The State Property Authority has been established by the NSW Government as a corporation with functions relating to the acquisition, management and disposal of Government owned property.

The requirements outlined in this Memorandum and the attached Government Property Principles apply immediately to all General Government Sector agencies and Public Trading Enterprises (excluding State Owned Corporations). Shareholding Ministers and Boards of State Owned Corporations are to note the establishment of the Authority and where their organisations do not have the necessary in house expertise, they are encouraged to use the services of the Authority.

The Authority’s objectives as stated in the State Property Authority Act 2006 are to:

• improve operational efficiencies in the use of properties of government agencies, particularly generic properties (such as offices, warehouses, depots and car parks);
• manage properties of government agencies in a way that supports the service delivery functions of those agencies;
• provide advice and support within government on property matters; and
• operate at least as efficiently as any comparable business, consistently with the principles of ecologically sustainable development and social responsibility for the community (including the indigenous community).

The Authority is the Government’s real estate services provider and is responsible for acquiring and managing Government’s generic and, by agreement, other property assets.

To assist the State Property Authority to achieve its legislated objectives, the Government has approved a new property policy framework. The framework outlines the relationship between agencies and the State Property Authority in the acquisition, management, maintenance and disposal of property.

The key initiatives of the framework are:

• the immediate vesting (from 1 July 2008) to the State Property Authority of the ownership of all government owned office accommodation;
• the implementation of a commercial rental charge for all office accommodation vested in the State Property Authority;
• the transfer to the State Property Authority of management responsibility of all government leased office accommodation;
• the extension of the Government Leasing Service within the State Property Authority to include all lease renewals and new and existing lease negotiations for generic property in the Greater Sydney Metropolitan Area (as defined by the Department of Planning);
• regular and ongoing reviews by the State Property Authority of agency property portfolios to identify efficiencies to improve service delivery which will be monitored by the Government Asset Management Committee and reported to Government;
• the provision of information by all agencies for the generic property database, including the participation in surveys;
• review and endorsement of all proposed property acquisitions and disposals by the Government Asset Management Committee;
• the State Property Authority is Government’s preferred acquisition and disposal agency;
• the State Property Authority will be the lead agency for all multi-faceted property proposals that are interlinked by timing, location or use; and
• the Department of Premier and Cabinet, State Property Authority and NSW Treasury will work cooperatively with Government agencies and relevant unions to address any staffing and funding implications which may arise from implementation of the policy framework.

The attached Government Property Principles outline details of the property policy framework as well as other considerations relating to property title, preferred office locations, provision of car parking, lease precommitments, sale and lease back proposals and fitout amortisation.

This Memorandum supersedes .

Morris Iemma
Premier

OPERATING PRINCIPLES

Principle 1

All owned office buildings will be vested in the State Property Authority and lease arrangements will be entered into with tenant agencies through a Memorandum of Understanding. Agencies will not be compensated for the vesting of assets, but will receive budget funding for net rental payments. Normal operating costs will be funded by agencies from existing resources. The vesting of all owned office buildings will occur from 1 July 2008.

Principle 2

Agencies may vest in the Authority any or all of their non-generic owned property assets subject to agreement with the Authority and Treasury on resource and funding transfers associated with those properties. In some instances Government may direct that certain properties or agency portfolios be vested in the Authority.

Principle 3

The Authority will assume management responsibility for all leased office space and other leased property assets and sublease arrangements will be entered into with tenant agencies through a Memorandum of Understanding. Agencies will pay a management fee to the Authority in addition to the rent payable under the head lease.

A program will be established to transfer management of existing head lease responsibilities to the Authority.

Principle 4

The State Property Authority will conduct all lease negotiations (new leases, renewals and rent reviews) for property assets required by government agencies except where the Government Asset Management Committee determines otherwise.

Principle 5

Consistent with Operating Principle 4, negotiations for all proposed lease pre-commitments must be conducted by the Authority and in accordance with existing approval processes. All pre-commitments to acquire property or office space must be assessed and approved in accordance with the Working with Government Policy and Guidelines.

Principle 6

Any request to the Authority to acquire new property assets must be consistent with the agency’s Asset Strategy, supported by a business case and certification of funding availability for acquisition, rental and fitout, as appropriate. Where an office accommodation requirement exceeds 1,000m2, agencies must provide the Authority with a facility plan for approval before the Authority can approach the market.

Principle 7

All proposed property acquisitions must be referred to the Government Asset Management Committee to consider the proposed acquisition strategy and determine the appropriate agency to complete the transaction. Normal Treasury requirements for acquisitions continue to apply. All proposed property disposals will continue to be referred to the Government Asset Management Committee for approval.

Principle 8

No General Government Sector agency will approach the market to acquire property assets, either by lease or ownership, other than through the State Property Authority, unless the Government Asset Management Committee determines otherwise.

Principle 9

All proposals that involve either sale and leaseback arrangements or amortisation of fitouts as part of lease arrangements must be referred to the Authority and will require Treasury’s specific approval.

Principle 10

All government agencies must immediately advise the Authority of any vacant, underutilised or no longer required office space or other property.

Principle 11

Car parking spaces that incur a cost to an agency should only be provided for official Government vehicles including vehicles supplied under salary sacrifice arrangements used for official business. There are circumstances where approval has been given by CEOs for the parking of private motor vehicles in official car spaces. These approvals have been given on the basis of the particular needs of the agencies concerned. Pending finalisation of a sector-wide policy in respect to these motor vehicles, existing approvals are to remain in force.

Principle 12

All agencies will enter into an agreed Memorandum of Understanding with the Authority for office space or other property assets it provides. If an agency fails to execute a Memorandum within a reasonable time, the Authority, subject to Treasury approval, may deem its execution and the terms of the Memorandum will be binding on the agency. For leased premises the term is to be consistent with the head lease. For government owned accommodation the term may be negotiated between the parties, but subject to a certain minimum term.

Principle 13

The Authority will enter into Service Level Agreements with agencies in relation to the provision and maintenance of owned or leased non-generic property assets that meet their service delivery requirements and deliver best value for Government.

Principle 14

Agencies are responsible for the provision of fitout, changes to existing fitouts and the makegood of premises provided by the Authority and no fitout, makegood or other alterations are to be undertaken without the Authority’s prior approval.

Principle 15

The Authority will conduct regular and ongoing reviews of agencies’ property portfolios, working with agencies to identify efficiencies to improve service delivery. The outcome of these reviews will be reported to the Government Asset Management Committee, which will monitor implementation.

GUIDING PRINCIPLES

Principle 1

The Government Asset Management Committee remains Government’s peak Chief Executive body for considering all strategic asset management issues. The Committee’s terms of reference are broadened to include all assets including assets other than real property.

Principle 2

The title for all new property acquisitions where the responsible Minister does not have the legislative power to deal in property transactions is to be placed in the name of the State Property Authority. All property related leases (including office accommodation) will also be in the name of the State Property Authority.

Principle 3

Government agencies are to achieve the office space use targets determined by Government. Currently these are an average of 17m2 per person across an agency’s office portfolio and 15m2 per person for all new office space.

Principle 4

Government agencies are to actively pursue opportunities to share common resources or services consistent with Government policy or directives.

Principle 5

The preferred location for agencies in the Sydney CBD is in the southern sector or other sector where equivalent terms can be negotiated. No agency, however, will be provided with accommodation in the Sydney CBD Core unless approval has been obtained from the Government Asset Management Committee.

Subject to individual agency service delivery requirements, the preferred locations for government agencies in the Sydney Metropolitan Area are those centres consistent with the Department of Planning’s Sydney Metropolitan Strategy.

Government agencies will ensure that decisions on the location and fitout of office accommodation are consistent with planning for active living principles and sustainable travel options as referred to in the Premier's ‘Why Active Living’ Statement, including the necessary infrastructure such as showers, lockers and secure bicycle parking.

Principle 6

All government agencies are to ensure that office accommodation complies with Government policy in relation to sustainability and energy conservation. The current policy is outlined in Premier’s Memorandum 2004/04.