Testimony of Robin-Eve Jasper
Director
Office of Property Management
Adrian M. Fenty
Mayor
COMMITTEE ON GOVERNMENT OPERATIONS AND THE ENVIRONMENT
Councilmember Mary Cheh, Chairperson
Monday, April 6, 2009
4 pm
Room 412
Council Chamber
John A. Wilson Building
1350 Pennsylvania Avenue, NW
Washington, DC 20004-3003
Good morning Chairperson Cheh and members of the Committee on Government Operations and the Environment. I am Robin-Eve Jasper, Director of the Office of Property Management and I thank you for the opportunity to testify today on the Office of Property Management Fiscal Year 2010 proposed budget.
The Office of Property Management is pleased to present a Fiscal Year 2010 budget that maximizes value to the District government, supports our mission and improves operational efficiency throughout the agency and property inventory. I will highlight certain aspects of the FY 2010 budget in my testimony and will also summarize the process by which OPM assessed agency fixed costs, a critical element of the District’s budget.
Supporting Our Mission
The mission of the Office of Property Management is broken down into four components:
- Strategically manage the District’s owned and leased real estate assets in support of District agency clients and District residents;
- Providing clean and welcoming environments for District agency workers and residents doing business with the District government;
- Building and repairing capital facilities to meet the District’s needs; and
- Creating an atmosphere of safety in District agency facilities for all government employees and residents.
The Fiscal Year 2010 budget provides the necessary funding to achieve our mission and address critical issues facing OPM and District agencies in Fiscal Year 2010 and in the future. OPM anticipates that when finalized in the June budget book, OPM’s Fiscal Year 2010 gross operating budget will be approximately two percent higher than Fiscal Year 2009. OPM’s ability to keep the District’s occupancy and property related costs so close to prior year levels is worthy of mention. Maintaining overall expenditure levels during a period of rising costs, both in rent and in property operating costs, is a testament to the hard work done by agency staff to assure the efficient use of space and other resources during a period of significant challenge and change.
Let me describe what I mean by a period of challenge and change. Some Committee members may know that the District government is currently facing a large number of lease expirations. This bulge in expirations results from the fact that many of the District’s office leases were established during the Control Board era. Now fast forward ten years. In the period from calendar year 2008 through 2010, leases representing roughly 1.9 million square feet of office and warehouse space have expired or will expire. As a rough estimate, we are talking about office lease expirations affecting in the neighborhood of 8,000 to 10,000 District employees. As you can imagine this situation presents both challenge and opportunity. OPM has seized the opportunity by creating new Workplace Design Guidelines, implementing disciplined programming processes for all affected agencies, and going back through the District’s owned space inventory to assure that wherever feasible we are putting that inventory to good use. Several items in OPM’s budget are best understood in the context of this situation. For example, $7,646,000 is budgeted to assist to support agency moves. Additionally, OPM has increased the number of Asset Management staff and is taking advantage of current opportunities to hire highly-qualified real estate professionals to assist in this tidal-wave of work. Our ability to absorb rising lease costs within current economic and budgetary constraints has been improved by OPM’s success in terminating leases representing 322,450 square feet of space to date.
The Fiscal Year 2010 budget also includes for new projects intended to improve the operation of District-owned assets; such as energy management upgrades at District buildings. And we are working closely with the District Department of the Environment, the Office of the City Administrator, and other District agencies to identify additional Federal stimulus dollars to implement additional energy conservation efforts. These investments are being selected for their ability to yield long-term savings for the District.
Additionally, OPM’s Construction Division is conducting a city-wide facility assessment to identify critical building needs and preventative maintenance requirements. This will help OPM anticipate such needs and address them in a proactive way. The alternative, namely, waiting for equipment and building systems to fail, is both more expensive to correct and disruptive to the work of the District government. Significantly, building systems that are not operating as designed because of relatively minor maintenance issues can lead to substantial and unnecessary increased energy costs. OPM is already aware that such conditions exist in several District-owned buildings and is planning to undertake corrective action.
On the capital side we are pursuing the same goals of effectively deploying District-owned assets to address agency space needs, manage energy consumption and contribute to making the District government an example of significant and successful green construction and facilities management practices. Important examples of this focus are initiatives to repurpose closed schools for energy use and the project to renovate the historic Daly Building at 300 Indiana Ave, NW to house headquarters functions for various public safety agencies. Funding for this project will be available in Fiscal Year 2012 and OPM is exploring various options to accelerate planning and design to the maximum extent possible.
Another area in which OPM has been able to reduce operating costs without diminishing effectiveness is in the area of guard services purchased through the Protective Services Division (PSD). Over the last several months, under the leadership of Chief Cannon, OPM took a hard look to determine whether the District’s security dollars were being spent wisely. In consultation with the Metropolitan Police Department, OPM’s Protective Services Division conducted site-by-site security assessments to understand whether spending on security was actually improving the safety of District employees and customers – or whether it was merely creating a perception of safety. As a result of those assessments, redundancies in service were eliminated, contract services are being more closely monitored, and technology is being implemented whenever possible. In Fiscal Year 2008, OPM spent approximately $41 million on protective services. In Fiscal Year 2010, OPM is now forecasting that the Protective Services Division cost will be in the neighborhood of $27 million. Recognizing the excellent work now being done by the Protective Services Division, the Fiscal Year 2010 budget includes funding for seven additional PSD staff to assist in the provision of security services at certain District Public Libraries.
Improving OPM Operations
As a whole, OPM will achieve savings in Local and Special Purpose Revenue Funds in Fiscal Year 2010 while enhancing the quality of service to District agencies. As noted above, OPM is taking advantage of the current economic climate and is hiring highly-qualified real estate and construction professionals who might not otherwise be as interested in District employment. This is helping OPM to implement a variety of best practices that reflect current real estate industry standards, save money on upcoming moves, and to further professionalize construction and lease management. Together, these initiatives enable OPM to "do more with less," ensuring accountability and proactive planning for future needs.
OPM is also implementing new systems to manage activities and data in several critical areas including capital projects, preventative maintenance, building service requests, energy consumption, and lease and fixed cost reporting. In the area of fixed costs our goal is to provide agencies with a dashboard-style interface that will give them real time information about costs and lease obligations.
Taken together all of these efforts and others being undertaken by OPM will enable the District to reduce costs associated with District agency occupancy and improve the quality of District workplaces for District employees, customers and visitors.
Fixed Costs
When discussing OPM’s budget, a frequent question is “how does the District assess fixed costs for client agencies?” There are nine separate categories of cost included in the fixed cost allocations. They include: rent, security, occupancy, janitorial services, electricity, fuel, gas, steam, and water and sewer costs. OPM has spent the last several months scrubbing the budgeted and actual costs for seventy (70) agencies and has vastly improved our ability to tie our fixed cost allocations to actual historic and sensibly projected use. In the context of the more than $270 million citywide fixed cost budget, we are confident that the Fiscal Year 2010 fixed cost budget is the most accurate budget ever presented.
Elements of fixed costs relating to utility consumption; namely, electricity, gas, steam, fuel and water and sewer costs are allocated based on actual historic use and, in multi-tenant buildings, assigned ratably based on building occupancy. In Fiscal Year 2010, we have anticipated that conservation efforts will yield a small reduction in consumption and that there will also be modest increases in unit cost. The elements and methodologies used in determining rent, security, occupancy and janitorial costs can be described as follows.
Rent is a cost generated from leasing non-District Government owned buildings. Rent is comprised of four individual components: base rent, operating expenses, real estate tax and parking. Each one of these four charges is unique to the terms and conditions of the lease agreement with the landlord. For the purposes of the Fiscal Year 2010 fixed cost budget if the building is leased by one agency then that agency bears the burden of the total cost. If the building is occupied by multiple agencies then the cost for all four categories is prorated based on occupied square footage. Parking is usually charged per parking space.
Security service is defined as all components that contribute to the protection of and law enforcement at District owned and leased properties. The costs are broken down in four ways: patrol operations, contract security guard management, electronic access control/security systems, and the indirect costs including equipment, training, management oversight, etc required to accomplish facility-related security goals. The level and type of security services provided is determined through an assessment completed by the Protective Services Division of OPM with input from the District agencies occupying the various properties. The Fiscal Year 2010 security budget is built around these four security elements. In all cases where a building is owned or occupied by multiple tenants, the costs associated with the property is prorated according to occupancy.
Occupancy includes the basic costs to operate the building, such as: elevator maintenance, fire alarm, landscape, air quality, pest control, HVAC, electrical repairs, other repairs and maintenance, water treatment and salary expense. These costs are determined in-part by in place contracts with third party providers such as elevator and HVAC, while others costs are determined by the needs of the building as well as actual expenditures. For the purposes of the Fiscal Year 2010 Budget, occupancy costs vary based on the needs of the building. For example, some buildings may not have elevators while other buildings may have a larger lawn area and use more landscaping. Those needs are then totaled for the entire building. If an agency is a single occupant then they will incur the burden of the cost. However, if multiple agencies occupy the building then the costs are prorated based on the amount of space they occupy.
Janitorial is comprised of trash removal and cleaning services. These two functions are provided by contractors. Their costs are predetermined by an underlying contract that provides for basic cleaning and trash removal. For the purposes of the Fiscal Year 2010 Budget, janitorial costs were determined by reviewing the base contract as well as an entire year of historical invoices. The invoices provide the District specific costs and allow for a level of consistency to ensure that the FY 2010 cleaning levels are appropriate. Costs are billed as follows: single occupants will incur the burden of the cost while multiple occupants may pay prorated shares.
Once the Office of Property Management provides the projected occupancy costs, the Office of the City Administrator scrubs the data again and ensures that agency budgets properly reflect the required fixed cost allocation and that there is adequate coverage of the operating expenses for the entire District, as a whole.
Conclusion
OPM looks forward to the upcoming challenges and opportunities to save money and improve work environments. We are confident the proposed budget meets our needs, the needs of our client agencies and the property-related costs to the District as a whole.
Thank you again for the opportunity to testify and I look forward to answering your questions.