Real Estate and Leasing Services

Melissa Milburn, Director August 29, 2017

SERVICES • Inventory of State Property. • Leasing Services.

– Space Leases. – Surface Leases. – OMES managed building leases.

• Acquisition and Disposal Services.

• Mineral Interests.

• Easements.

• Continuing Contract Management.

The act required OMES to create a comprehensive list of all of the property owned or leased by the state. The inventory list is published online. THE REPORT INCLUDES: • Real Property Inventory List. • Transportation & Turnpike Rights-of-

Way. • Report of Underutilized Properties. • Report of 5% Most Underutilized

Properties. • Mineral Interests. • Numbers At-A-Glance. • Agency Profiles. • County Profiles. • Highlighted Properties. • Personal Property Inventory.

Inventory of State Assets

Numbers At-A-Glance

* museums, sheds, pole barns, turnpike toll booths, salt sheds, maintenance buildings, boat slips, residential houses, fish hatchery buildings, check stations, restrooms, etc.

Numbers At-A-Glance

* Aeronautics to the Tax Commission

TOP TEN AGENCIES WITH THE MOST OWNED AND LEASED BUILDINGS AND STRUCTURES

Inventory of State Assets

• Benefits: – Transparent – Source of information for other sections of OMES and

other sections of government. – Foundation information for long term asset management. – Users can manipulate the data on ok.gov for specific

information. – Allow OMES to identify available or underutilized space. – Assists with identifying underutilized properties for

disposal. – Funding some capital projects.

FUNDING CAPITAL PROJECTS • Lexington Assessment and Reception Center – cell doors,

frames and locks replacement. • DPS Administration Building – parking lot repairs.

• Kate Barnard Correctional Center - roof replacement. • Mabel Bassett Correctional Center – roof replacement.

ACT EXEMPTIONS • Exemptions to the Inventory of State Assets (62 O.S. § 908):

– Oklahoma Ordnance Works Authority. – Commissioners of the Land Office

• Exemptions from Maintenance of State Buildings Revolving Fund and OMES and LRCPC

authority over real property (74 O.S. § 61.8): – Oklahoma Ordnance Works Authority. – Commissioners of the Land Office. – Department of Transportation. – Turnpike Authority.

• Exemptions from OMES oversight of real property disposal or acquisition process (61 O.S. §

327): – Oklahoma Ordnance Works Authority. – Commissioners of the Land Office. – Northeast Oklahoma Public Facilities Authority. – Oklahoma Historical Society. – Department of Transportation. – Turnpike Authority. – School Boards.

STATE LEASING PROGRAM • 1984 Study • Rules were created in 1989 and have been

updated. • Benefits of the program include:

– Standard Lease Agreement with beneficial terms.

• 30 days cancellation on most leases – Leverage buying power of the state to create a

savings for all user agencies. Seen as one large company.

– Ensure that procured space is the best value for the user agency.

– Lower rates. – Space and management consistency.

STATE LEASING PROGRAM • Use state space first whenever available and to maximize utilization.

• Collocate whenever possible to take advantage of IT savings.

• Lease from other public entities if possible when state space is not

available and collocation is not an option.

• Provide adequate space to satisfy appropriate functional and locational requirements for state programs and the best balance of quality and cost.

• Reduce the state’s leased footprint.

• Consider total space cost in all space decisions.

• Maintain fair and consistent guidelines.

STATE LEASING PROGRAM • OMES manages 2.5 million square feet

of state space - primarily leased to state agencies.

• OMES manages the leases for another 2.3 million square feet of space leased from the private sector and other public entities.

• 601 Active Lease Agreements

STATE LEASING PROGRAM • Process

– Certification from the Governmental Technology Applications Review Board (GTARB) that the space need could not be eliminated or reduced through telework, an agency submits a Space Request to REALS.

– Space Request completed by agency. – OMES reviews and approves or denies. – OMES checks for availability of state space. – If state space is not available.

• Agency is authorized to begin searching for space. – County – City – Federal – Private sector

• Agency selects space. • Agency negotiates rate and terms. • Agency submits selected space to OMES.

– OMES approves, denies or further negotiates. – Lease is drafted & executed.

LEASING OBJECTIVES • Use state space first whenever available and to maximize

utilization. – Lease – Sublease

• Collocate whenever possible to take advantage of IT savings. • Lease from other public entities if possible when state space is

not available and collocation is not an option. • Provide adequate space to satisfy appropriate functional and

locational requirements for state programs and the best balance of quality and cost.

• Reduce the state’s leased footprint. • Consider total space cost in all space decisions. • Maintain fair and consistent guidelines.

SPACE REDUCTIONS 74 O.S. §61.8. By February 1 of each year, OMES shall publish a report listing properties sold, space reductions, and funds and expenditures from the Maintenance of State Buildings Revolving Fund.

• 2013

o Reduction in privately leased space– 103,060 square feet. o Moved to state-owned space - 17,730 square feet. o Estimated savings from private leases $1,133,660.00 annually.

• 2014 o Reduction in privately leased space – 40,923 square feet. o Moved to state-owned space – 8,886 square feet. o Estimated savings from private leases $531,465.00 annually.

• 2015 o Reduction in privately leased space – 37,700 square feet. o Moved to state-owned space – 73,620 square feet. o Estimated savings from private leases $1,046,859.00 annually.

• 2016 o Reduction in privately leased space – 362,339 square feet. o Moved to state-owned space – 28,036 square feet. o Estimated savings from private leases - $4,009,645.75 annually.

STATE AGENCIES EXEMPT FROM LEASING PROCESS

• Department of Human Services - county office leases only. (2000 OK AG 49 - DHS county offices exempt from oversight of DCS)

• Department of Public Safety – interagency or interlocal agreements only. (47 O.S. § 2-108 DPS may enter into agreements with another government agency or any state educational institution).

• Department of Corrections – private prisons only. (57 O.S. § 561) • Constitutionally created colleges and universities. Notes: 74 O.S. § 61.8 provides separate requirement that all leases be approved by OMES. Legal guidance is sought on a case by case basis for interpretation of whether a specific exemption is trumped by this statute or provides sufficient specificity to be interpreted as prevailing.

TYPES OF DISPOSAL O.S. 61 §327. Unless procedures for state agency real property transactions are otherwise specifically provided by for law, no state agency shall sell, lease, exchange, or otherwise dispose of property… except as provided for in this section.

• Public Auction or Sealed Bid Auction. • Request for Proposal.

– Historic. – State Capitol Complex. – Located within a campus owned

by the state. • Liquidation.

– Must be approved for liquidation by LRCPC.

– Two unsuccessful sealed bid or public auctions.

• Interagency or interlocal transfer

SALE PROCEEDS DEDICATED TO A PROJECT

• By statute, sale proceeds go into the Maintenance of State Buildings Revolving Fund. The pooling of funds allows OMES Planning and the LRCPC to prioritize the capital projects and approve the highest priority projects first.

• Special exceptions may be made in emergencies or when there are critical for a project.

MINERALS, EASEMENTS, AND SURFACE AGREEMENTS

• Minerals. – 72 active leases.

• Easements. – 259 active easements.

• Surface Leases. – 20 active leases.

3031 N 32ND MUSKOGEE, OKLAHOMA

• 4,872 total square feet with highway frontage. • Formerly a motel, this property is owned and operated by the Department

of Corrections for a Probation and Parole Office. • Property includes office and storage space on 3 acres of land. • Estimated Value: $336,375.00.

3031 N 32ND MUSKOGEE, OKLAHOMA

3031 N 32ND MUSKOGEE, OKLAHOMA

• Current Value: $336,375 • Current Estimated Annual Cost: $38,976 • Estimated Future Annual Rental Cost: $48,000 • Estimated Annual Difference: $9,024 increase

• Estimated deferred maintenance costs: $40,000 • Cost of the sale: $ 8,000 • Cost of moving: $46,000

WORKING WITH CITY AND COUNTY • 74 O.S. § 74.1 establishes the priority in assigning space (state owned, county or municipal

owned, public trust or building authority owned, private vendor owned.

• OMES and state agencies work with the local governments in many locations. – 31 leases with the county and 32 with cities and municipalities.

• 20% of DHS leased locations are located with Political Subdivisions/County Offices. 12% of DPS

leased locations are location with Political Subdivisions/County offices.

• Agencies with extensive history of working with political subdivisions: – Department of Human Services. – Department of Public Safety. – Department of Corrections. – Oklahoma State Bureau of Investigation. – Office of Juvenile Affairs.

• In many cases, cities and counties have asked state agencies to vacate as their own space needs

have grown.

BETTER PARTNER WITH OUR CITIES AND COUNTIES

• Meet with city and county officials when considering space in their area.

• Host a seminar on how to lease space to the state. • Develop a special lease for the cities and counties. • Request a list of available properties. • Explore potentially synergistic connections between

divisions of the state and divisions of local government. • Assist local governments in signing up for ok.gov

notices when the state needs space or is offering space for sale or lease.