Building Value: Modernizing Property Management
Full Report
Executive Summary
Press Release
FOR IMMEDIATE RELEASE
September 27, 2012
For Additional Information Contact:
Stuart Drown, Executive Director
(916) 445-2125
Commission Calls for Stronger Approach to State Property Management
The Little Hoover Commission on Tuesday urged the Governor and Legislature to put the job of state property management into the hands of a new state department. The Commission recommended that the Governor use the reorganization process to consolidate and focus all property management functions statewide under this new department. The Commission recommended that state leaders develop policy and a strategic plan for property management with the goal of maximizing the value of the state’s real property assets for better program outcomes, greater transparency and enhanced accountability. The Commission’s recommendations are in its latest report, Building Value: Modernizing Property Management.
As part of the process, the State Auditor’s Office should audit departments to develop a list of all state assets as a benchmark for enhancing the value and utility of the Statewide Property Inventory. Though the state maintains an inventory of its land acreage, buildings and office space, the Commission found that the list is incomplete, in part because the Department of General Services, which maintains the list, lacks adequate authority to ensure its accuracy.
In its study, the Commission found that the state should develop a long term strategy to manage the state’s property assets to build value and make efficient use of state office buildings as state government changes in response to realignment, restructuring and technological advances. Too often, the focus has been on finding surplus property that could be sold for one-time gains to offset a budget shortfall. The Commission found that this practice does not reflect long-term thinking or productive management of state property assets.
The Commission recommended forming a Department of Asset Management within the new Government Operations Agency. The core of the new department would incorporate the functions of the Real Estate Services Division of the Department of General Services. As part of the reorganization, the Governor should form an advisory group made up of experts from successful California private sector property management firms to provide guidance on industry best practices and business systems. The advisory group should meet quarterly to assess and offer guidance on the department’s performance in meeting the needs of customer departments, reducing the amount of vacant state office space and minimizing the use of privately leased office space.
“Management of state property must go beyond the idea of selling buildings to raise revenue in a difficult fiscal year,” Commission Chairman Daniel Hancock said. “The state’s real estate managers must have the authority they need to truly manage state property. This includes assembling an accurate listing of the state’s assets as well as having a strong statewide policy and productive property management practices at its disposal.”
In its report, the Commission recommended:
- The Legislature should request that the State Auditor conduct an audit of all state properties held by California state government departments, boards and commissions. The results should be used to update and enhance the Statewide Property Inventory.
- The Governor, through the reorganization process, should create a Department of Asset Management within the Government Operations Agency, separate from the Department of General Services, to serve as the central state authority for managing California’s real property assets, drive innovation to maximize state property assets and provide accountability to the public. The new department should manage the Statewide Property Inventory, which should be foundational in the state’s property management strategy and should have an online interface designed to facilitate accessibility and ease of use for the public. The Governor should consolidate property management functions in state departments into the new department. The Governor should form a board of volunteer advisors made up of experts from top California firms that can help the state integrate industry best business practices into its property management operations. Staff from the Department of General Services Real Estate Services Division should be moved into the new department, and based on guidance from the advisory group, the division should be functionally reorganized to align with best industry practices. The department should be the lead on identifying and disposing of surplus state property, including the creation of an annual list of potential property sales that would go forward without action by the Legislature; proceeds from the sales should go toward paying down debt or other one-time outlays. The department should have flexibility in hiring exempt employees to build management capacity and expertise, and once it has established management expertise, the management of high-value oil, gas and mineral leases should be transferred to it from the State Lands Commission. The new department should lead the development of a comprehensive asset management policy, and should publish an annual report on its performance.
- California should create a clear asset management policy to guide property-related decisions by the Department of Asset Management and across state departments. The Department of Asset Management should serve as the central forum for drafting the policy, seeking input from all asset-controlling departments, private-sector partners, the Department of Finance and other interested persons.
The Little Hoover Commission is a bipartisan and independent state agency charged with recommending ways to improve the efficiency and effectiveness of state programs. The Commission’s recommendations are submitted to the Governor and the Legislature for their consideration and action. For a copy of the report, visit the Commission’s website: www.lhc.ca.gov.
Fact Sheet
Study Description
For this study, the Commission examined the management of state property. This study took a broad look at the range of property interests held by the state and the process through which these properties are managed. The Commission made recommendations on this issue in 1986, which along with legislation, led to the creation of the Statewide Property Inventory that provides information on thousands of state properties. The Commission studied property management again in 1995, and additional changes have been made since then. This study sought to revisit the issue in light of current realities, renewed interest in state asset management and utilization, and recent changes in the law relating to the reporting of state property utilization. The Commission’s goal was to provide a comprehensive overview of how the state holds and manages its varying property interests and to identify specific areas where the process can be improved.
Previous Studies
- California's Real Property Management: A Cornerstone for Structural Reform
(Report #137, December 1995)
- Squeezing Revenues Out of Exisiting Assets
(Report #116, June 1992)
- Real Property Management in California: Moving Beyond the Role of Caretaker
(Report #105, October 1990)
- California State Government's Management of Real Property
(Report #70, March 1986)
Agenda
Overview
In this report, the Commission calls for a stronger approach to state property management.
During its review, the Commission found the state has much to gain from more proactive, more comprehensive management of its lands, buildings and leases.
The Commission recommends moving all state property management operations into a new, stronger agency. The Commission also recommends that state leaders develop policy and a strategic plan for property management with the goal of maximizing the value of the state’s real property assets for better program outcomes, greater transparency and enhanced accountability.

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March 202012Property Management1:30 p.m., Legislative Counsel Conference Room, Lower Level, 925 LSubcommittee MeetingPublic Notice
PUBLIC NOTICE
FOR IMMEDIATE RELEASE
March 7, 2012For Additional Information Contact:
Stuart Drown, Executive Director
(916) 445-2125Notice of Meeting
The Property Management Subcommittee of the Little Hoover Commission has scheduled a public meeting for Tuesday, March 20, 2012. The meeting will begin at 1:30 p.m. in the Legislative Counsel Conference Room in the lower level of 925 L Street in Sacramento. Participants will discuss the state’s ownership of fairground properties, particularly in light of the elimination of General Fund support for state fairs.
All public notices for meetings are on the Commission’s Web site, www.lhc.ca.gov. If you need reasonable accommodation due to a disability, please contact Stuart Drown, executive director, at (916) 445-2125 or littlehoover@lhc.ca.gov by Tuesday, March 13, 2012.
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January 242012Property Management9:00 a.m., State Capitol, Room 2040, Sacramento, CAPublic HearingAgenda
AGENDA
Public Hearing on Property Management
Tuesday, January 24, 2012, at 9:00 a.m.
State Capitol, Room 2040
Sacramento, CA
Opening RemarksThe Need for Vision and Focused Leadership
- John Salmon, Owner, Upstream Investments, LLC (Written Testimony)
- Peter Stamison, former Director, Department of General Services, and former Administrator, Pacific Rim Region, U.S. General Services Administration (Written Testimony)
Government Asset Management Strategy
- Olga Kaganova, Senior Fellow, Center on International Development and Governance, The Urban Institute (Written Testimony)
Potential Benefits of Asset Mapping Through Geospatial Information Systems
- Scott Gregory, Geographic Information Officer, California Technology Agency (Written Testimony)
Case Study: Rethinking California Fairgrounds- Rebecca Desmond, Director, Division of Fairgrounds and Expositions, Department of Food and Agriculture (Written Testimony)
Public Comments
Public NoticePUBLIC NOTICE
FOR IMMEDIATE RELEASE
January 10, 2012For Additional Information Contact:
Stuart Drown, Executive Director
(916) 445-2125Notice of Meetings
On Tuesday, January 24, 2012, the Little Hoover Commission will conduct a public hearing on property management in California. The hearing will begin at 9 a.m. in Room 2040 of the State Capitol in Sacramento.
The Little Hoover Commission is taking a broad look at the range of property interests held by the state and the process in which these properties are managed, a topic that has seen renewed interest among state leaders and changes in the law relating to the reporting of state property utilization. The Commission’s goal is to provide a comprehensive overview of how the state holds and manages its various property interests and to identify specific areas where the process can be improved.
At the January 24, 2012 hearing, the Commission will hear from the owner of a private real estate company who was the first director of the Governor’s Office of Asset Management, and from a former director of the Department of General Services. The Commission then will hear about government asset management from a senior fellow from The Urban Institute. Following her testimony, the geographic information officer from the California Technology Agency will speak about the benefits of using mapping technology in managing assets. Finally, the Commission will hear about management of California fairgrounds from the director of the state’s Division of Fairgrounds and Expositions in the Department of Food and Agriculture.
There will be an opportunity for public comment at the end of the hearing. The Commission also encourages written comments. Immediately following the hearing, the Commission will hold a business meeting in the Legislative Counsel Conference Room in the Lower Level of 925 L Street, Sacramento.
On Monday, January 23, 2012, the Property Management Subcommittee of the Little Hoover Commission will hold an advisory committee meeting on current property management practices within state agencies. The meeting will begin at 1:30 p.m. in the Legislative Counsel Conference Room in the Lower Level of 925 L Street, Sacramento.
All public notices for meetings are on the Commission’s Web site, www.lhc.ca.gov. If you need reasonable accommodation due to a disability, please contact Stuart Drown at (916) 445-2125 or littlehoover@lhc.ca.gov by Tuesday, January 17, 2012.
- John Salmon, Owner, Upstream Investments, LLC (Written Testimony)
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January 232012Property Management1:30 p.m., Legislative Counsel Conference Room, Lower Level, 925 LAdvisory Committee MeetingAgenda
AGENDA
Advisory Committee Meeting on Property Management
Monday, January 23, 2012, 1:30 - 3:30 p.m.
Legislative Counsel Conference Room, Lower Level
925 L Street, Sacramento, CA
Meeting Goals: To discuss current property management practices within multiple state agencies.1:30 – 1:40 p.m.
Welcome and Introductions
1:40 – 2:30 p.m.
Overview of Department Asset Management Operations
2:30 – 3:30 p.m.
Discussion
Public NoticePUBLIC NOTICE
FOR IMMEDIATE RELEASE
January 10, 2012For Additional Information Contact:
Stuart Drown, Executive Director
(916) 445-2125Notice of Meetings
On Tuesday, January 24, 2012, the Little Hoover Commission will conduct a public hearing on property management in California. The hearing will begin at 9 a.m. in Room 2040 of the State Capitol in Sacramento.
The Little Hoover Commission is taking a broad look at the range of property interests held by the state and the process in which these properties are managed, a topic that has seen renewed interest among state leaders and changes in the law relating to the reporting of state property utilization. The Commission’s goal is to provide a comprehensive overview of how the state holds and manages its various property interests and to identify specific areas where the process can be improved.
At the January 24, 2012 hearing, the Commission will hear from the owner of a private real estate company who was the first director of the Governor’s Office of Asset Management, and from a former director of the Department of General Services. The Commission then will hear about government asset management from a senior fellow from The Urban Institute. Following her testimony, the geographic information officer from the California Technology Agency will speak about the benefits of using mapping technology in managing assets. Finally, the Commission will hear about management of California fairgrounds from the director of the state’s Division of Fairgrounds and Expositions in the Department of Food and Agriculture.
There will be an opportunity for public comment at the end of the hearing. The Commission also encourages written comments. Immediately following the hearing, the Commission will hold a business meeting in the Legislative Counsel Conference Room in the Lower Level of 925 L Street, Sacramento.
On Monday, January 23, 2012, the Property Management Subcommittee of the Little Hoover Commission will hold an advisory committee meeting on current property management practices within state agencies. The meeting will begin at 1:30 p.m. in the Legislative Counsel Conference Room in the Lower Level of 925 L Street, Sacramento.
All public notices for meetings are on the Commission’s Web site, www.lhc.ca.gov. If you need reasonable accommodation due to a disability, please contact Stuart Drown at (916) 445-2125 or littlehoover@lhc.ca.gov by Tuesday, January 17, 2012.
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October 252011Property Management9:00 a.m., State Capitol, Room 437, Sacramento, CAPublic HearingAgenda
AGENDA
Public Hearing on Property Management
Tuesday, October 25, 2011, at 9:00 a.m.
State Capitol, Room 437
Sacramento, CA
Opening RemarksChallenges in California’s Management of State Property
- Elaine Howle, California State Auditor
Reports Submitted by Ms. Howle:
- California State Auditor. March 2009. Management of Surplus Property Follow-Up Review: The State Has Made Limited Progress, but Fundamental Concerns Remain.
- California State Auditor. August 2011. State Lands Commission Because It Has Not Managed Public Lands Effectively, the State Has Lost Millions in Revenue for the General Fund.
Property Management Information and Assistance – Department of General Services
- James Derby, Assistant Deputy Director, Real Estate Services Division, Department of General Services
- Joe Mugartegui, Chief, Asset Management Branch, Real Estate Services Division, Department of General Services
- Robert McKinnon, Assistant Chief, Asset Enhancement and Surplus Sales, Asset Management Branch, Real Estate Services Division, Department of General Services
- Department of General Services (Joint Written Testimony)
Property Management in an Independent Agency – California State Lands Commission
- Curtis Fossum, Executive Officer, California State Lands Commission (Written Testimony)
Public Comments
Public NoticePUBLIC NOTICE
FOR IMMEDIATE RELEASE
October 11, 2011For Additional Information Contact:
Stuart Drown, Executive Director
(916) 445-2125Notice of Meeting
On Tuesday, October 25, 2011, the Little Hoover Commission will conduct a public hearing on property management in California. The hearing will begin at 9 a.m. in Room 437 of the State Capitol in Sacramento.
The Little Hoover Commission is taking a broad look at the range of property interests held by the state and the process in which these properties are managed, a topic that has seen renewed interest among state leaders and changes in the law relating to the reporting of state property utilization. The Commission’s goal is to provide a comprehensive overview of how the state holds and manages its varying property interests and to identify specific areas where the process can be improved.
At the October 25, 2011 hearing, the Commission will hear about challenges in management of state property from the California state auditor. Following her testimony, the Commission will hear from a panel of executives at the Department of General Services regarding asset management and enhancement and maintaining statewide property information. Finally, the executive officer of the State Lands Commission will describe that commission’s role in independently managing public trust and school lands.
There will be an opportunity for public comment at the end of the hearing. The Commission also encourages written comments. Immediately following the hearing, the Commission will hold a business meeting in Room 125 of the State Capitol in Sacramento.
All public notices for meetings are on the Commission’s Web site, www.lhc.ca.gov. If you need reasonable accommodation due to a disability, please contact Stuart Drown at (916) 445-2125 or littlehoover@lhc.ca.gov by Tuesday, October 18, 2011.
- Elaine Howle, California State Auditor

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March 202012Property Management1:30 p.m., Legislative Counsel Conference Room, Lower Level, 925 LSubcommittee MeetingPublic Notice
PUBLIC NOTICE
FOR IMMEDIATE RELEASE
March 7, 2012For Additional Information Contact:
Stuart Drown, Executive Director
(916) 445-2125Notice of Meeting
The Property Management Subcommittee of the Little Hoover Commission has scheduled a public meeting for Tuesday, March 20, 2012. The meeting will begin at 1:30 p.m. in the Legislative Counsel Conference Room in the lower level of 925 L Street in Sacramento. Participants will discuss the state’s ownership of fairground properties, particularly in light of the elimination of General Fund support for state fairs.
All public notices for meetings are on the Commission’s Web site, www.lhc.ca.gov. If you need reasonable accommodation due to a disability, please contact Stuart Drown, executive director, at (916) 445-2125 or littlehoover@lhc.ca.gov by Tuesday, March 13, 2012.
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January 242012Property Management9:00 a.m., State Capitol, Room 2040, Sacramento, CAPublic HearingAgenda
AGENDA
Public Hearing on Property Management
Tuesday, January 24, 2012, at 9:00 a.m.
State Capitol, Room 2040
Sacramento, CA
Opening RemarksThe Need for Vision and Focused Leadership
- John Salmon, Owner, Upstream Investments, LLC (Written Testimony)
- Peter Stamison, former Director, Department of General Services, and former Administrator, Pacific Rim Region, U.S. General Services Administration (Written Testimony)
Government Asset Management Strategy
- Olga Kaganova, Senior Fellow, Center on International Development and Governance, The Urban Institute (Written Testimony)
Potential Benefits of Asset Mapping Through Geospatial Information Systems
- Scott Gregory, Geographic Information Officer, California Technology Agency (Written Testimony)
Case Study: Rethinking California Fairgrounds- Rebecca Desmond, Director, Division of Fairgrounds and Expositions, Department of Food and Agriculture (Written Testimony)
Public Comments
Public NoticePUBLIC NOTICE
FOR IMMEDIATE RELEASE
January 10, 2012For Additional Information Contact:
Stuart Drown, Executive Director
(916) 445-2125Notice of Meetings
On Tuesday, January 24, 2012, the Little Hoover Commission will conduct a public hearing on property management in California. The hearing will begin at 9 a.m. in Room 2040 of the State Capitol in Sacramento.
The Little Hoover Commission is taking a broad look at the range of property interests held by the state and the process in which these properties are managed, a topic that has seen renewed interest among state leaders and changes in the law relating to the reporting of state property utilization. The Commission’s goal is to provide a comprehensive overview of how the state holds and manages its various property interests and to identify specific areas where the process can be improved.
At the January 24, 2012 hearing, the Commission will hear from the owner of a private real estate company who was the first director of the Governor’s Office of Asset Management, and from a former director of the Department of General Services. The Commission then will hear about government asset management from a senior fellow from The Urban Institute. Following her testimony, the geographic information officer from the California Technology Agency will speak about the benefits of using mapping technology in managing assets. Finally, the Commission will hear about management of California fairgrounds from the director of the state’s Division of Fairgrounds and Expositions in the Department of Food and Agriculture.
There will be an opportunity for public comment at the end of the hearing. The Commission also encourages written comments. Immediately following the hearing, the Commission will hold a business meeting in the Legislative Counsel Conference Room in the Lower Level of 925 L Street, Sacramento.
On Monday, January 23, 2012, the Property Management Subcommittee of the Little Hoover Commission will hold an advisory committee meeting on current property management practices within state agencies. The meeting will begin at 1:30 p.m. in the Legislative Counsel Conference Room in the Lower Level of 925 L Street, Sacramento.
All public notices for meetings are on the Commission’s Web site, www.lhc.ca.gov. If you need reasonable accommodation due to a disability, please contact Stuart Drown at (916) 445-2125 or littlehoover@lhc.ca.gov by Tuesday, January 17, 2012.
- John Salmon, Owner, Upstream Investments, LLC (Written Testimony)
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January 232012Property Management1:30 p.m., Legislative Counsel Conference Room, Lower Level, 925 LAdvisory Committee MeetingAgenda
AGENDA
Advisory Committee Meeting on Property Management
Monday, January 23, 2012, 1:30 - 3:30 p.m.
Legislative Counsel Conference Room, Lower Level
925 L Street, Sacramento, CA
Meeting Goals: To discuss current property management practices within multiple state agencies.1:30 – 1:40 p.m.
Welcome and Introductions
1:40 – 2:30 p.m.
Overview of Department Asset Management Operations
2:30 – 3:30 p.m.
Discussion
Public NoticePUBLIC NOTICE
FOR IMMEDIATE RELEASE
January 10, 2012For Additional Information Contact:
Stuart Drown, Executive Director
(916) 445-2125Notice of Meetings
On Tuesday, January 24, 2012, the Little Hoover Commission will conduct a public hearing on property management in California. The hearing will begin at 9 a.m. in Room 2040 of the State Capitol in Sacramento.
The Little Hoover Commission is taking a broad look at the range of property interests held by the state and the process in which these properties are managed, a topic that has seen renewed interest among state leaders and changes in the law relating to the reporting of state property utilization. The Commission’s goal is to provide a comprehensive overview of how the state holds and manages its various property interests and to identify specific areas where the process can be improved.
At the January 24, 2012 hearing, the Commission will hear from the owner of a private real estate company who was the first director of the Governor’s Office of Asset Management, and from a former director of the Department of General Services. The Commission then will hear about government asset management from a senior fellow from The Urban Institute. Following her testimony, the geographic information officer from the California Technology Agency will speak about the benefits of using mapping technology in managing assets. Finally, the Commission will hear about management of California fairgrounds from the director of the state’s Division of Fairgrounds and Expositions in the Department of Food and Agriculture.
There will be an opportunity for public comment at the end of the hearing. The Commission also encourages written comments. Immediately following the hearing, the Commission will hold a business meeting in the Legislative Counsel Conference Room in the Lower Level of 925 L Street, Sacramento.
On Monday, January 23, 2012, the Property Management Subcommittee of the Little Hoover Commission will hold an advisory committee meeting on current property management practices within state agencies. The meeting will begin at 1:30 p.m. in the Legislative Counsel Conference Room in the Lower Level of 925 L Street, Sacramento.
All public notices for meetings are on the Commission’s Web site, www.lhc.ca.gov. If you need reasonable accommodation due to a disability, please contact Stuart Drown at (916) 445-2125 or littlehoover@lhc.ca.gov by Tuesday, January 17, 2012.
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October 252011Property Management9:00 a.m., State Capitol, Room 437, Sacramento, CAPublic HearingAgenda
AGENDA
Public Hearing on Property Management
Tuesday, October 25, 2011, at 9:00 a.m.
State Capitol, Room 437
Sacramento, CA
Opening RemarksChallenges in California’s Management of State Property
- Elaine Howle, California State Auditor
Reports Submitted by Ms. Howle:
- California State Auditor. March 2009. Management of Surplus Property Follow-Up Review: The State Has Made Limited Progress, but Fundamental Concerns Remain.
- California State Auditor. August 2011. State Lands Commission Because It Has Not Managed Public Lands Effectively, the State Has Lost Millions in Revenue for the General Fund.
Property Management Information and Assistance – Department of General Services
- James Derby, Assistant Deputy Director, Real Estate Services Division, Department of General Services
- Joe Mugartegui, Chief, Asset Management Branch, Real Estate Services Division, Department of General Services
- Robert McKinnon, Assistant Chief, Asset Enhancement and Surplus Sales, Asset Management Branch, Real Estate Services Division, Department of General Services
- Department of General Services (Joint Written Testimony)
Property Management in an Independent Agency – California State Lands Commission
- Curtis Fossum, Executive Officer, California State Lands Commission (Written Testimony)
Public Comments
Public NoticePUBLIC NOTICE
FOR IMMEDIATE RELEASE
October 11, 2011For Additional Information Contact:
Stuart Drown, Executive Director
(916) 445-2125Notice of Meeting
On Tuesday, October 25, 2011, the Little Hoover Commission will conduct a public hearing on property management in California. The hearing will begin at 9 a.m. in Room 437 of the State Capitol in Sacramento.
The Little Hoover Commission is taking a broad look at the range of property interests held by the state and the process in which these properties are managed, a topic that has seen renewed interest among state leaders and changes in the law relating to the reporting of state property utilization. The Commission’s goal is to provide a comprehensive overview of how the state holds and manages its varying property interests and to identify specific areas where the process can be improved.
At the October 25, 2011 hearing, the Commission will hear about challenges in management of state property from the California state auditor. Following her testimony, the Commission will hear from a panel of executives at the Department of General Services regarding asset management and enhancement and maintaining statewide property information. Finally, the executive officer of the State Lands Commission will describe that commission’s role in independently managing public trust and school lands.
There will be an opportunity for public comment at the end of the hearing. The Commission also encourages written comments. Immediately following the hearing, the Commission will hold a business meeting in Room 125 of the State Capitol in Sacramento.
All public notices for meetings are on the Commission’s Web site, www.lhc.ca.gov. If you need reasonable accommodation due to a disability, please contact Stuart Drown at (916) 445-2125 or littlehoover@lhc.ca.gov by Tuesday, October 18, 2011.
- Elaine Howle, California State Auditor