to report at budget subcommittee hearings regarding its ongoing plan for maintaining up-to-date facility condition information for its facilities, including anticipated costs and schedules.