Item 10: Property Asset Management Plan

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Item 10: Property Asset Management Plan Item: 10 Asset Management Sub-committee: 7 November 2019. Property Asset Management Plan. Report by Executive Director of Corporate Services. 1. Purpose of Report To consider the draft Property Asset Management Plan 2019 to 2023. 2. Recommendations The Sub-committee is invited to note: 2.1. That, on 2 June 2016, the Asset Management Sub-committee recommended that the Property Asset Management Plan, covering the period 2016 to 2019, be approved. 2.2. That the Property Asset Management Plan has been revised and updated to cover the period 2019 to 2023. It is recommended: 2.3. That the Property Asset Management Plan, attached as Appendix 1 to this report, be approved. 3. Introduction 3.1. At its meeting held on 2 June 2016, the Asset Management Sub-committee noted: 3.1.1. That, in March 2015, the Sub-committee noted that work had commenced on individual Asset Category Plans that came under the umbrella of the Corporate Asset Management Plan. 3.1.2 That the Council currently had 217 operational properties and 196 non-operational properties, as detailed in section 5 of the report by the Executive Director of Corporate Services. Page 1. 3.1.3. That the Council currently spent £7.96 million per annum on operational and non- operational property, which was increasing year on year. 3.1.4. That the Change Programme had identified property asset management as a key area for review to identify and deliver revenue savings. 3.1.5. That development of a corporate approach to property asset management would lead to efficiencies and service improvements. 3.1.6. The draft Property Asset Management Plan, attached as Appendix 1 to the report by the Executive Director of Corporate Services, which covered the Council’s operational and non-operational property. 3.1.7. That a community asset transfer policy, to support property asset management and community empowerment objectives, would be developed once the Community Empowerment (Scotland) Act 2015 came into effect, anticipated to be late 2016. 3.2. The Sub-committee recommended that the Property Asset Management Plan, attached as Appendix 1 to the Minute, be approved. 4. Property Asset Management Plan 2019 to 2023 4.1. The development of a corporate approach to asset management planning will lead to efficiencies in the use of fixed assets, together with the potential for rationalisation of the Council’s property estate going forward. 4.2. A process of property data review and validation was undertaken prior to the development of the draft Property Asset Management Plan 2019 to 2023, attached as Appendix 1 to this report. 4.3. The Council has 226 operational properties, that is properties from which services are delivered. This includes 196 buildings with a gross internal area of 134,110m2. 13 operational properties are leased from the private sector at an annual cost of £54,364.56. These properties range from ground leases, office accommodation, industrial units and residential care facilities. Page 2. 4.4. The Council spends £7.64 million per annum on operational property, which includes £1.32 million for repairs and maintenance, £2.42 million on rates and £2.12 million on utilities (water, electricity, oil etc). 4.5. The Council’s operational property portfolio is currently valued at £188.53 million. 4.6. The Council has 170 non-operational properties, that is property which is not used for the delivery of services. This includes 86 buildings with a gross internal area of 37,006m2 and 84 land assets. 76 non-operational land and property assets are leased out, or are available for lease, and generate an investment income for the Council. 4.7. The Council’s non-operational property portfolio generates an income of approximately £1.55 million per annum but the portfolio requires frequent expenditure on repairs and maintenance and capital improvements to sustain property in a condition fit for lease to third parties. 4.8. The Council spends £0.47 million on non-operational property, which includes £0.18 million on repairs and maintenance, £0.107 million on rates and £0.13 million on utilities (water, electricity, oil etc). 4.9. The Council’s non-operational property portfolio is currently valued at £21.37 million. 4.10. The total expenditure on operational and non-operational property is approximately £8.1 million per annum. Additional revenue costs are incurred where new build projects become operational but the old, replaced asset has not yet been disposed of. 5. Equalities Impact An Equality Impact Assessment has been undertaken and is attached as Appendix 2 to this report. 6. Corporate Governance This report relates to governance and procedural issues and therefore does not directly support and contribute to improved outcomes for communities as outlined in the Council Plan and the Local Outcomes Improvement Plan Page 3. 7. Financial Implications 7.1. The draft Property Asset Management Plan provides an analysis of the physical and financial performance of the Council’s property portfolio which has been assessed at a total revenue cost of £7.64 million per annum. The annual cost varies from year to year and it is understood that financial year 2018 to 2019 has been used as the most accurate guide to the total capital and revenue expenditure on property. 7.2. On the basis that these costings have been developed in isolation and not reconciled back to the financial management system it has not been possible to verify any of the figures set out in the Property Asset Management Plan including property costs, asset numbers or values. 7.2.1. By way of example, the property costs for General Fund Services amounted to £9.6 million in total for financial year 2018 to 2019. This would include both operational and non-operational properties, but also community assets, such as open spaces, and infrastructure assets, such as the roads network, which may have been excluded from this plan. Property costs for fixed assets held within trading accounts and including investment properties held on the Strategic Reserve Fund, would be additional to this. 7.3. The draft Property Asset Management Plan makes some reference to reductions in property costs being realised at a corporate level but has yet to develop the reporting of this information at a service level and in the context of established budgets for property costs. It is anticipated that such an outcome can only be achieved once asset management plans are fully developed for each property related asset class going forward. 8. Legal Aspects Regularly reviewing and updating the corporate Property Asset Management Plan helps the Council meet its obligations to secure best value. 9. Contact Officers Gillian Morrison, Executive Director of Corporate Services, extension 2103, Email [email protected]. Hayley Green, Head of IT and Facilities, extension 2309, Email [email protected]. Graeme Christie, Estates Manager, extension 2303, Email [email protected]. Page 4. 10. Appendices Appendix 1: Draft Property Asset Management Plan 2019 to 2023. Appendix 2: Equality Impact Assessment. Page 5. Property Asset Management Plan Strategy, Framework and Action Plan 2019 to 2023 Corporate Services, Council Offices, School Place, Kirkwall, Orkney, KW15 1NY V1 – October 2019 DRAFT VERSION Contents 1. Executive Summary ................................................................................................................... 3 2. Introduction ............................................................................................................................... 4 3. A Corporate Approach To Property Asset Management .......................................................... 4 3.1 Property Data ................................................................................................................. 5 3.2 Strategic Overview ......................................................................................................... 5 3.3 Governance .................................................................................................................... 5 3.4 A Corporate Approach to Property Asset Management ................................................ 6 3.5 Effective Property Asset Management .......................................................................... 6 3.6 Defining the Decision Making Process ........................................................................... 7 4. Asset Management ................................................................................................................... 8 4.1 Approach to Property Asset Management .................................................................... 8 4.2 Operational Property ..................................................................................................... 8 4.3 Non-operational Property ............................................................................................ 10 4.4 Surplus Property ........................................................................................................... 12 5. Current Property Asset Performance ...................................................................................... 12 5.1 Energy Performance ..................................................................................................... 12 5.2 Condition ...................................................................................................................... 13 5.3 Suitability .....................................................................................................................
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