City-Wide Real Estate Review Toronto Public Library Board of - PowerPoint PPT Presentation

City-Wide Real Estate Review Toronto Public Library Board of Directors Meeting JUNE 27 27, , 2016 2016

City-Wide Real Estate Review City Council directed the City Manager to undertake a review of all divisions, agencies and corporations involved in real estate processes with the intent to assess the City’s real estate service delivery model . BACKGROUND  Delo De loit itte was as eng engag aged to o con onduct the the review in n part partnership ip wi with th the the Chie Chief Co Corpo rporate Of Offi ficer Or Organ aniz izatio ion  An An internal stee eerin ing g com ommit ittee cha hair ired by y the the De Deputy Ci City ty Man Manager &CF &CFO was as forme ormed  An external An l advi advisory ry pan panel was as as assemble led to o adv advis ise the the Ci City ty Man Manager  15 Ag Agen encie ies, Co Corpo rporatio ions, and and Di Divisio ions in n scop ope: 6 Ag 6 Agenci cies 4 Cor orporati tions 5 City ty Di Divisions Affordable Housing Office Exhibition Place Build Toronto Toronto Parking Authority Toronto Community Housing Corporation (TCHC) Long Term Care, Homes and Services Toronto Hydro Parks, Forestry and Recreation (PF&R) Toronto Police Services Real Estate Services Toronto Public Library Toronto Port Lands Company Shelter, Support and Housing Administration Toronto Transit Commission Toronto Zoo 2

Our Current State A very complex and valuable real estate portfolio with significant operational and capital expenditures:  6,97 ,976 bui buildings s with ith 106.3 .3 mil illio lion SF SF, 49% is multi-residential Building Space and Land Inventory  8,44 ,446 prop propert rties s on on 28,82 ,823 acre acres of land, 64% is park land  $1.1 .1 Bi Bill llion in annual operating costs in core real estate and Operations facilities management Capital Expenditures and  $1.0 .0 Bi Bill llion in annual portfolio capital & development costs Development  3,17 ,177 FTEs Es oversee the portfolio FTE Resources (94% in facilities management; 6% in core real estate functions)  $27 Bil Billion in assessed portfolio value Property Value (36% TCHC; 9% Parks, Forestry & Recreation) 3

Assessment: Key Findings There is limited ability to make timely and informed decisions & set strategic direction on a City-wide basis. Mo More op oppo portunit ity for or city-wid ide, str trategic ic pl plan annin ing and and man management of of the the po portf rtfol olio io - Complex governance model making efficient decision making and approvals a challenge (vertically and horizontally). Workin orking g in n silos/la os/lack of of co-or ordin ination - Multiple entities involved in the management of the portfolio. Tale alent / / ski kills lls imb mbala lance - majority of real estate expertise focused on day-to-day activities, resulting in some decisions without a broader strategic view. Inc nconsistent pr proce ocesses, too ools & & tech echnol olog ogy – Missed opportunities to integrate best practices in process and technology to improve effectiveness. Th The e or organiz anizatio ion is rea eady for or tr tran ansfor ormatio ion - S tructure and process has been developing and timing is right to pursue the next step of the maturity model. 4

What others in the industry/sector doing? We used public sector benchmarks: Infrastructure Ontario, Public Works & Government Services Canada (PWGSC) and Shared Services BC OPER ERATIONAL AN AND D STRA RATEGIC FI FINDI DINGS 1. 1. St Strategic alig alignment – Big picture view and alignment to enterprise wide strategy Centralized Decentralized real estate 2. 2. Cos ost Red eduction – Centralized control improves property operating model operating vacancy management and portfolio optimization model 3. 3. Continuous s Improvement and and Inno nnovation - Focus on process and adopting of best practices CREs planning to invest in technology within 3 years 4. 4. Economies s of of sc scale ale – Procurement opportunity to identify and realize increase value for money Planned investment in next 3 years 75% 5. 5. Improved da data qual quality – Centralized and complete data to No planned investment in next 3 years 25% run the business enabled by technology 0% 10% 20% 30% 40% 50% 60% 70% 80% Bottom line: The industry is moving towards a centralized model including Service Relationship Management with a program focus 5

How do we compare? COMBINED PORTFOLIO & CORE RE SERVICES BUDGET / SF*  Compared to Com o IO, , the the Ci City ty has has a a di disproporti rtionate num number $24.08 of staff of f focu ocuse sed on on faci aciliti ties s man anagement  Consi Con sidering cor ore e rea eal l es estate, the the Ci City ty has has a a $17.28 di disp sproport rtionate num number r of of staff f focu ocuse sed on on tr transa ansacti tional wor ork k (vs str trategic pl planning and and man anagement) $14.38 $13.77 -69% -21% +4% SKILLS DISTRIBUTION OF INFRASTRUCTURE ONTARIO CORE REAL ESTATE 26% 54% 20% 0 Strategy Transactions Capital Management City of Toronto Infrastructure PWGSC BC Shared Ontario Services SKILLS DISTRIBUTION OF CITY CORE REAL ESTATE Some cost efficiencies may be achievable, but the current 36% 44% skills imbalance is the more significant concern . 20% From an overall cost per square foot perspective, the City’s current real estate service delivery is relatively efficient. Strategy Transactions Capital Management 6

Maximizing value by coordinating ‘city building’ TODAY: INDEPENDENT PLANNING 1. 1. Mult ltiple independent pl plans 2. 2. Lack ck of of coor coordin ination resu result lting in n los ost t opp opportunity at at publi public c si sites. 3. 3. Mix ix of of real eal es estate expertise – skill mix more focused on day-to-day activities vs planning and strategy. 4. 4. Di Diverse cor orporate / ag agency visio ion, , interests, and and man andates - not aligned to a single ‘City Building’ framework. 5. 5. Gr Growing St State of of Good Good Rep epair ir (SO SOGR) back backlo logs - no coordinated plan to reduce capital spending. 7

Maximizing value by coordinating ‘city building’ TOMORROW: STRATEGIC & COORDINATED PLANNING W/ MULTIPLE STAKEHOLDERS COMMUNITY 1. 1. Un Unlo lock land valu alue - getting the best CENTRE strategic use of City lands. AFFORDABLE HOUSING 2. 2. Co Co-location cos cost sa savings – pursue RESIDENTIAL mixed-use, multi-service developments. 3. 3. Eco conomic op opportunities - job creation including commercial, retail & LIBRARY affordable housing. 4. 4. Co Communit ity hu hubs - build capacity, pride in facilities, improve accessibility & services closer to residents. 5. 5. Modernization of of spa space ce - enhance PARKS productivity & efficiency through UNDERGROUND PARKING space planning innovation. FIRE DAYCARE 8

Recommendation: Centralizing Service Delivery AN ENTITY TO LEAD ALL CITY OF TORONTO REAL ESTATE – Sim Simplif ifie ied & & Tran ansparent Go Gover ernance Mo Mode del l - unified vision, clear and balanced objectives and enhanced accountability. Le Led by y Mu Multi-dis iscip ipli linary ry Tal alent - professionals w/ skills to strategically manage large portfolios (industry experts, contract management, data/analytics, project management, legal, stakeholder engagement). In n Pur ursuit it of of Par artnership ips & & Joi Joint-Venture Oppo Opportunit itie ies - with risk-sharing, alternative finance and procurement, revenue generation & efficient capital delivery. To o Addr Address St State of of Go Good od Repa epair ir Back Backlo logs & & Full Fully Uti tiliz izin ing As Assets - pursue capital investments with a strategic lens maximizing return on investment (financial, social, environmental). = Value Creation / Effective Operations / Cost Savings 5 – 10% of operating budget Revenue Generation opportunities 5-10% 9

New Real Estate Entity: Consolidation of core functions All strategic development and transactional real estate activities currently performed by the individual entities will be executed by the new Real Estate Entity in the new model (including facilities management). Current State Toronto Hydro * Corporations Transitional State Toronto Community Housing * Core Real Estate Only Build Toronto Toronto Port Lands Company Final State Exhibition Place Strategic Real Estate Core Real Estate & FM (i.e. strategic planning & Toronto Parking Authority New Real Estate Entity Agencies development) Toronto Police Service Strategic RE Toronto Public Library Transactional RE Toronto Transit Co Facilities Management Significant Transactional Toronto Zoo Real Estate Affordable Housing Office (i.e. appraisals, acquisitions / 2-4 Years Depending on Consolidation Long Term Care dispositions, leasing transactions) Divisions Adoption Coordination and Collaboration with Parks, Forestry and Recreation Agencies, Corporations and Divisions Real Estate Services Shelter, Support & Housing (IMMEDIATE) NEXT STEPS 12 – 18 months Stage 1: Policies and Practices Stage 2: Entities into dev’t; All RE FTEs except capital management * Timing post transition 10