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www.lpma.nsw.gov.au
2010-11 BUSINESS PLAN
2010-11 BUSINESS PLAN
Published June 2010
1
CONTENTS
2
AIMS AND OBJECTIVES
3
OUR STAKEHOLDERS
4
SPA STRATEGIC DIRECTION
4
CLIENT RELATIONS
6
SPA SERVICE DELIVERY
8
CURRENT FINANCIAL PICTURE
16
MORE COMMERCIAL FOCUS
20
PROPOSED REVIEWS
20
SPA PROJECTS 2010-11
21
THE ROAD AHEAD
27
ORGANISATION DEVELOPMENT
28
APPENDICES - A, B, C, D
(financial tables and
organisation chart)
30
The State Property Authority (SPA) strives
to establish itself as the government’s
property specialist. Since 2006, we have
successfully implemented significant
changes in government property
legislation and policy. Our vesting
program has seen a large proportion of
government property transferred under
SPA management, ensuring better asset
management practices. SPA’s activities
have generated significant economic,
social and environmental benefits. We are
providing more efficient management of
property and helping agencies to focus
on their core service delivery functions.
We are also helping to drive sustainability
practices in property as required under
the NSW Government’s Sustainability
Policy.
SPA has demonstrated a strong track
record of success, and as a result, some
agencies are now seeking additional
services to help them manage their
property portfolio. This demand is driven
by the recognition that centralising the
management of government property
services in SPA will drive efficiencies
further and better support agency service
delivery.
There are many challenges ahead for SPA
such as integration with the Land and
Property Management Authority (LPMA)
and resourcing the organisation to meet
projected growth. There are opportunities
to streamline business functions.
Our success also largely depends on
developing positive client relationships
through improved communication, liaison
and delivery of services.
SPA’s revenue continues to grow each
year due to increased rental income from
the vesting program. Our business
model is unique as we are neither a
government department model nor
a pure profit maximising model. This
presents an opportunity to become
more commercial to ensure maximum
efficiency and to generate more income
for government. We will also examine
the possibility of borrowing to accelerate
building projects which are often
vital to the long term sustainability of
government services in regional areas.
SPA has several projects to deliver in
2010-11 and significant planned projects
over the next three years. Agency reviews
and centre studies are invaluable in
helping to plan for the property needs
of individual agencies as well as the
whole of government. We will continue
to develop these reviews and make
recommendations for government
property to meet service delivery needs.
SPA’s business plan sets the foundations
to develop the agency and to continue to
provide high quality professional property
services in the future. This business plan,
as well as future plans, will help us to
be a centre of expertise in government
property.
AIMS AND
OBJECTIVES
This business plan outlines the SPA’s
strategic direction for 2010-11, and
provides a platform to develop the
agency over the next five years. The
plan states that SPA, as a division of
the LPMA, is the best agency to deliver
property services for the whole of the
NSW Government.
Key themes covered in the plan include:
• improving client relations
• building knowledge and property
expertise
• providing quality service delivery
• being a one-stop-shop for
government property matters
• providing cost efficiencies
• meeting policy and legislative
requirements
• establishing SPA as a leader in
sustainability.
SPA’s core objective is to provide
government agencies with safe,
productive and sustainable workplaces
that meet their service delivery needs. We
take a strategic approach to maintaining,
acquiring, disposing and developing
generic government property. In the
next few years, we aim to become the
NSW Government owner of the entire
generic property portfolio and full service
provider of integrated property services.
SPA will continue to provide leadership
for government in property and facilities
3
management and policy and develop the
right tools and knowledge to become a
leading centre of expertise in property.
This will provide long term cost savings
and, most importantly, assist agencies to
better deliver their core services to the
community.
This business plan outlines the following:
SPA will focus on developing strong
client relationships which will strengthen
our partnerships with agencies, and win
confidence in SPA as the key adviser and
leader in government property matters.
We will strive to become an even more
service driven business which can better
meet the needs of agencies.
3. Strategies to improve service delivery
and implement new government
property services.
Many government agencies have
identified the need for SPA to continue
to vest ownership of their properties,
and in some instances, vest other generic
and non-generic assets. Our vesting
program has already provided substantial
economic, social and environmental
benefits to government and the
community and, as a result, there is a
growing demand from clients and central
agencies for SPA to provide new services.
There is now potential to increase returns
to government and make SPA more
self-sufficient.
During 2010-11, SPA will examine the
possibility of implementing a more
commercial approach to property. We will
seek out sound investment opportunities
using our existing capital base. In the
year ahead, we will investigate new ways
to fund essential government property
services. Alternative funding would allow
finite capital to be put towards essential
public services such as police, health and
education.
4
1. SPA’s strategic direction for 2010-11
and beyond.
2. Strategies to strengthen client relations
and improve outcomes.
4. SPA’s current financial position and
implementing the most effective
business model over the next few years.
5. Key projects for 2010-11 and project
planning over the next few years.
OUR
STAKEHOLDERS
Our highest level stakeholders include the
Minister for Lands, the Treasurer, NSW
Treasury and heads of NSW Government
agencies who rely on SPA to support
service delivery.
SPA has a key role in providing quality,
accessible, convenient and sustainable
government facilities to ensure the effective
delivery of government services. It also
provides savings to government so that
funds can be directed to front line services.
Other key stakeholders include the
Government Asset Management
Committee, facilities and property
management providers, private landlords
and private tenants who occupy space
in government owned buildings. SPA
also has a range of industry stakeholders
including real estate agents, developers,
the Property Council of Australia and the
legal community.
SPA STRATEGIC
DIRECTION
THE STORY SO FAR
The State Property Authority was
established as a statutory authority
under the State Property Authority Act
2006. It is now a division of LPMA. This
merger is part of the government’s drive
to deliver more efficient and effective
services to the people of NSW. In
particular, the amalgamation was seen
as an opportunity to consolidate similar
functions such as land management,
conservation, development, land
information and corporate services.
The diagram on this page provides an
overview of LPMA’s core functional
relationships.
As can be seen from the diagram, LPMA
consists of three core functions:
• Land and Property Management and
Conservation
• Land and Property Development
• Land and Property Information,
supported by consolidated business
services.
SPA is seen as primarily part of Land and
Property Management and Conservation.
However we have some similar functions
to other divisions of LPMA. For example,
SPA develops properties on behalf of
government, such as government office
buildings. SPA also maintains detailed
information on government owned and
leased properties.
INTEGRATION WITH LPMA
During 2010-11, the integration of SPA
into LPMA will continue and we will
continue to work with LPMA to deliver
better services. The major focus will be
the consolidation of corporate services
within LPMA.
We will also continue to streamline
business functions within SPA and
LPMA. The emphasis will be on ensuring
that, where our functions are similar to
functions of other divisions within LPMA,
the services will be streamlined to better
support our business needs.
LPMA BUSINESS SERVICES
LEGAL SERVICES, INCLUDING NATIVE TITLE,
ABORIGINAL LAND CLAIMS AND STATUS BRANCH
COMMUNICATIONS SOLUTIONS GROUP
INFORMATION COMMUNICATIONS AND TECHNOLOGY
CORPORATE PEOPLE & PERFORMANCE GROUP
LAND AND PROPERTY
MANAGEMENT & CONSERVATION
INFORMATION
LPMA
STATE PROPERTY AUTHORITY
CROWN LANDS DIVISION
SOIL CONSERVATION SERVICE
LAKE ILLAWARRA AUTHORITY
CHIPPING NORTON AUTHORITY
SYDNEY HARBOUR FORESHORE AUTHORITY
COOKS COVE DEVELOPMENT AUTHORITY
OFFICE OF RURAL AFFAIRS
OFFICE OF STRATEGIC LANDS
OFFICE OF BIOFUELS
INTEGRATED
LAND AND PROPERTY
PRODUCTS AND SERVICES
• act as the NSW Government’s adviser
on property matters – including
strategic planning.
- owns and administers government
land and buildings
FINANCE, STRATEGIC POLICY & CORPORATE SUPPORT
CORPORATE GOVERNANCE UNIT
LAND AND PROPERTY INFORMATION DIVISION
GEOGRAPHICAL NAMES BOARD
BOARD OF SURVEYING AND SPATIAL
INFORMATION
The major functions of SPA are to:
• act as the NSW Government’s
landlord which:
CORE FUNCTIONAL RELATIONSHIPS
LAND AND PROPERTY
SPA FUNCTIONS
- administers property leases on
behalf of government.
• act as the NSW Government’s real
estate agent which:
- buys and sells properties
- provides accommodation services
through leases and collects rent
from tenants
- manages owned and leased
properties including maintenance
and pays for outgoings.
• develop NSW Government generic
properties such as office buildings,
car parks, data centres, warehouses,
depots etc.
• maintain detailed property
information about owned and leased
government properties.
LAND AND PROPERTY
DEVELOPMENT
FESTIVAL DEVELOPMENT CORPORATION
HUNTER DEVELOPMENT CORPORATION
5
SPA ACHIEVEMENTS
Over $120 million in savings and
economic benefits were achieved in
2008-09 – $24 million above the target
set by NSW Treasury. In its first three
years, SPA has returned to government
$114.6 million. In 2009-10, SPA forecasts
a total return to government of $65.1
million.
SPA continues to roll out the
government’s property policy framework
and meet its legislative objectives under
the Act. The number of properties in our
asset portfolio has increased substantially
since 2006. Our vesting program has
delivered 674 leased and owned assets
from 29 agencies - 389,000 square
metres in total - since July 2008. This
involves managing a further 389,000
square metres of office space in addition
to the current 911,000 square metres
under management.
With a total portfolio of 1.3 million
square metres under management,
significant savings will be realised
through better occupancy rates and
lower vacancies across the portfolio. We
will continue to drive efficiencies across
government and improve operational
efficiencies following the vesting
program.
SPA has reduced the average office
space per public sector employee
from 24 square metres in 1997 to 17
square metres and has reduced rental
expenditure by approximately $155
million each year in today’s dollars, while
maintaining service delivery. Impressively,
SPA has maintained a portfolio-wide
office vacancy rate of 0.55% (Jan 2010).
This result demonstrates our effectiveness
in managing the state property portfolio.
6
SNAPSHOT OF SPA
AS AT JUNE 2010
•Total office space = 1.3
million square metres
•Total vacant land managed
= 260,000 square metres
•Total vested assets from 29
agencies = 674
•Buildings owned = 152
•Number of government
agencies who are SPA
clients = 84
•Number of tenancies = 990
•Asset value of buildings =
just under $1 billion
•Rental value managed =
$250 million
•Rental paid by direct debit
payment method = over
$100 million
CLIENT
RELATIONS
MAKING CLIENT
RELATIONSHIPS A TOP
PRIORITY
SPA has worked to build a reputation
as the government’s property specialist.
We have worked hard to develop strong
client relationships which are vital to
the success of SPA in implementing the
government’s property reforms, but
acknowledge that there is much more to
be done.
Client relationships affect every part of
the business, from day-to-day property
transactions to high level government
negotiations. They also influence the
types of products and services we offer
and how effectively these are delivered.
Over the next year, SPA will work to
develop stronger client relationships
to better understand the needs of our
stakeholders.
Improving client relations is a key
strategic objective for SPA. This plan
highlights some of the key client
relationship outcomes that we aim to
achieve and states how we will better
understand agency needs to improve
their service delivery by developing strong
client relationships.
OUR BIGGEST CLIENTS
SPA’s primary clients are NSW
Government agencies. These include
agency staff as tenants of government
owned and leased buildings, senior
property managers and agency
executives. We work closely with
agencies and provide a range of
products and services as outlined
in the government’s property policy
framework.
The table on this page highlights SPA’s
top eight clients based on a forecast of
total client income over 2009-10. Total
rental income makes up 89% of SPA’s
total income. The top clients represent a
significant percentage of overall income.
Results of SPA’s customer satisfaction
surveys show that while we have
engaged successfully with agencies
on some levels, we can improve. This
includes communicating more effectively,
building agency confidence in SPA
and acting as a property advisor and
provider of choice in all property matters.
The surveys have also found that we
need to improve our service provision
by being more accessible to clients,
being consistent in the level of service
we provide and resolving issues more
effectively. Many agencies have stated
they want more regular communication
from SPA around our services and fee
structures.
Customer surveys have helped us to
better understand our clients and their
needs and will continue to be used
to improve the service delivery of our
business. We can gain more support from
government agencies by addressing their
concerns and encouraging productive,
long term relationships. SPA will build
on the knowledge and skills required
to maintain ongoing and positive
relationships. Some of the ways we will
go about this are outlined in this section.
RENTAL INCOME
BY CLIENT
RENTAL INCOME
2009-10
Forecast
$’000
Human Services NSW, Dept of
30,153
Justice and Attorney General, Dept of
29,403
Services, Technology and Administration, Dept of
25,560
Education and Training, Dept of
23,816
Premier and Cabinet, Dept of
18,978
NSW Land and Housing Corporation
11,286
Environment, Climate Change and Water, Dept of
Other Clients
Total Rental Income
Engaging with the property industry is
beneficial to SPA’s reputation, business
activities and overall success. We have
been increasing our industry presence
through participation in and membership
of industry groups. SPA is regularly invited
to speak at industry events and provide
insight into government property policy,
initiatives and other changes. Industry
networking helps us to position SPA as
a leader in government property and we
encourage the private sector to work
with us on a range of initiatives, such as
sustainability in commercial offices, to
achieve government objectives.
BUILDING OUR CLIENT
RELATIONSHIPS
In the next 12 months, SPA will focus
on improving client satisfaction,
communicating more effectively and
providing high quality services. In the next
few years, SPA will aim to include all NSW
Government agencies in its client base.
9,326
112,222
260,744
SPA is working to provide clients with
the best value for money possible. The
initial phase of property vesting is now
complete, and many agencies now
expect capital investment in the buildings
from which they deliver their services.
SPA will aim to be better resourced and
implement a more effective business
model to assist us to provide high quality
services to our clients. We will build
trust and improve customer service at a
grassroots level by having direct and daily
contact with clients through an in-house
SPA Helpdesk service.
Another of SPA’s key objectives in the
next five years is to become involved at
an early stage of Total Asset Management
planning with agencies. We will then be
better placed to provide agencies with
expertise and advice at a critical time of
the planning process to ensure that their
future property needs are met. Engaging
with agencies early in the process will
only be successful if we build solid
7
We will continue to implement client
relationship strategies such as the client
satisfaction survey and Government
Property Forums. Communications
strategies we will implement over the
next 12 months include:
VESTING PROGRAM
• face-to-face briefings
A key component of the government’s
property policy framework is to
manage property assets on a whole of
government basis. Under the framework,
SPA is responsible for acquiring all
agency-owned and leased office
accommodation assets through its
vesting program. Centralising property
management into SPA allows agencies to
concentrate on their core service delivery
activities.
• up-to-date online information
The program gives government:
• news bulletins
• more client visits
• ongoing government property forums
• more control over its assets
• industry forum presentations
• centralised ownership and asset
management in the one agency
• assisting agencies with asset planning.
SPA SERVICE
DELIVERY
The State Property Authority currently
offers a variety of property services to
government agencies including property
management, divestments, acquisitions,
developments, capital improvements, and
sustainability initiatives. This business plan
outlines our core services and highlights
opportunities to expand or improve these
services. It also focuses on possible new
services which we will look to develop
over the next five years.
8
SPA’S CURRENT SERVICES
• improved government infrastructure
through improved facilities
management
• identification of unused or surplus
assets that might be sold.
Since 1 July 2008, SPA has vested a total
of 674 owned and leased assets from
29 agencies. We now manage a further
389,000 square metres of office space
in addition to the existing portfolio of
around 911,000 square metres.
It is anticipated that at least a further
200,000 square metres of additional
office space will be managed by SPA by
the end of 2010 following the vesting of
a further 280 owned and leased assets.
The total projected office space under
management from the vesting program
is expected to reach 589,000 square
metres.
The vesting program has increased SPA’s
annual rental income from both owned
and leased assets by $127.4 million. This
is expected to increase by a further $60
million by the end of 2010.
The success of the vesting program
is due to the ongoing cooperation of
government agencies and acceptance
of the benefits of centralised ownership
and management of government assets
by SPA.
The work of the vesting team is expected
to be complete by the end of financial
year 2010-11 when staff can be absorbed
into mainstream activities.
LEASING
SPA owns and develops generic
properties and leases them to agencies.
We also lease privately owned properties
on behalf of agencies. SPA charges rent
and a fee for service to manage the
leases. This model of leasing ensures that
there is one central point in government
where leasing is undertaken by expert
lease negotiators. It gives government
more specialist control over its leases,
saving money in the long term. It also
allows agencies to focus on their core
service delivery and assists them with
asset planning and management.
One of SPA’s major challenges is to
further develop our resources and
capacity to absorb and manage a
large volume of leases from disparate
agencies across NSW, review and
renegotiate those leases as they fall due,
meet the government’s responsibilities
to private owners and ensure that
occupying agencies are being properly
accommodated.
SNAPSHOT OF THE VESTING PROGRAM
Vested Owned Vested Leased
Original Crown Property Portfolio
(CPP) - October 2007
66
49
Confirmed total vesting
Stages 1, 2, 3, 4A and 4B
98
554
Projection for
Stage 5
21
200
Projected total delivery
1 December 2010
119
754
Projected total vesting
and original CPP
185
803
1 October 2010
Directly Leased Total Managed
To SPA
Total Space m2
115
911,070
674
389, 000
221
200,000
22
895
589,000
22
1010
1,500,070
22
PORTFOLIO MANAGEMENT GROWTH THROUGH THE VESTING PROGRAM
1100
1000
900
Number of Properties
relationships and gain a level of trust with
the organisation.
800
700
600
500
400
300
200
100
Original GPP
Tranche 1
1 July 2008
Cumulative Owned
Tranche 2
1 Nov 2008
Tranche 3
1 July 2009
Cumulative Leased
Tranche 4A
2 Nov 2009
Tranche 4B
1 Apr 2010
Tranche 5
1 Oct 2010
CumulativeTotal
9
FACILITIES MANAGEMENT
SPA is responsible for the efficient
management of its owned and leased
properties and has developed Service
Level Agreements that outline what
services we provide client agencies and
the fees we charge. The agreements
also provide reassurance to clients that
we are committed to providing high
quality facilities that are managed and
maintained to a high standard. A major
challenge is that some vested properties
have come to SPA in poor condition
and require significant upgrade to bring
them to a suitable standard. During
2010-11, SPA will develop some in-house
functions to allow us to better monitor
and advise on facilities management and
improve our service delivery. We will also
look at outsourcing managed by SPA to
provide more control over our service
functions and to be more strategic in our
delivery. In some instances, an integrated
or outsourced model will be more
appropriate to deliver services to client
agencies which are not core to SPA.
STRATEGIC PLANNING
The Planning and Strategy Group (the
group) is responsible for developing
whole of government policies and
strategies to guide and govern decisions
relating to property management across
the NSW public sector.
The group’s key objective is to advise
government on its property needs
now and into the future. It develops
strategies which look at the whole of
government property needs and identifies
opportunities to improve efficiencies in
property management.
10
One if its main objectives over the next
year will be to review the State Property
Authority Act 2006 to accommodate
SPA’s expanded role in vesting and
acquiring a broader range of generic and
non-generic properties on behalf of other
agencies. This will require a government
policy decision, if supported.
AGENCY REVIEWS AND CENTRE
STUDIES
The Planning and Strategy Group
researches agency service delivery
needs, property market trends and
demographics to advise government
on property risks and risk management
strategies. These reviews help SPA
to develop an overall strategy for
government’s future property needs.
Agency Property Portfolio Reviews are
a key government initiative to improve
service delivery and identify inefficient
property use. The reviews look at an
agency’s current assets as well as future
property needs state-wide. They often
reveal unused or surplus properties which
might be sold to help fund the agency’s
core service delivery activities. The reviews
also identify opportunities for agencies to
improve service delivery through better
building design.
Since the portfolio review initiative was
introduced in 2008, SPA has completed
property reviews for the former agencies
of: Commerce; Education and Training
(offices only); Arts, Sport and Recreation;
Emergency Services; Juvenile Justice
(offices only); Attorney General’s
Department (offices only); Community
Services; Maritime; Fire Brigades; Primary
Industries; Environment, Climate Change
and Water; RailCorp; and Ageing,
Disability and Homecare.
In 2010-11, reviews will be completed
for the Roads and Traffic Authority, State
Transit Authority of NSW, Department of
Planning, Rural Fire Service and the NSW
Ambulance Service.
Centre Studies focus on regions
and review all the agencies within a
regional centre to determine whether
their existing properties and facilities
are adequate to meet the needs of
government and the community. The
studies involve multiple agencies and
examine government assets, service
delivery requirements, funding priorities,
demographics and the government’s
future property needs.
In 2009-10, SPA completed centre studies
for Liverpool/Campbelltown, Newcastle
and Parramatta. Work also continued
on the implementation of the Sydney
CBD Asset Strategy and development of
the Far West Strategy for the delivery of
human services.
In 2010-11, studies will be completed
for Blacktown, Gosford, Tamworth and
other regional centres to be approved
by the Government Asset Management
Committee. Implementation of the
Sydney CBD Asset Strategy and the Far
West Strategy will continue.
ASSET SALES
SPA works with government agencies
to identify properties that are surplus to
their service delivery needs and which
may be sold. In the disposal process, SPA
provides a full range of professional real
estate services and undertakes a number
of activities to ensure optimal commercial
outcomes from the sale.
SPA aims to optimise the return to
government from these sales through
activities such as sub-divisions,
re-zonings, the assessment of
development options and land
decontamination. It also undertakes due
diligence investigations, prepares sales
contracts and tender documents, develops
marketing strategies and facilitates
contract exchanges and settlements.
ACQUISITIONS
SPA provides a range of property
acquisition services and professional
advice to assist clients with their
strategic property needs, whether
they are acquiring a single property or
implementing an acquisitions program.
Services provided by SPA include scoping
clients’ requirements, identifying sites
and undertaking assessments, engaging
and managing consultants, negotiating
purchases and completing purchases.
By applying its professional expertise in
property acquisitions, SPA can save client
agencies time and money by project
managing property acquisitions and
allowing agencies to concentrate on
their core business activities. SPA can
also ensure that they acquire the right
property that meets their service delivery
requirements and that they are acquired
at a competitive price.
SPA is a key delivery agency in the
implementation of the Sustainability
Policy and is working with the
Department of Environment, Climate
Change and Water to implement
initiatives under the policy’s Office
Buildings Strategy.
Energy reduction projects are a core
component of this strategy which
is aimed at reducing the electricity
consumption of government owned
buildings. Projects include upgrading
air-conditioning systems and installing
more efficient light fittings and plumbing
fixtures.
All SPA-owned office buildings have been
rated using the National Australian Built
Environment Rating Scheme (NABERS)
Water and Energy scales to measure
performance.
CASE STUDY:
The original 40-year-old airconditioning system at the
Grafton Government Office
Building is being replaced with
a contemporary, more energy
efficient system which will
reduce running costs by up to
35% and improve comfort levels.
A SUSTAINABLE FUTURE
SPA will continue to reduce its carbon
footprint by implementing a sustainability
strategy to meet core objectives of the
NSW Government Sustainability Policy.
Sustainability plays a major role in many
of SPA’s activities and programs and also
contributes to our triple bottom line
approach in determining real savings to
government.
Lighting has been upgraded
at Bligh House to reduce
electricity consumption by
324,000 kilowatt hours per year
and reduce greenhouse gas
emissions by over 300 tonnes
per annum.
We also have a role in educating
government tenants about how they can
be more environmentally sustainable at
work. We have conducted a number of
sustainability awareness seminars at major
government buildings and undertaken
walk-through energy audits to educate
tenants in energy reduction practices.
Recycling programs are being implemented
and environmental performance criteria
have been incorporated into service and
supply contracts.
In accordance with the Sustainability Policy,
SPA is also developing a Green Lease
Schedule which sets out shared building
owner/tenant environmental obligations.
These Schedules, incorporating ‘Green’
conditions, will be progressively rolled out
once the National Policy for Green Leases
is finalised.
PROPOSED NEW SERVICES
SPA has already demonstrated success
in bringing savings and efficiencies
to government and providing expert
property services to a range of
government clients. Many clients would
welcome more scope for SPA to provide
additional property services and some are
approaching SPA to manage other areas
of their property portfolio. SPA has the
potential to build on its existing services
and develop new services that will help
to improve government performance and
potentially provide a commercial profit
to government. Implementation of new
services will depend on outcomes from
the review of legislation and policy in
2011. Possible new services are described
in this section.
11
PROPERTY TITLE CONSOLIDATION
CAR PARKS
SPA can improve operational efficiencies
and administration of government
property by vesting certain non-generic
properties. For example, there are many
properties in which the title currently sits
with agencies which no longer exist or
with Ministers who no longer hold the
Ministerial position for the agency. This
creates difficulties if the government
wants to develop or dispose of the
property. It would be more appropriate
to have one central authority to retain
ownership.
SPA currently manages the Domain Car
Park on behalf of the Botanic Gardens
Trust and has a long term ground
lease for the Opera House Car Park.
SPA has discussed with some larger
government agencies the potential to
vest, develop and centralise ownership
and management of car parks. This
would meet a growing need identified
by agencies themselves and could
also provide a commercial opportunity
to government, delivering more cost
efficiencies and community facilities.
Currently, SPA is only mandated to
transfer title of generic government
office property. An expansion of the
vesting program would give government
greater knowledge and control over its
entire property portfolio and provide new
opportunities to manage, develop or
dispose of underutilised properties.
A commercial car park operation would
generate ongoing profit that could be
used to improve government services or
potentially be invested in new car parks
where they are needed most, for example
at transportation hubs. It would also
mean that agencies such as the NSW
Department of Health and RailCorp could
focus on their core business of running
hospitals and railways as opposed to
managing and maintaining car parks. SPA
would deliver benefits by ensuring that
car parks:
• are outsourced and managed by
an external provider with expertise
in car park management, therefore
improving the quality of the facilities
• have regulated pricing, operating
and design standards to ensure
operational efficiencies
• provide cost efficiencies and savings
to government by minimising the
resources required to manage car
parks through outsourcing via a statewide contract
12
FITOUTS
• operate to a greater capacity by
providing car parks in areas where
they are needed the most. Some
underutilised car park sites could
redeveloped into hospital facilities
Currently SPA owns and manages base
buildings and agencies own their office
fitouts, similar to a commercial leasing
model. However, unlike commercial
arrangements, government has an
interest in the efficient and effective
use of all tenancies and this presents
opportunities to generate greater cost
efficiencies and sustainable outcomes.
There are three options for fitouts:
• operate commercially.
CASE STUDY:
The NSW Government is
considering tenders for
two CBD car parks owned
by the Sydney Harbour
Foreshore Authority (SHFA).
The Harbourside car park
in Darling Harbour is being
sold as a 40 year lease and
the Promontory Car Park
in Pyrmont is being sold
freehold. Government made
the decision to sell the car
parks as they are not the
core business of SHFA and
revenue can be realised from
their sale. SPA can apply
the same principle to other
agencies that own, manage
or outsource car parks which
are not part of their core
business. Our role would be
to identify all government
owned car parks and to
provide a solution which will
see them managed in a more
efficient way.
1.Maintain the current model where the
agency funds, manages, installs and
owns their own fitouts.
DEPOTS AND WAREHOUSES
Currently, some generic government
properties such as depots and
warehouses are owned and managed
by agencies. SPA’s experience from
the vesting of government offices
demonstrates that if we vested and
managed other generic property we
could improve the efficient use of that
property, for example, by consolidating
multiple government warehouse facilities
in a region to a single warehouse or
depot. We could also better identify
agency warehouse or depot needs and
sell or redevelop surplus assets.
2.Standardise and monitor fitouts
on behalf of agencies, providing
advisory and consultancy services.
In this model the agency still funds,
manages, installs and owns their own
fitouts.
3.A full in-service model where SPA
outsources installation of fitouts but
manages and owns them and charges
agencies for this service as part of
their leasing arrangement.
As part of the current model, SPA has
developed guidelines to advise agencies
on optimal fitout installations. Currently
agencies must install and remove fitouts
if they relocate. This is wasteful and does
not optimise the cost of fitouts. A full
in-service fitout model would be more
sustainable and cost effective. Benefits
include innovative fitout solutions,
minimising costs of equipment and
supplies, the flexibility to move agencies
without expensive fitout costs and
utilisation of SPA’s professional expertise.
13
CONSOLIDATING
GOVERNMENT FACILITIES
Many NSW Government agencies
manage their own specialist facilities
such as training facilities, data centres,
serviced offices and dispute centres.
There are opportunities to provide shared
government services by centralising
management of these facilities in SPA.
This could drive more efficiencies and
savings to government and ensure better
utilisation of these assets.
TRAINING FACILITIES
The government needs training facilities
for staff as well as specialist training
facilities for emergency services. SPA has
been approached by some agencies to
assist with their training facility needs.
For example, we are currently working on
a proposal to develop an all-in-one
training academy for emergency services
including NSW Fire Brigades, NSW Police
Force, the NSW State Emergency Service,
and the Ambulance Service of NSW.
SPA could provide savings and efficiencies
by centralising general staff training
facilities. New government training
centres could provide the latest
facilities such as video conferencing and
high-speed internet connection. Benefits
of centrally managed training centres
include improved space utilisation, the
provision of high quality facilities with
up-to-date technologies, and regular and
ongoing maintenance.
14
DATA CENTRES
SERVICED OFFICES
All government agencies require data
centres to provide secure off-site storage
of data. Currently, some data centres
are located in premium office space
and others are stored in inappropriate
facilities.
SPA could provide government agencies
with fully serviced offices complete
with fitout, office equipment, reception
services, and meeting and training spaces.
This type of facility would be useful for
many agencies that have relocated to
regional areas and require access to office
facilities in the Sydney CBD. It would also
assist government agencies in regional
areas with only one or two staff, by
providing cost effective accommodation
and office facilities. The benefits of the
serviced office model include:
Data Centre Reform is a project of the
Government Chief Information Office
(GCIO). The GCIO has gone to tender
to develop two major government data
centres. SPA supports this program and
would recommend providing assistance
to GCIO with property development
and facility management. As part of our
ongoing property portfolio reviews, SPA
may identify the need for additional data
centres and will work with GCIO to meet
those needs.
• the provision of customised office
space in small towns or regional areas
where facilities can be difficult to find
• the creation of economies of scale
through one or more agencies using
a centrally managed single space at a
lower cost
• improvement of government service
delivery to regional communities with
services delivered from the one, more
accessible location.
A business case will be developed by
January 2011.
DISPUTE CENTRES
Dispute centres are rooms used by
tribunals and dispute resolution bodies
that represent government in dispute
matters. They have similar fitout and
service delivery needs to courtrooms.
SPA owned and managed dispute centres
could provide economies of scale by
allowing multiple agencies to access the
one centre and ensure optimum use of
space. In regional areas this could be
extended to courtrooms which can also
be used as dispute centres, ensuring
maximum use of space.
15
CURRENT
FINANCIAL
PICTURE
FINANCIAL GROWTH - 2006-07 TO 2013-14
OVERVIEW
RESOURCES
(At Financial Year End)
2006-07
Actual
No.
2007-08
Actual
No.
2008-09
Actual
No.
2009-10
Forecast
No.
2010-11
Budget
No.
2011-12
Fwd Est
No.
2012-13
Fwd Est
No.
2013-14
Fwd Est
No.
66
49
66
49
136
91
164
625
185
825
185
825
185
825
185
825
Properties*
Owned Properties
Leased Properties
Workforce
Full Time Equivalent
$400m
$375m
$350m
$325m
$300m
$275m
67.8
*Property is defined by address
SPA commenced business in September
2006 and in just over three years has
grown significantly, with total assets now
worth more than $1.1 billion. In the year
from 1 July 2009 to 30 June 2010, SPA
expects to generate nearly $300 million
in revenue and will deliver to government
almost $100 million in normal dividends
and capital repatriations. Over the next
four years SPA expects to:
68.8
86.6
105.6
141.0
138.0
138.0
138.0
$250m
$225m
$200m
$175m
$150m
$125m
$100m
$75m
$50m
$25m
• Increase revenue to nearly $380
million
• Increase its operating surplus to $44
million
$m
2006-07
(Actual)
2007-08
(Actual)
2008-09
(Actual)
Revenues
(Excluding Capital Contributions)
2009-10
(Forecast)
2010-11
(Budget)
Expenses
2011-12
(Fwd Est)
2012-13
(Fwd Est)
2013-14
(Fwd Est)
Operating Surplus
(Underlying)
• Maintain total assets at over $1 billion
• Increase total equity to more than
$750 million.
16
17
EXPENSES
REVENUE
Typically, our largest source of income
is rent from leased properties, followed
by rent from owned properties, which
combined represents the vast majority
of SPA’s income. Other sources of
income include fee for services such
as acquisitions and divestments, and
interest income. SPA also receives a
regular recurrent grant to deliver whole
of government strategy and planning
services.
The growth in revenue is a result of
the growth in our owned and leased
properties. Owned properties have
increased from 66 in 2006-07 to a
budgeted 185 in 2010-11 and leased
properties have increased from 49 to 825
over the same period.
The following chart shows SPA’s
budgeted revenue for the financial
year 2010-11. In addition, there will
be a $31.6 million capital grant from
the NSW Government, to fund capital
improvements to SPA’s land and
buildings.
In most years, SPA also receives capital
grants to fund construction projects. This
amount varies from year to year.
Typically SPA’s largest regular expenses are:
• property head lease expenses, which
includes lease payments and related
outgoings
• other property expenses, which
covers the maintenance, utility and
other costs associated with owned
properties
• other operating costs, including
outsourced property management
services
• finance lease expenses, relating
to accommodation agreements
which are not classified as property
operating leases.
In addition, in some years SPA can incur
other expenses such as:
As a result of having an increased
number of properties to manage, SPA’s
workforce has increased. In 2006-07,
SPA started with 67.8 equivalent full time
staff. SPA expects this to expand to 141
in 2010-11 to manage the recent and
projected increase in properties.
The following chart shows SPA’s
budgeted expenses for the financial year
2010-11.
• depreciation and amortisation
• land remediation
• personnel services expenses (ie.
personnel provided by LPMA)
• capital grants
• losses (or gains) on the disposal or
revaluation of assets.
2010-11 REVENUE BUDGET
2010-11 EXPENSES BUDGET
(EXCLUDING GOVERNMENT CAPITAL CONTRIBUTIONS)
Property Headlease
Expenses $224.3m
Rental Income - Leased
$238.6m
Other Operating Expenses
$9.1m
Rental Income - Owned
$79.6m
Fees For Services $4.4m
Other Revenue $3.1m
Govt Recurrent
Contribution $5.6m
18
Interest Income $3.7m
Personnel Services
Expenses $18.3m
Other Property Expenses
$20.3m
Depreciation &
Amortisation $26.4m
Finance Costs $8.3m
19
BALANCE SHEET
The bulk of SPA’s assets are its land and
buildings, which are budgeted to be
$832 million by June 2011. Other major
assets SPA expects to have at the end of
the 2010-11 financial year are:
• finance leases - $71 million
• cash for Newcastle land remediation $63 million
• total receivables (mainly for lease
make good obligations) - $56 million
• investment properties - $39 million
(properties leased out to nongovernment tenants on operating
leases with terms greater than 50
years)
• cash for operations - $37 million.
SPA expects to have total assets of $1.1
billion by 30 June 2011.
In comparison, by 30 June 2011 SPA’s
liabilities are projected to be $336 million.
The major liabilities will be:
• deferred income - $169 million
• land remediation provisions - $66
million
• non-current finance leases - $46
million
• make good provisions - $29 million
• current payables - $14 million.
As a result, SPA expects to have owner’s
equity of $762 million by 30 June 2011.
Detailed financial information is provided
in Appendix A.
MORE
COMMERCIAL
FOCUS
Since formation, we have grown rapidly
and it is now appropriate to review SPA’s
business model, including:
• SPA’s sources of revenue
• SPA’s services including those which
are mandated.
As the legislation will be reviewed in mid
2011, it is appropriate that SPA’s business
model be reviewed in 2010-11 to ensure
that it operates in a way that maximises
the efficiency and effectiveness of both
SPA and the resources entrusted to it by
the NSW Government. We believe that
the best way to achieve our goals is to
have a more commercial focus.
The review of SPA’s business model will
be in conjunction with NSW Treasury and
will include:
• analysing current and projected
services by client and market
• identifying those services where
clients are required to use SPA and
those which may be sourced from the
private sector
• ensuring that SPA remains compliant
with all relevant government policies
including;
20
- NSW Treasury’s pricing policies
- NSW Treasury’s commercialisation
policies
- the government’s competition
policies
- all relevant legislation including the
Trade Practices Act
• reviewing the cost of and
recommending prices for services
• determining the appropriate rate of
borrowing for new projects
• reviewing tax and dividend policies
• ensuring that SPA’s incentives
encourage the efficient and effective
allocation of government resources.
PROPOSED
REVIEWS
ACQUISITION AND
DISPOSAL PROCESS
SPA’s interaction with agencies and NSW
Treasury has matured and it is timely to
consider reforms to the acquisition and
disposal process. There are opportunities
to improve outcomes for government by,
for example, mandating SPA to acquire
and dispose of all generic government
assets on behalf of agencies. Currently,
agencies can seek these services from the
private sector. Under a revised mandate,
agencies would still be responsible for
developing their asset plans, with SPA’s
assistance, and SPA would assume
full responsibility for the acquisition
and disposal process. Agencies would
no longer need to allocate significant
resources to acquisition and disposal
activities. SPA could link these activities to
the Government Property Register.
Functions currently with the Property
Disposal and Acquisition Panel under
NSW Treasury may be better placed in
SPA. There is also opportunity to improve
the distribution of sales proceeds from
asset disposals
PRICING STRUCTURE
NEW PRICING STRUCTURE
A major outcome of the review of the
business model will be a review of SPA’s
prices for services. The revised prices will
better reflect costs and set incentives
that improve the efficient allocation of
resources.
CAPITAL EXPENDITURE
The business model review will also
examine the best way of managing
capital expenditure including:
• the appropriate mix of owned and
leased government properties
• the appropriate levels of capital
expenditure required to maintain the
state’s buildings
• the appropriate funding model for
small to medium, regular capital
projects
• the appropriate funding model for
large and infrequent capital projects.
BORROWING POWERS
SPA will also examine what level of
borrowing best ensures government’s
property services are provided at the
lowest cost. For example, if SPA is able to
borrow at cheaper rates than landlords, it
may be appropriate to accelerate building
projects by using borrowed funds. This
would allow government to move to
the optimal mix of owned and leased
properties as quickly as possible.
SPA PROJECTS
2010-11
CAPITAL PROGRAM
SPA is fully funded by way of government
contribution for its capital investments
which include major works such as the
construction of government office
buildings and asset renewal works. SPA is
also fully funded for all corporate
capital expenditure including information
and communication technology
requirements such as office equipment
renewals and major software
development. A $16 million office
building refurbishment program for
2009-10 is improving the quality of many
government buildings in city and regional
locations. Some of the works include
internal refurbishments, energy and
water efficiency improvements and new
tenant amenities.
In 2010-11, SPA’s approved capital
expenditure program will total $31.6
million. Of this amount, $30.1 million will
be spent on programmed refurbishment
of SPA’s office accommodation stock,
$1 million on improvements to the land
and foreshore areas of the Sydney Fish
Markets (plus $13.9m in 2011-12) and
$0.5 million on improving corporate
information technology and reporting
systems.
SUSTAINABILITY
As a key delivery agency identified in the
NSW Government’s Sustainability Policy,
SPA is taking a lead role in implementing
sustainability initiatives throughout its
owned and leased office portfolio to
meet the government’s sustainability
targets which require:
• all government owned or tenanted
buildings to obtain 4.5 star
environmental performance ratings
for both energy and water efficiency
by 1 July 2011
• a 15% reduction in water consumption
across all budget dependent agencies
• a return to 2000 level greenhouse gas
emissions by 2019-20.
SPA has developed a sustainability
strategy to implement actions under the
NSW Government Sustainability Policy.
We have already commenced four major
work streams under the strategy which
are as follows:
1. SPA portfolio – integration of
sustainability principles into SPA’s
operational portfolio management,
including delivery of responsibilities
under the Office Building Strategy,
such as NABERS ratings and the
development of Green Lease Schedules.
2. Internal operations – management of
corporate response to sustainability,
including Waste Reduction and
Purchasing Policy (WRAPP)
commitments and reporting.
21
3. Awareness and education – improving
SPA and client agency staff
understanding of sustainability
through training and communications.
4. Centre of excellence and influence
– introducing and integrating
sustainability into strategy and
decision making and into whole of
government processes for which SPA
is responsible.
REMEDIATION OF NELSON PARADE,
HUNTERS HILL
In 2009, SPA acquired property at
numbers 7 and 9 Nelson Parade, Hunters
Hill from the NSW Department of
Health. The department had previously
purchased the sites because testing
found radioactive readings in the soil
residues that posed an element of risk
to public health. These properties are
contaminated as a result of a uranium
processing plant which operated on
the site from 1911-1916. The plant
was run by the Radium Hill Company,
a commercial enterprise that no longer
exists. In 2009, SPA also acquired number
11 Nelson Parade from the department.
SPA is now responsible for remediating 7,
9 and 11 Nelson Parade and managing
the future sale of the sites. We are
working closely with the Department
of Environment, Climate Change and
Water, the NSW Department of Health,
the Department of Planning and NSW
Maritime to plan and manage the
remediation.
An experienced specialist contractor will
carry out the remediation works which
are scheduled to begin early 2011,
pending Environmental Assessment and
Remediation Action Plan approval.
22
VESTING OPPORTUNITIES
SPA continues to transfer ownership and
management of generic office assets
from government agencies under its
vesting program.
The focus of the vesting program from the
year 2010-11 will build upon three areas.
SPA will:
1. Continue the transfer of ownership
and management of assets from
government agencies, including
a focus on assets held by Public
Trading Enterprises but excluding
State Owned Corporations. Up to
400 assets have been identified for
2010-11.
2. Look at the vesting opportunities for
other classes of generic assets (such
as depots, warehouses and car parks)
from agencies and Public Trading
Enterprises. Up to 400 assets have
been identified for consideration.
3. Proceed with the transfer to SPA of
property titles from agencies that
cannot hold land in their own name.
In some cases the occupying agency
will have ongoing management
rights. This could deliver up to 200
assets to SPA.
PLANNED PROJECTS FROM
2010-11 ONWARDS
SPA has also identified an opportunity to
develop a multi-agency call centre facility
in the Newcastle CBD. We will work
closely with agencies to develop a plan
based on their office space and facility
requirements.
SYDNEY FISH MARKET
On 7 April 2010 the NSW Government
announced an upgrade to the Sydney
Fish Market with a funding injection
of $40 million, including $20 million
from government and $20 million from
Sydney Fish Market. The site will be
developed into a world class attraction,
creating more employment opportunities
and providing social benefits to the
community.
The site is owned by SPA, managed by
the Sydney Harbour Foreshore Authority
and leased to Sydney Fish Market. There
has been no significant capital investment
in the site since it was established in the
1960’s. The facilities are in poor condition
and there is limited access to the
foreshore. Around two million visitors
attend the markets each year.
The government’s contribution will
help to improve public areas outside
the market. This includes a new park,
boardwalk and dining areas. Works will
also include the construction of a new
multi-storey building and a new car park.
PARRAMATTA
Sydney Fish Market
NEWCASTLE
There are 34 NSW Government agencies
located within the Newcastle City Council
area, including 26 in the Newcastle CBD.
These agencies occupy almost 50,000
square metres of office space. SPA has
prepared a government real estate asset
strategy for Newcastle to address agency
long term office requirements and we
are reviewing options to provide office
accommodation in a more efficient and
cost effective manner.
In 2010-11 SPA will develop a preliminary
business case to address the office
accommodation needs of government
agencies in Newcastle CBD. We will
examine a range of options including
options for the existing government office
building in the CBD.
Government agencies occupy
approximately 180,000 square metres
of office space in Parramatta. This
represents about 27% of the commercial
office market in the area. The majority
of the space is leased from the private
sector. SPA is investigating long term
options for accommodating the large
number of government agencies in the
area. The existing Parramatta Justice
Precinct site has further development
potential of approximately 28,000
square metres of office space and we are
preparing a business case to examine this
potential.
The existing master plan for the site
is being reviewed. SPA will engage a
project manager to work in partnership
with Sydney Fish Market. A development
application will be lodged with work
expected to be completed by the end of
2012.
Newcastle
23
STATE EMERGENCY SERVICES
The State Emergency Services (SES)
headquarters and emergency response
centre in Wollongong is currently
based in leased accommodation. SPA is
working with the SES to identify suitable
alternative accommodation for when
the current lease expires. As this is a
critical government service, preference
is being given to a purpose built facility
on a government owned site. In 201011 SPA will develop a business case and
funding submission outlining our key
recommendations.
WAGGA WAGGA
Wagga Wagga is a growth centre for the
Riverina/Murray region and has around
24 government agencies occupying
approximately 15,000 square metres of
office accommodation. The existing
government office building does not
provide appropriate facilities for staff
or the public. It has no disabled access,
there is insufficient parking and the
building has security issues. SPA also
leases a building on behalf of another
six agencies, which does not meet
their operational needs. A case study
conducted by SPA recommended a
review of the future and best use of
the Wagga Wagga owned and leased
property and consideration of a possible
development project to meet the needs
of government and the community.
COFFS HARBOUR
Funding was recently granted to
commence planning activities for a new
Government Services Precinct in Coffs
Harbour. Coffs Harbour is a high growth
regional area which has a demonstrated
need for more appropriate and
centralised government accommodation.
The proposed precinct will incorporate
a police station, courthouse and office
accommodation. The total value of the
project, if approved, is expected to be
around $120 million. Current planning
activities include master planning
and concept design, and establishing
accommodation requirements.
WOLLONGONG
Wollongong is home to approximately 30
government agencies occupying around
25,000 square metres of office space.
The existing government owned office
building has security issues, a lack of
space and is not user friendly for staff or
the public. The site is also underutilised
and could potentially support a
development of around 47,000 square
metres. A study has shown that a master
plan is required to determine future and
best use of the site. This could result in a
redevelopment opportunity which would
better service the community.
PEAT ISLAND
SPA has been engaged to project
manage the decommissioning and future
management program for the Peat Island
mental health facility on the Central
Coast. The facility will close once all
residents have been relocated to a new
state-of-the-art facility in Wyong which is
currently being developed.
SPA is committed to taking into account
the needs of the local community
regarding future use of the facility. We
will undertake extensive community
consultation as part of the decision
making process.
SPA is currently working with several
government agencies to coordinate the
decommissioning program. In addition,
we are assisting to develop plans that
will facilitate and support the social,
historical, environmental and economic
needs of the site.
Old Police Station, Wagga Wagga
24
SHIRLEY ROAD, WOLLSTONECRAFT
STRICKLAND HOUSE
Shirley Road is a moderately sloping lot
facing Gore Cove with picturesque views
of the working harbour. It is currently
occupied by NSW Fisheries which has a
requirement to consolidate operations
and will release the site for consideration
of its future use.
Strickland House, a 35 hectare site on
Sydney Harbour at Vaucluse, boasts the
1835 heritage listed building Cararra
and offers a superior opportunity for
development. This magnificent heritage
site will be adaptively reused to ensure it
is maintained appropriately and in a way
that enhances its availability for public
access and preserves the site for future
generations.
SPA is looking to provide greater public
access to the site while at the same
time improve the amenity for harbour
users. As with most government owned
harbour sites, an important driver is
retaining public ownership and access.
BERRYS BAY
Following a public tender process,
SPA and NSW Maritime are finalising
commercial terms with a proponent to
develop a maritime precinct at Berrys
Bay on Sydney’s lower North Shore. The
precinct will include a boat repair and
storage facility as well as a marina and
associated retail facilities, and will open
up public access along the foreshore.
During 2010-11 SPA and NSW Maritime
will finalise a development application
for the precinct which will be placed on
public exhibition.
Strickland House, Vaucluse
Peat Island
SPA is in communication with the North
Sydney Council and the NSW Department
of Planning to ensure that appropriate
stakeholder interest is surveyed prior
to any development. Once the initial
consultation has taken place, SPA intends
to conduct wider community consultation
on any proposed uses of the site prior to
any future development.
Demolition to remove derelict and
contaminated buildings will be completed
in 2010. The site, currently used by
picnickers during the day and revellers
on New Year’s Eve and Australia Day,
will be put to the market for potential
commercial use while retaining public
access.
Community and stakeholder consultation
has commenced for the use of the site
and will be a prime consideration for its
future use.
25
REVIEW OF THE STATE
PROPERTY AUTHORITY
ACT 2006
The State Property Authority Act 2006
provides that the Act must be reviewed
in 2011. This will determine whether the
terms of the Act and policy objectives
currently meet the government’s
requirements. The review will:
• assess the effectiveness of the Act in
carrying out government objectives
• establish any need for change to
legislation and/or the property policy
framework
• determine the most effective means
of achieving the change
• conduct a cost benefit analysis of any
proposed change
• determine whether the change is
effective
THE ROAD
AHEAD
As SPA continues to achieve significant
property reform across government we
need the right support to help us to meet
our goals, both legislative and policy
driven. In 2011 SPA will conduct a review
of the State Property Authority Act 2006
and property policy framework to ensure
that they support the government’s
objective to improve operational
efficiencies in government property. Some
agencies have recognised that it is more
efficient for SPA to manage their entire
property portfolios and provide property
services on their behalf. The review will
identify any recommended changes to
legislation and government policy.
With the advent of the super-departments
in 2009, SPA can develop a long term
framework in collaboration with agencies
across agency clusters to improve
service and budget outcomes. SPA’s
strategic plan over the next five years
will focus on consolidating our role
as the government’s property expert,
continuing to vest government property,
implementing new service opportunities
and expanding our role to other asset
categories where efficiencies can be
achieved.
SPA will also need to review the balance
of leased and owned property in the
government portfolio. Over many years,
government policy has encouraged
leasing to provide more flexibility and
avoid demands on capital and to meet
the changing needs of government.
While a detailed analysis of the benefits
of owned versus leased assets is
conducted where significant office space
is needed, various studies conducted by
SPA have shown the benefits of sound
long term planning across agencies.
Government owned buildings provide
better value for money, mitigate the risks
of cyclical market forces and can address
market failure in smaller communities.
Government is a long term investor, and
by buying or developing property that
has the potential to decrease financial
risk and provide future investment
opportunities - effectively safeguarding its
property needs.
Our focus has also shifted from
maximising economic savings to a triple
bottom line approach – economic, social
and environmental benefits. Our strategic
plan will incorporate this approach, to
identify and measure the benefits from
our activities. This will apply to all future
developments and is also critical to our
sustainability goals and objectives.
• consult with all stakeholders
• make recommendations to
government.
The review will also consider SPA’s
achievements over the past five years and
identify our performance outcomes. It
will also identify any need to strengthen
our regulatory role and position SPA as a
key property agency within government.
SPA will conduct an internal review and
make recommendations on our current
performance as well as identify areas that
might require legislative or policy change
based on needs identified by clients, as
well as through our own studies.
26
27
ORGANISATION
DEVELOPMENT
TIMEFRAME
OUTCOME
Stage one
• Consolidate the portfolio and lift organisation performance
Stage three
• Complete the program of vesting generic office properties
• Continue the vesting program
• Implement recommendations from the Regional Strategy Program to reduce asset duplication and promote more efficient utilisation
• Continue agency reviews and centre studies
• Identify service needs and areas for improvement
• Review the State Property Authority Act 2006 and Property Policy Framework
• Be more involved in the identification and disposal of surplus assets
• Continue to implement the sustainability strategy
• Implement the Client Relationship Management Framework
Stage two
• Expand some services in response to government needs (and review of the Act and policy).
This might include:
-vesting additional generic assets such as depots, warehouses and car parks
28
1
2
-vesting generic assets of Public Trading Enterprises, excluding State Owned Corporations
-examine the potential of owning and managing fit outs
• Continue the roll out of agency reviews and centre studies outcomes
• Prioritise future centre studies and identify other opportunities (such as training facilities and data centres)
3
• Complete all property business plans
• Continue to expand services, for example the management of car parks, warehouses, depots and other assets as requested by agencies
Stage four
• Expand the agency review program to include non-generic assets such as schools and
residential housing
Stage five
• Consolidate changes and improve new services
• Implement strategies to ensure the government’s property portfolio meets the needs of agencies in a sustainable way
4
5
• Consolidate office facility services
29
APPENDIX A
INCOME STATEMENT
ACTUAL & PROJECTED RESULTS FOR THE PERIOD 2006-07 TO 2013-14
INCOME STATEMENT
2006-07 2007-08 2008-09 2009-10 2010-11 2011-12 2012-13 2013-14
Actual
Actual
Actual Forecast Budget Fwd Est Fwd Est Fwd Est
$’000
$’000
$’000
$’000
$’000
$’000
$’000
$’000
REVENUES
Rental Income
Owned Properties
0
58,699 81,336 76,263 79,554 84,435 85,540 90,888
Leased Properties
0 100,965 104,000 184,480 238,595 247,682 258,260 266,840
Fees for Services
7,497 4,417 3,055 3,432 4,438 4,059 4,211 4,380
Interest Income
2,833 6,918 4,330 3,337 3,738 1,787 0
0
Government Contributions
Recurrent
1,594 5,631 5,910 5,500 5,598 5,698 5,798 5,998
Capital
0
74,685 17,447 17,501 31,623 23,562 7,527 4,218
Other
0
1,850 2,200 2,600 3,100 3,700
4,400 5,150
TOTAL REVENUES
11,924 253,165 218,278 293,113 366,646 370,923 365,736 377,474
EXPENSES
Property Headlease Expenses
0
91,138 99,080 173,143 224,258 232,015 242,550 251,150
Other Property Expenses
0
15,920 19,238 20,582 20,283 20,355 21,017 21,863
Finance Costs
Finance Lease Liabilities
0
3,453 4,015 3,858 3,687 3,504 3,305 3,092
Land Remediation Liabilities
0
(8,407)
9,589 18,631 4,573 0
0
0
Depreciation & Amortisation
55 14,265 21,983 25,256 26,353 27,485 27,797 27,809
Capital Grants
0
0
0
1,054 0
0
0
0
Personnel Services Expenses
5,705 8,938 11,948 13,532 18,279 18,613 19,496 20,076
Other Operating Expenses
2,527 5,681 6,005 8,169 9,148 9,429 9,604 9,898
TOTAL EXPENSES
8,287 130,988 171,858 264,225 306,581 311,401 323,769 333,888
Gain/(Loss) on Disposal of Assets
Gain/(Loss) on Revaluation of Assets
(126)
0
16,759 (4,779)
0
2,094 (111)
0
525 0
551 0
579 0
608
0
NET SURPLUS
3,511 134,157 48,514 28,777 60,590 60,073 42,546 44,194
0
(74,685)
(17,447)
(17,501)
(31,623)
(23,562)
(7,527)
(4,218)
3,511 59,472 31,067 11,276 28,967 36,511 35,019 39,976
Less Government Capital Contributions
NET SURPLUS (UNDERLYING)
30
INCOME STATEMENT Cont.
2006-07 2007-08 2008-09 2009-10 2010-11 2011-12 2012-13 2013-14
Actual
Actual
Actual Forecast Budget Fwd Est Fwd Est Fwd Est
$’000
$’000
$’000
$’000
$’000
$’000
$’000
$’
RETAINED EARNINGS
Opening Balance
0 129,927 712,320 761,582 725,686 750,276 767,952 762,211
Net Surplus
3,511 134,157 48,514 28,777 60,590 60,073 42,546 44,194
Equity Transfers & Other Adjustments 128,270 521,991 39,783 33,003 0
0
0
0
Financial Distributions
Normal Dividend
0 (32,488) (39,035) (32,603) (36,000) (42,397) (48,287) (51,893)
Capital Repatriations
(1,854) (41,267)
0 (65,073)
0
0
0
0
CLOSING RETAINED EARNINGS
129,927 712,320 761,582 725,686 750,276
767,952 762,211 754,512
CAPITAL EXPENDITURE
Property Construction/Acquisition
0
64,960 12,987 0
1,000 13,930 0
0
Property Refurbishment
0
7,204 8,052 16,344 30,148 9,407 7,302
3,993
Other
105 2,521 579 1,157 475 225 225 225
TOTAL CAPITAL EXPENDITURE
105 74,685 21,618 17,501 31,623 23,562 7,527 4,218
31
APPENDIX B
BALANCE SHEET
ACTUAL & PROJECTED RESULTS FOR THE PERIOD 2006-07 TO 2013-14
BALANCE SHEET
2006-07 2007-08 2008-09 2009-10 2010-11 2011-12 2012-13 2013-14
Actual
Actual
Actual Forecast Budget Fwd Est Fwd Est Fwd Est
$’000
$’000
$’000
$’000
$’000
$’000
$’000
$’000
ASSETS
Current Assets
Cash
Operations
7,174 25,359 40,679 36,782 37,250 43,918 47,507 48,575
Land Remediation (Newcastle)
113,051 95,269 99,904 99,786 63,086 0
0
0
Receivables
Rental Debtors
0
4,184 5,048 6,756 2,200 2,150 2,150 3,650 Makegood Cost Recoverable
0
2,408 3,339 3,339 3,339 3,339 3,339 3,339
Other
11,074 12,189 12,222 9,282 10,163 9,769 10,494 25,383
Assets Held for Sale
0
0
75,795 0
0
0
0
0
Total Current Assets
131,299 139,409 236,987 155,945 116,038 59,176 63,490 80,947
BALANCE SHEET Cont.
2006-07 2007-08 2008-09 2009-10 2010-11 2011-12 2012-13 2013-14
Actual
Actual
Actual Forecast Budget Fwd Est Fwd Est Fwd Est
$’000
$’000
$’000
$’000
$’000
$’000
$’000
Non-Current Liabilities
Payables - Personnel Services
0
0
0
6,372 6,372 6,372 6,372 6,372
Finance Leases
0
52,576 50,430 48,113 45,762 43,076 40,177 36,862
Provisions
Land Remediation
76,133 82,765 76,352 61,358 0
0
0
0
Makegood Restoration
0
15,179 25,944 25,944 25,944 25,944 25,944
25,944 Employee Related
449 1,474 6,372 0
0
0
0
0
Other - Deferred Income
0 168,992 165,820 172,019 168,745 166,329 163,913 161,772
Total Non-Current Liabilities
76,582 320,986 324,918 313,806 246,823 241,721 236,406 230,950
TOTAL LIABILITIES
137,520 352,011 389,140 391,189 335,587 261,377 256,142 250,702
Non-Current Assets
Receivables - Makegood & Other
270 15,289 25,944 36,444 36,969 37,520 38,099 25,944
Property, Plant & Equipment
Land & Buildings
187,830 990,450 776,389 817,895 832,475 839,089 830,133 818,435 Finance Leases
0
92,633 81,793 76,345 70,648 64,706 58,508 52,055
Plant & Equipment
118 2,126 1,969 1,806 1,359 897 483 267
Investment Property
0
23,540 39,155 39,259 39,259 39,259 39,259 39,259
Intangibles & Other
40 251 466 1,151 1,085 652 351 277
Total Non-Current Assets
188,258 1,124,289 925,716 972,900 981,795 982,123 966,833 936,237
NET ASSETS
182,037 911,687 773,563 737,656 762,246 779,922 774,181 766,482
TOTAL ASSETS
EQUITY
Retained Earnings
129,927 712,320 761,582 725,686 750,276 767,952 762,211 754,512
Asset Revaluation Reserve
52,110 199,367 11,981 11,970 11,970 11,970 11,970 11,970
TOTAL EQUITY
182,037 911,687 773,563 737,656 762,246 779,922 774,181 766,482
319,557 1,263,698 1,162,703 1,128,845 1,097,833 1,041,299 1,030,323 1,017,184
LIABILITIES
Current Liabilities
Payables - Trade Creditors
20,342 19,008 30,729 16,905 12,405 8,918 9,517 9,158
Payables - Personnel Services
0
0
0
1,194 1,316 1,427 1,552 1,696
Finance Leases
0
1,989 2,146 2,317 2,500 2,698 2,912 3,143
Provisions
Land Remediation
37,347 1,137 20,743 50,354 65,930 0
0
0
Makegood Restoration
0
2,408 3,339 3,339 3,339 3,339 3,339 3,339 Employee Related
3,249 3,311 4,093 0
0
0
0
0
Other - Deferred Income
0
3,172 3,172 3,274 3,274 3,274 2,416 2,416
Total Current Liabilities
60,938 31,025 64,222 77,383 88,764 19,656 19,736 19,752 32
33
APPENDIX C
APPENDIX D
CASH FLOW STATEMENT
ORGANISATION CHART
ACTUAL & PROJECTED RESULTS FOR THE PERIOD 2006-07 TO 2013-14
CASH FLOW STATEMENT
2006-07 2007-08 2008-09 2009-10 2010-11 2011-12 2012-13 2013-14
Actual
Actual
Actual Forecast Budget Fwd Est Fwd Est Fwd Est
$’000
$’000
$’000
$’000
$’000
$’000
$’000
$’000
CASH FLOW FROM OPERATING ACTIVITIES
Payments
Personnel Services Payments
(6,630)
(9,656) (11,985) (13,460) (18,144) (18,489) (19,358) (19,918)
Land Remediation
(11,567) (24,758)
(1,637)
(4,014) (50,355) (65,930)
0
0
Property and Other Payments
(3,804) (130,565) (130,328) (233,288) (264,757) (267,942) (278,311) (290,110
Total Payments
(22,001) (164,979) (143,950) (250,762) (333,256) (352,361) (297,669) (310,028)
Receipts
Rental Income
0 163,259 179,146 266,297 319,251 325,415 338,988 352,611 Interest on Land Remediations Funds 3,842 6,976 6,272 2,999 3,737 3,167 549 0
Fees for Services and Other
13,670 5,804 15,464 3,432 4,438 4,059 4,211 4,380
Total Receipts
17,512 176,039 200,882 272,728 327,426 332,641 343,748 356,991
Cash Flows From Government
State Government Contributions
1,594 79,636 24,037 23,001 37,221 29,260 13,325 10,216
Net Cash Flows From Government 1,594 79,636 24,037 23,001 37,221 29,260 13,325 10,216
NET CASH FLOW FROM OPERATING (2,895)
90,696 80,969 44,967 31,391 9,540 59,404 1,749 (35,082)
(21,967)
48,694 (31,623)
(23,561)
(7,528)
General Manager
State Property Authority
Executive Asst
Manager, Corporate
Communications
Executive Officer
Corporate
Management
Executive Director
Divestments,
Acquisitions &
Developments
Commercial
Transactions
(Acquisitions &
Divestments)
Project
Development
Executive Director
Planning & Strategy
Group
Strategy &
Analysis
Review
Total Asset
Management
Planning
Executive Director
Portfolio
Management Group
Regional
Portfolio
Management
Portfolio
Services
Manager
Legal Services
Director
Finance &
Information
Systems
NSW
Police Force
Portfolio
Manager
Human Resources
57,179
CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of PP&E
(105) (76,349) (21,967) (17,173) (31,623) (23,561)
(7,528)
(4,218)
Proceeds from Assets Sales
1,854 41,267 0 65,867 0
0
0
0
NET CASH FLOW FROM INVESTING
State Property Authority
Senior Management
Finance &
Accounting
Business
Services
Information
Systems
(4,218)
CASH FLOWS FROM FINANCING ACTIVITIES
Financial Distributions to the
State Government
0 (75,597) (39,047) (97,676) (36,000) (42,397) (48,287) (51,893)
NET CASH FLOW FROM INVESTING
0
(75,597)
(39,047)
(97,676)
(36,000)
(42,397)
(48,287)
(51,893)
NET INCREASE/(DECREASE) IN CASH (1,146)
(19,983)
19,955 (4,015)
(36,232)
(56,418)
3,589 1,068
OPENING CASH BALANCE
0 120,225 120,628 140,583 136,568 100,336 43,918 47,507
Cash Transfers due to
Administrative Restructuring
121,371 20,386 0
0
0
0
0
0
CLOSING CASH BALANCE
34
120,225 120,628 140,583 136,568 100,336 43,918 47,507 48,575
35
NOTES
36
NOTES
37
38