PUBLIC SECTOR PROPERTY ASSET MANAGEMENT

Policy, strategy and implementation: discontinuity of interest at the operational

level − Case study of Budapest"

PAL BAROSS FRICSAssistant to the Deputy Mayor for

Municipal Finance and Assets BUDAPEST MUNICIPALITY

The „British experience”

THE POLICY PROPOSITION

MAGNITUDE OF ALLOCATION TO FUNCTIONS

MY „PAST” AS A DEVELOPER

MY OFFICE PROJECT

OFFICE ENVIRONMENT

MY „PRESENT” AS A PUBLIC EMPLOYEE

“all and all it is just another brick in the wall...” Pink Floyd

WHAT BUDAPEST CITY OWNS – AND WHY?

1. Land and buildings used to deliver a direct service to the public – for example, schools, health centers, elderly persons’ homes, residential units, public parks, cemeteries, …..

2. Those that support service delivery in some way – most notably the town hall and other local administrative offices, vehicle depots…...

3. ‘Non-operational’ property – that is, property which is not used for, or in support of, mainstream service delivery. This includes commercial and industrial property and surplus property awaiting sale

4. Infrastructure companies….. and their property assets

WHAT DO WE OWN?• In terms of property types? (schools, libraries,

swimming pools, community halls, leisure centers, office space, industrial space, flats, theatres, movie halls, hospitals, health centers …) NO IDEA

• In terms of values (price, operating costs, efficiency of use, environmental footprint..) NO IDEA

• In terms of legal structure of holding (freehold, condominium, contested ownership, rent…) NO IDEA

• In terms of budget allocation within the overal municipal budget what realistic savings to be achieved from rationalization, disposal or redevelopment. NO IDEA

WHO MANAGES IT?

• There is a fragmented management structure of companies, agencies, committees, institutions, departments with un-transparent budgets, non-existent benchmarks, ad-hock decisions about use, disposal or refurbishment.

WE HAVE NO IDEA HOW MUCH RESOURCES ARE TIED UP IN THE BUDAPEST MUNICIPAL PROPERTY PORTFOLIO

OUR APPROACH

PRIORITIES:1. CREATE A MANAGEMENT INFORMATION CENTERD

PROPERTY INFORMATION SYSTEM (CADASTER)2. USE PROPERTY AS A SUPPORT FOR SERVICE DELIVERY3. CONSOLIDATE PROPERTY MANAGEMENT FUNCTION

IN A SINGLE ORGANISATION4. ALL FUTURE RUNNING, MAINTENANCE,

REFURBISHMENT OR DEVELOPMENT DECISIONS WILL BE BENCHMATKED AGAINST „ECOLOGICAL FOOTPRINT”

Dr. Gabor Bagdy MRICS, Deputy Mayor for Budget and Assets, Budapest

OUR BUSINESS DISCILPINE

Asset management includes strategic considerations as well as a range of property services.

STRATEGIC ISSUES•ACCOMODATION REVIEW AND SPACE MANAGEMENT•PROPERTY INFORMATION•BUDGET MANAGEMENT•ENERGY MANAGEMENT

PROPERTY SERVICES•LEASE MANAGEMENT•BUILDING MAINATENANCE•VALUATION

AQUISITIONDISPOSAL

REFURBISHMENT

ASSET KADASTER

CORE ASSET DATA

SITE

BUILDING

TENANT AREA

ADDITIONAL DATA

VALUATION

CONDITION SURVEY

RUNNING COSTS

OCCUPANT(S)

LEASE TERM(S)

SPACE USE BENCHMARK

ENERGY USE BENCHMARK

USER DEMAND FOR IMPROVEMENT

ANNUAL PROPERTY REVIEW1. PROPERTY COSTS

2. PROPERTY REVENUES

3. INVESTMENT BUDGET

4. DISPOSAL REVENUES

SIGNIFICANT ASSET ISSUES

PHYSICAL UPKEEP

VALUECASHFLOW

FIT FOR PURPOSE

SUSTAINABILITY

USER/OCCUPIER

WHERE TO PUT THE EMPHASIS

THE REAL ESTATE ASSET

SERVICE ORIENTED STRATEGY BUSINESS ORIENTED STRATEGY

OBLIGATORY VOLUNTARY BUSINESS VACANT

PHYSICAL UPKEEP FIT FOR PURPOSE CASHFLOW MARKET VALUE SUSTAINABILITY

A building fit for the purpose, in the right location for users, can make the difference between a good and a poor service.

THE NEW MANTRA

THE THEATRE PORTFOLIO

OWNERSHIP

UPKEEP OBLIGATIONS

OCCUPANNCY RIGHT

USER MANAGED MODEL

MUNICIPALITY PUBLIC COMPANY THEATRE

ASSET OWNER

ASSET MANAGER

ASSET USER

NO PROPERTY RENT + SUBSIDY FOR PROPERTY OPERATIONS

„QUASY” ASSET MANAGER MODEL

MUNICIPALITY PUBLIC COMPANY THEATRE

ASSET OWNER

ASSET MANAGER

ASSET USER

PROPERTY RENT + MORE SUBSIDY FOR OPERATIONS