In 2001, following a review of land banking and property disposal practices by Government agencies, the Budget Sub-Committee of Cabinet approved a number of reforms to the property disposal process. These reforms are intended to:

• improve the coordination of property disposal processes across government agencies,
• enable a more strategic assessment of surplus government real estate assets, and
• identify opportunities for optimising the return to Government and the community through property divestment.

This Memorandum outlines the reforms that will apply to budget and non-budget dependent agencies from 1 July 2003.  The flow chart at Attachment B outlines the general property disposal process.

The Government Asset Management Committee (GAMC) has established a Property Disposal Assessment Panel (PDAP), chaired by Premier's Department's Infrastructure Coordination Unit and comprising representatives from the Department of Public Works and Services' Policy Services Division (DPWS-PSD), Planning NSW and NSW Treasury. Landcom and the Department of Public Works and Services' Asset Management Services join the panel as expert advisers. The PDAP protocols can be found at the GAMC website www.gamc.nsw.gov.au.

The GAMC, through the PDAP, will ensure that whole-of-government interests are considered for each proposed property disposal.

Commencing on 1 July 2003, budget and non-budget dependent agencies are required to prepare a Property Disposal Plan (PDP) and submit it to the GAMC for consideration. The PDP is considered an integral part of an agency's overall Asset Management Strategy and needs to demonstrate clear linkages to desired service outcomes.

The Asset Disposal Guidelines in the Total Asset Management (TAM) Manual, available at www.gamc.nsw.gov.au, provide guidance in the development of an asset disposal strategy. The PDP should, as a minimum, incorporate the information shown at Attachment A for all properties that no longer support the agency's service delivery goals. Agencies are to detail in the PDP all property disposal activities, including joint ventures and leasehold disposals.

To facilitate forward planning the PDP is to identify any properties that are not being fully utilised in the achievement of service outcomes and advise of the action proposed to address the fact that the asset is underutilised or request assistance in determining the future use of the property.

Data collected from the PDPs will be entered into the Surplus Property Database, maintained by DPWS-PSD. Access to this database will be provided to agencies to assist in real estate asset planning and coordination.

All property disposals will be reviewed by GAMC to determine the strategic value of the property in terms of wider government policies and objectives, other agency requirements, community interest, environmental outcomes and other areas of interest the GAMC may determine. In order to improve the coordination of asset disposal activities the GAMC:

• will nominate the appropriate means of disposal, including any proposed divestment to another Government agency, and
• allocate to an appropriate agency responsibility for management of the disposal.

Should an urgent requirement to dispose of a property arise and it has not previously been identified in a PDP considered by the GAMC, the proposed disposal will need to be submitted for the GAMC's approval in the first instance.

As part of its strategic assessment of property disposal activities the GAMC intends to review all previously granted exemptions for agencies to carry out disposals under the provisions of PM 97-02. Where agencies consider they have the necessary expertise to conduct their own property disposal activities, application may be made to the GAMC for an exemption. Exemption criteria are detailed at the GAMC website.

Property Disposal Plans for disposals proposed for the 2003/2004 financial year are to be submitted to the GAMC Secretariat, Level 23 McKell Building, 2-24 Rawson Place Sydney or by email to [email protected] by 30 June 2003. The balance of the plans, for disposals proposed for subsequent financial years, are to be submitted to the GAMC Secretariat by 31 December 2003. Thereafter, the plans are to be updated annually and submitted by 31 December.

Ministers and CEOs are to ensure that all agencies under their administration are aware of these reforms in the property disposal process and that Property Disposal Plans are submitted by the required date each year. They should also ensure that these reforms are brought to the attention of all State Owned Corporations (SOCs). Whilst acknowledging the independence and rights of the SOCs, I seek their support in adopting a Total Asset Management (www.gamc.nsw.gov.au) focus in the identification of properties that no longer support desired service outcomes and plan for their disposal. Where agencies do not have the necessary in-house expertise, they are encouraged to seek professional input from experts in government property disposal.

Bob Carr
Premier

Attachment A

Asset Disposal Planning

Asset Disposal Strategic Planning enables an agency to identify and cull redundant and/or underutilised assets that may not contribute efficiently or effectively to core service delivery.

Effective asset disposal planning achieves a balance between whole-of-government policies and objectives, other government agencies requirements, community needs and expectations, sound environmental management and asset value optimisation.
The TAM Manual (Asset Disposal Strategic Planning, p. 3) describes Asset Disposal planning as having two separate and distinctive elements:

• Identification of surplus assets (asset planning), and
• Physical (active) disposal (disposal project management - refer Definitions) of the asset.

An asset is identified as surplus when one or more of the following occurs:

• The asset is not required for the delivery of services, either currently or in the long term;
• The asset has become uneconomical to maintain and/or operate;
• The asset is no longer suitable for ongoing core service delivery needs.

Asset disposal is dependent on one or more of the following:

• Whether there are net disposal benefits, either in financial or other terms;
• Whether there are secondary service obligations associated with the asset, which may dictate its retention; and
• Whether a disposal can be carried out without adverse impacts on the physical environment.

The flow chart at Attachment B sets out the general Property Disposal Process and the interrelationship between strategic asset planning and asset disposal project management.

Property Disposal Plan and Assessment

The preparation of a Property Disposal Plan (PDP) is considered an integral component of an agency's Total Asset Management Strategic planning and budgeting cycle. The PDP should:

• separately identify properties which have strategic or non-strategic value (see Definitions);
• assets that are still being used for core service delivery but are underutilised and requiring further assessment; and
• assets that are vacant or formally declared surplus to core service delivery requirements.

If agencies require assistance in determining their future requirements for an underutilised asset, this should be identified in the PDP.

Issues specifically relating to the disposal of real property assets are detailed in the TAM Manual - Asset Disposal Strategic Planning, Appendix B (www.gamc.nsw.gov.au). Agencies are encouraged to address these issues in the PDP.

PDP's will be reviewed by the Property Disposal Assessment Panel (PDAP). The PDAP may request additional information to clarify issues identified in the PDP and provide feedback to agencies as appropriate. The PDAP will prepare a consolidated report and provide recommendations to the GAMC on proposed disposal activities.

Definitions

The following definitions are cross referenced to the Property Disposal Process flow chart at Attachment B.

1. Asset Management Strategy: Refer TAM Manual (www.gamc.nsw.gov.au) for guidance on the development of a strategy. Agencies to utilise the services of a disposal property expert, if required, to provide a needs analysis on the real estate component of the strategy.

2. Service delivery: Purchasing agency's core business activity and/or to fulfil a government policy objective - excludes land development agencies engaged in commercial land development.

3. Strategic Property: Suitable for use for other government objectives/requirements, including urban consolidation; and/or highest and best use value greater than $3 million.

Properties with strategic value and whole-of-government benefits to Government can incorporate, but are not necessarily limited to, one or more of the following general criteria:

Adjoins other government (Federal, State and Local) owned land with opportunities for property consolidation - improved access, improved community amenity; multiple titles, another government agency has expressed an interest in the property; community and/or not for profit organisations utilise the site (or part of) for delivery of community services; heritage, environmental and cultural values (eg endangered flora/fauna/habitat, heritage buildings/elements, Aboriginal and/or European cultural heritage significance); regional open space opportunities, located near major transport routes/interchanges; located in/near town centres/business districts; potential for urban consolidation (residential use); potential as employment lands or potential highest and best use value greater that $3 million; any known Ministerial commitments to continuing and/or alternative uses.

Non-strategic Property: Not suitable for other government objectives/requirements; and/or value less than $3 million.

Properties with non-strategic value to government can generally be considered to fall outside the aforementioned general strategic criteria and dependent on the market may have a potential highest and best use value less than $3 million.

4. Surplus Property: Asset not required for delivery of services; uneconomical to maintain and/or operate; identified as not being suitable for ongoing service delivery, formally declared surplus.

5. Surplus Property Database: Information available on request, maintained by DPWS Policy Services Division.

6. Disposal project management: Owner agency engages nominated disposal agency, if required. Disposal agency project manages sale process, as agreed.

Disposal project management can include, but is not necessarily limited to, the following general program of activities:

Rezoning, site subdivisions, site specific studies (eg flora, fauna, contamination, traffic and access), negotiations with local government and other interested parties regarding future use or disposal, sale consultant engagement and management, sales negotiations (eg private treaty, post auction, tender/expressions of interest).

DPWS Policy Services Division will review proposed sale terms and conditions for proposed direct dealings with government land development agencies (eg Landcom), where the proposed acquisition occurs on a commercial basis.

7. Disposal agency: May be owner agency or other appropriate government agency, as agreed by GAMC, with expertise in government property disposals.

8. Disposal strategy changes: If, during the course of the disposal project management, there is a substantial change in the viability of sale and/or expected outcomes, including dollar value, the matter should be referred back to GAMC for consideration.

9. Agency managed disposals: Agency utilises in-house resources, experienced in government property disposals, or engages another appropriate government agency, as agreed by GAMC, with expertise in government property disposals.

DETAILS REQUIRED IN AGENCY PROPERTY DISPOSAL PLAN

The following information should be provided for each property. Please refer to the GAMC website (www.gamc.nsw.gov.au) for the appropriate template.

PROPERTY DESCRIPTION Building and/or property/site name.

ADDRESS Street Number and Name, Suburb/Town, Postcode.

CURRENT USE School, Hospital, Office, etc.

STATUS/UTILISATION Vacant/Underutilised/Identified as surplus to requirements.
Include date of vacation/cessation of operations.

STRATEGIC/NON-STRATEGIC See Definitions
Comment on and/or nominate the criteria used to classify the property as strategic/non-strategic.

LAND TITLE DETAILS Lot(s), Deposited Plan(s), Folio Identifier(s).

LOCAL GOVERNMENT AREA City/Shire.

ZONING Land zoning details - brief description
(eg Residential 2A).
Other applicable planning policies (if known).

SITE AREA Approximate area in square metres or surveyed area (if available).

SITE IMPROVEMENTS Brief details of site improvements.

TENURE Crown Land, freehold, details of leasehold arrangements (sub-leases, sub-licences, permissive occupancies).

PROPERTY VALUATION Valuation figure and basis, date of valuation.

HERITAGE STATUS: Details of heritage orders and/or heritage listings (known or proposed); Native Title claims and/or Aboriginal land claims..

ECOLOGICAL STATUS Threatened/protected species, protected environment/habitat (known or proposed).

CONTAMINATED SOILS/BUILDINGS None, unknown, remediated (brief details of remediation status), contaminated (brief details of known or suspected contaminants).

MINISTERIAL COMMITMENTS Details of any known Ministerial comments/position re: land status and/or future use.

OTHER GOVERNMENT AGENCIES Details of interest in site from other agencies, including Local and/or Federal government.

WHOLE OF GOVERNMENT ISSUES Details of other whole of government issues such as community interest, open space potential, adjoining uses, location to amenities (eg schools, transport).

GENERAL COMMENTS Any other pertinent information.