20 18 REAL ESTATE STRATEGY February 6, 2018 Overview of Real - PowerPoint PPT Presentation

20 18 REAL ESTATE STRATEGY February 6, 2018

Overview of Real Estate Portfolio State Portfolio 97M SF General Gov’t 34M Higher Education, 63M State Map – General Gov’t Owned and Leased Properties 2 84% owned 16% leased

Guiding Principles 1. Program requirements and government 1. Manage real estate initiatives drive real estate strategies efficiently 2. Employ financial metrics in decision 2. Implement real estate industry best making practices 3. Reduce the size of the real estate portfolio 3. Improve building maintenance funding 4. Develop strategic real estate plans 3

Guiding Principles 1. Program requirements and government initiatives drive real estate Middle Tennessee State Veterans Cemetery Nashville, TN 4

Guiding Principles 2. Employ financial metrics in decision making South Central Regional Health Building Lease vs. Own Cost Comparison $8 $6 Cost to Millions Own $4 Cost to Lease $2 $0 Year 10 Year 15 Year 20 5

Guiding Principles 3. Reduce the size of the real estate portfolio 6

Real Estate Strategies Manage Real Estate Efficiently Capital Project Charter Implementation FY16 – FY18 232 250 200 150 100 73 36 50 0 FY16 FY17 FY18 7

Real Estate Strategies Manage Real Estate Efficiently On-time and Within Budget Capital Project Delivery FY17 100% 96% 95% 93% 90% 89% 90% 85% 80% 75% 1st Quarter 2nd Quarter 3rd Quarter 4th Quarter 8

Downtown Nashville Strategic Real Estate Plan Mov es to Cord ell Hull Cordell Hull 323,827 SF War Memorial 43,450 SF James K. Polk Legislative Plaza Comptroller: 53,887 SF 88,866 SF Rachel Jackson 34,560 SF 9

Downtown Nashville Strategic Real Estate Plan Foreca sted Va ca ncies – By Yea r-end 20 18 Total Vacancy: 459,288 SF W/O Citizens Plaza: Davy Crockett: 214,331 SF 7,113 SF TN Tower: Citizens Plaza: 38,105 SF 244,957 SF War Memorial 43,450 SF James K. Polk – Tower only Legislative Plaza Rachel Jackson 42,447 SF 57,351 SF 25,865 SF 10

Citizens Plaza Elim ination of unneeded buildings Est. Sale Date: Oct. 2018 11

Key Project Highlights • New Tennessee State • Andrew Jackson – Elevator Museum replacement • New Tennessee State Library • Memphis Regional Megasite and Archives – Wastewater improvements • State Capitol Cupola • James K. Polk – TPAC Renovation • Legislative Plaza and War Memorial Building • Multi-agency Law Enforcement Training • John Sevier Building Campus – Cockrill Bend 12

RECOMMENDED FY 19 CAPITAL BUDGET

Funding Approach Funding was based on analysis and recommendation by the Department of General Services and the Higher Education Commission.

Recom m ended FY19 Capital Budget Maintenance $215,520,000 Improvements $231,117,000 $446,637,000 State $184,608,000 Federal $3,405,000 Other $140,189,000 Bonds $118,435,000

Maintenance and Im provem ents Total Maintenance Total Improvements $1,000 $900 $800 $700 $600 $ Millions $500 $400 $300 $200 $100 $0 FY 2011-2012 FY 2012-2013 FY 2013-2014 FY 2014-2015 FY 2015-2016 FY 2016-2017 FY 2017-2018 FY 2018-2019

Recom m ended FY19 Capital Budget Total Improvements 17 Projects Total Maintenance 123 Projects

Maintenance Projects % of All No. of Mtce Projects Projects Type of Project 49 40% Building Systems - HVAC, Electrical, Lights, etc. 31 25% Building Envelope - Roofs, Walls, Doors, Windows 4 3% Elevator Repairs and Modernization 4 3% Paving & Parking 4 3% Restroom Remodel and ADA Compliance 9 7% Security - Security Doors, Locks, Fencing 22 18% Various Other Projects 123 100%

Capital Im provem ent Highlights Library & Archives $57.6M * TennCare Building Purchase $30.1M * Memphis Megasite $30.7M * MTSU Academic Classroom Building $38.0M Cleveland State $25.0M UTIA - Energy & Environ Science Bldg $4.0M UTIA - Vet Med Center Teaching Ctr $9.0M TCAT Improvements $14.5M *Funded from Bonds

GO Bond Authorizations $500,000,000 $450,000,000 $400,000,000 $350,000,000 $300,000,000 $250,000,000 $200,000,000 $150,000,000 $100,000,000 $50,000,000 $- 2011-2012 2012-2013 2013-2014 2014-2015 2015-2016 2016-2017 2017-2018 2018-2019

Debt Service History Total Debt As a % GO Debt Service Highway Debt Service from Fiscal Yr of Service Taxes and Other Taxes Revenues Change FY 09-10 $314,185,000 $115,800,000 $429,985,000 4.3% FY 10-11 290,653,000 108,200,000 398,853,000 -7.2% 3.8% FY 11-12 298,214,000 107,000,000 405,214,000 1.6% 3.6% FY 12-13 329,460,000 107,000,000 436,460,000 7.7% 3.7% FY 13-14 332,324,000 110,000,000 442,324,000 1.3% 3.8% FY 14-15 311,964,000 88,700,000 400,664,000 -9.4% 3.2% FY 15-16 341,055,000 88,800,000 429,855,000 7.3% 3.4% FY 16-17 332,954,000 92,100,000 425,054,000 -1.1% 3.1% FY 17-18 296,508,000 83,800,000 380,308,000 -10.5% 2.7% FY 18-19 Rec 286,947,000 80,200,000 367,147,000 -3.5% 2.6% Since FY10 -8.67% -30.74% -14.61%

Debt Service as a Percent of Taxes 5.0% 4.5% 4.0% 3.5% 3.0% 2.5% 2.0% 1.5% 1.0% 0.5% 0.0% FY 09-10 FY 10-11 FY 11-12 FY 12-13 FY 13-14 FY 14-15 FY 15-16 FY 16-17 FY 17-18 FY 18-19 Rec