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112.
- A substantial part of the Crown's ownership interest in the Police is tied up in property. The Police have 599 freehold properties with a book value of $312.6 million (including 184 houses at a book value of 15.3 million). The Police also lease 166 additional properties, at a total net rent of $8.6 million.
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113.
- An analysis of property management issues confronting the Police is contained in Appendix 3. The analysis was originally going to focus on two issues:
-
(i)
- the rationale for the continuing ownership of property by the Police, and the potential for selling property and leasing; and
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(ii)
- the location of Police premises relative to public safety risk, and the scope for swapping prime sites for alternative locations.
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114.
- The analysis has revealed that consideration of these issues is premature. This is because there are underlying problems with property management that must be addressed first, notably:
-
(i)
- the absence of a planned national property strategy, rooted in a firm understanding of property needs, to facilitate rational, consistent, and nationally directed property decisions
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(ii)
- the absence of robust property information and reporting systems
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(iii)
- a decentralised property process with little in the way of accountability specification and performance measurement. There is no consistency of asset or service procurement.
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(iv)
- arising from (iii), little opportunity is taken for global efficiencies. The National Property Office has no service level agreements with the regions.
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(v)
- a depreciation regime whose rates are lower than the Inland Revenue Department published rates.
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(vi)
- properties, particularly houses, which are in average or poor condition. Little money is spent on property maintenance, with the result that deferred maintenance is high (estimated at $2.4 million for Police stations alone).
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115.
- The immediate imperative is to bring decisions on property back within a national framework. One way of achieving this would be to establish a Property Service Organisation headed by a Property Manager, and to vest ownership of New Zealand Police property in that organisation. The Property Manager would report to the Chief Financial Officer, and be assisted by three property managers located outside of Wellington each managing an agreed portfolio of districts.
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116.
- Are specifically, the functions of the Property Service Organisation would be:
-
(i)
- to establish in consultation with District Managers a national property strategy appropriate to the new organisation and directions of policing;
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(ii)
- to develop an evaluative programme for considering the viability and priority of capital works;
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(iii)
- to develop and implement a property management information system with appropriate performance measures and benchmarks to identify performance improvement opportunities as the portfolio evolves;
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(iv)
- to enter into service agreements with District Managers on the provision of property, this initially being done on an occupation and capital charge basis district by district. The service agreements would cover occupation, maintenance, cleaning, compliance, and energy purchase. The application of a capital charge alone will cause District Managers to think carefully about their property needs. These will dispel the notion that property is a free good; and
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(v)
- to urgently review maintenance requirements with a view to bringing all property up to a satisfactory standard. Funding for this should fall outside of normal operating budgets.
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117.
- There are, however, some more immediate opportunities to rationalise at least part of the property portfolio:
-
(i)
- the preferred organisational structure described earlier means that the Commissioner's Office could be housed in an area of around 3000sq metres, at a current total occupation of $750,000 annum for similar quality accommodation. The total occupancy cost a present is 2.4 million. The lease expires on 8 April 2000 and if renewed would result in a considerable surplus of accommodation, if the preferred structure is adopted. Given the potential savings in rent, it is important to establish the accommodation requirements for the Commissioner's Office as soon as possible so that alternatives can be identified which meet the requirements within a sufficient timeframe to enable withdrawal and relocation from the current property;
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(ii)
- the lease on the accommodation at Transport House, Wellington expires on 30/9/2000. A right of renewal for six years in available, but at a rental higher than the market rental level. The lease should either be restructured to apply only to the space the Police require, and failing this, viable alternatives should be identified within this timeframe; and
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(iii)
- in respect of housing, a total review of housing stock should be undertaken urgently with a view to a disposal of those properties which are not genuinely required to satisfy "hard to fill" policing requirements. Initial indications are that some $13 million could be realised through this process. Some of these savings could be released to address deferred maintenance.
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118.
- The gains specified above are relatively modest compared with the potential gains arising from a rationalisation of the property stock within the context of a national strategic property plan.
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