REAL

PROPERTY

NOVEMBER 2018

REAL PROPORTY FUNDING ACCOUNTABLITIES FOR CLIENT DEPARTMENT’S

FINANCIAL OFFICERS

FROM THE PERSPECTIVE OF A TYPICAL CLIENT DEPARTMENT’S REAL PROPERTY TEAM

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Presentation Overview

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GoCTBS

CFOHRRP/IT/Security

Client Department / Agency

Real Property Team

PSPCAccommodation

Management

PSPCReal Property

Program

5

Real Property within the Government of Canada… Context

Financial Administration Act

Federal Real Property and

Federal Immovables Act

GOVERNMENT

OF CANADA

LEGISLATION

Policy Framework for the Management of

Assets and Acquired Services

Policy on Management of Real Property

Guide to the Management of Real

Property

TREASURY BOARD

SECRETARIAT

PUBLICATIONS

Real Property within the Government of Canada… Context

All departments as defined in Schedule I, section 2 of the Financial Administration Act, unless specific acts or regulations override it

are subject to these Real Property policy documents.

GOVERNMENT

OF CANADA

LEGISLATION

Custodial departments and Crown corporations regularly record, update and

certify information in the Directory of Federal Real Property (DFRP).

TREASURY BOARD

SECRETARIAT

PUBLICATIONS

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Real Property Office Accommodation… Context

PUBLIC SERVICES

AND PROCURMENT

CANADA MANDATE

Department of Public Works and Government Services Act

“PSPC’ Federal Accommodation Program is the designated custodian of general-purpose office

accommodation in Canada, provided on an obligatory basis to departments [and agencies], and

sets the standards for them.”

CLIENT DEPARTMENTS

AND FEDERAL

AGENCIES

Standard Terms and Conditions of PSPC-Administered Accommodations

“The management of federal accommodations is a shared accountability between PWGSC and client

departments to ensure open and public accountability for the allocation, compliance, health

and safety, and use of accommodations.

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Real Property Office Accommodation… 13% Levy

CLIENT

DEPARTMENT

TREASURY BOARD

SUBMISSION

Clients Departments contribute a 13% accommodation levy through their Treasury Board

submissions for accommodation costs.

The levy forms the basis for adjusting the client department space envelope; Program Growth

Report.

The 13% default approach typically covers the space required for the FTEs only. All SPS must be identified

and costed separately.

13%PSPC TB SUBMISSION

QUASI-STAT

FUNDING FORMULA

PSPC does not have automatic access the 13% premium for accommodation.

These funds are retained by the Department of Finance and PSPC can access them through an

annual Treasury Board submission.

The “Office” funds are for Non-Reimbursing “rent” and for PSPC’s portion of fit-up projects.

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Real Property Office Accommodation… Space Envelope

Note: FTEs located in custodial building do not contribute to PSPC’s 13% accommodation levy.

The Treasury Board (TB) approved space envelope refers to the total amount of space client departments and agencies can occupy based on

funding received by PWGSC from TBS to provide accommodation in accordance with standards, policies and guidelines.

The non-reimbursing occupancy level refers to the total number of square metres rentable (m²r) occupied by client departments and agencies in

facilities under the administration of PWGSC.

The variance or difference between the approved space envelope and the total non-reimbursing occupancy level is generally referred to as

“headroom”.

Reimbursing Expansion Control Framework (ECF) refers to those occupancies of a client department or agency that exceed the applicable

department or agency’s approved space envelope.

PSPC

SPACE ENVELOPE

Non-Reimbursingm2r

Headroom - m2r

ECF-Reimbursing - m2r

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PSP

C C

ost

Real Property Office Accommodation… Space Envelope

ECF-REIMBURSING

OCCUPANCY

INSTRUMENT

PSPC

SPACE ENVELOPE

NON-REIMBURSING

OCCUPANCY

INSTRUMENT

Includes “Headroom”

Clie

nt

Co

st

Non-Reimbursingm2r

Headroom - m2r

ECF-Reimbursing - m2r

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Note: FTEs located in custodial building do not contribute to PSPC’s 13% accommodation levy.

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Real Property Office Accommodation… Occupancy Instruments

Lease-Out Contract - Occupancy Instrument (OI): A formal agreement between a department or agency and PSPC concerning occupancy in a particular asset.

It also records the terms and conditions that govern the provision and occupancy of the accommodation, as well as charges for accommodation and agreed upon fit-up funding accountabilities.

Client/Agency Real Property

Cost Centre Manager

PSPC Accommodation

Manager

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PSP

C C

ost

Clie

nt

Co

st

Real Property Office Accommodation… Occupancy Instruments

ECF-REIMBURSING

OCCUPANCY

INSTRUMENT

NON-REIMBURSING

OCCUPANCY

INSTRUMENTIncludes “Headroom”

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Non-Reimbursing Occupancy: Space provided to a client department as part of their space envelope is provided via a non-reimbursing occupancy instrument as it is funded by PSPC through the Treasury Board Approved 13% Accommodation Levy. Charges for the occupancy, which include rent, Standard Building Services and Standard Fit-up “bundle of good” are funded by PSPC.

Expansion Control Framework (ECF) Occupancy: Space provided to a non-reimbursing client department in excess of their space envelope (i.e. over and above PSPC-funded accommodations) is provided via an Expansion Control Framework (ECF) occupancy instrument. Charges for the occupancy, which include rent, Standard Building Services and Standard Fit-up “bundle of good” are NOT funded by PSPC.

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Real Property Office Accommodation… Split Funding Model

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Funding accountabilities for GCworkplace Fit-up Projects are shared between PSPC and Client Departments which are illustrated in section A3.2, Funding Accountabilities of PSPC and Client Departments, of the Government of Canada Workplace 2.0 Fit-up Standards.

If appropriate funds are not available when PSPC requires these funds, a reverse re-profiling arrangement with TBS can be used to fund these funding pressures. This is similar to a loan that a department or agency would pay from its future budget.

Ideally these planned projects should be funded with existing in year appropriated funds, however if the funding related to client fit-up costs exceed the departments capacity to fund, CFO’s need to work closely with the their TB Analyst to account for these large one-time costs .

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Real Property Office Accommodation… Fit-up Project Cycle

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In 2017-18, PSPC advised all client departments that when a lease or occupancy instrument (OI) is being renewed in space that does not meet the Government of Canada Fit-up Standards; a fit-up project must be implemented. Therefore, all options considered in the financial analysis for any lease renewal, or the renewal of an OI in a Crown-owned asset, must incorporate a fit-up upgrade in line with the Fit-up Standards.

When PSPC makes portfolio investment decisions to proceed with a fit-up project based on their investment analysis and governance model client department and agencies are committed to fund the client costs related to these delivery of the fit-up project.

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Real Property Office Accommodation… Stakeholder Model

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Stakeholder Engagement and Governance Model

One of the key steps in ensuring all stakeholders are aware, engaged and have the same understanding of the funding requirements to support a Departmental National Accommodation Strategy is to establish a new governance model for accommodation planning and delivery.

Real Property Managers, Program Managers, Financial Officers and Human Resources need to strengthen their networks and broaden their department or agency’s understanding of the Office Accommodation program of works and the funding required to successfully implement the GoC Workplace Renewal Objectives.

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Real Property Office Accommodation… Stakeholder Model

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Chief Financial Officer-Gather/report TB Submission/MC activity annually and report on TB approved FTE and Salary dollars.

-Obtain funding from TBS for client fit-up projects costs.

Real Property Responsible for:

-Developing national accommodation strategies, annual programs of work to deliver office

accommodations services in support of programs across the country.-Annual life-cycle fit-up project

forecast.

Client Department / Agency

Internal Engagement and Governance Human Resources

Responsible for :-Gathering/reporting FTE requirements

by regional segment.-Change Management Activities related

to Workplace Renewal- Leadership

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Real Property Office Accommodation… Fit-up Funding Model

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Occupancy Instrument Expiry Forecast = Fit-up Budget

Cost Type Unit cost ($)

SPS cost per m2u: $1,000

Cost per FTE: $15,500

Fiscal Year Cost FTE SPS m2u Percentage2020 $6,250,000 400 50 4%

2021 $3,120,000 200 20 2%

2022 $12,470,000 800 70 8%

2023 $2,325,000 150 0 2%

2024 $1,162,500 75 0 1%

2025 $15,850,000 1000 350 10%

2026 $9,420,000 600 120 6%

2027 $3,200,000 200 100 2%

2028 $2,325,000 150 0 2%

2029 $12,590,000 800 190 8%

2030 $3,915,000 250 40 3%

2031 $10,275,000 650 200 7%

2032 $13,330,000 860 0 9%

2033 $9,577,500 615 45 6%

2034 $14,350,000 900 400 9%

2035 $9,320,000 600 20 6%

2036 $11,745,000 750 120 8%

2037 $1,550,000 100 0 1%

2038 $2,325,000 150 0 2%

2039 $11,685,000 750 60 8%

Totals $156,785,000 10000 1785 100%

Organizations ~10,000 FTEs - 20 Year Model

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Real Property Office Accommodation… Fit-up Funding Model

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Organizations ~10,000 FTEs - 20 Year Model

Occupancy Instrument Expiry Forecast = Fit-up Budget

$0

$2,000,000

$4,000,000

$6,000,000

$8,000,000

$10,000,000

$12,000,000

$14,000,000

$16,000,000

$18,000,000

Clie

nt

Fit-

up

Co

st

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Real Property Office Accommodation… Fit-up Funding Model

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Organizations under ~10,000 FTEs - 20 Year Model

Occupancy Instrument Expiry Forecast = Fit-up Budget

$0

$2,000,000

$4,000,000

$6,000,000

$8,000,000

$10,000,000

$12,000,000

$14,000,000

$16,000,000

$18,000,000

Clie

nt

Fit-

up

Co

st

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Real Property Office Accommodation… Fit-up Funding Model

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Organizations ~10,000 FTEs - 20 Year Model

Portfolio Approach based on 5% of Inventory Fit-up

per year = Fit-up Budget

Cost Type Unit cost ($)

SPS cost per m2u: $1,000

Cost per FTE: $15,500

Fiscal Year Cost FTE SPS m2u Percentage2020 $7,836,750 500 86.75 5%

2021 $7,836,750 500 86.75 5%

2022 $7,836,750 500 86.75 5%

2023 $7,836,750 500 86.75 5%

2024 $7,836,750 500 86.75 5%

2025 $7,836,750 500 86.75 5%

2026 $7,836,750 500 86.75 5%

2027 $7,836,750 500 86.75 5%

2028 $7,836,750 500 86.75 5%

2029 $7,836,750 500 86.75 5%

2030 $7,836,750 500 86.75 5%

2031 $7,836,750 500 86.75 5%

2032 $7,836,750 500 86.75 5%

2033 $7,836,750 500 86.75 5%

2034 $7,836,750 500 86.75 5%

2035 $7,836,750 500 86.75 5%

2036 $7,836,750 500 86.75 5%

2037 $7,836,750 500 86.75 5%

2038 $7,836,750 500 86.75 5%

2039 $7,836,750 500 86.75 5%

Totals $156,735,000 10000 1735

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Real Property Office Accommodation… Fit-up Funding Model

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Proposed Large Organizations over 10,000 FTEs - 20 Year Model

Budget for ~5% workplace moderation per fiscal year

Portfolio Approach based on 5% of Inventory Fit-up per year = Fit-up Budget

$0

$1,000,000

$2,000,000

$3,000,000

$4,000,000

$5,000,000

$6,000,000

$7,000,000

$8,000,000

$9,000,000

Clie

nt

Fit-

up

Co

st

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Real Property Office Accommodation… Fit-up Funding Model

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Proposed Large Organizations over 10,000 FTEs - 20 Year Model

Budget for ~5% workplace moderation per fiscal year

Portfolio Approach based on 5% of Inventory Fit-up per year = Fit-up Budget

$0

$1,000,000

$2,000,000

$3,000,000

$4,000,000

$5,000,000

$6,000,000

$7,000,000

$8,000,000

$9,000,000

Clie

nt

Fit-

up

Co

st

Presentation Conclusion

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Client Department / Agency

Real Property Team

GoCTBS

CFOHRRP/IT/Security

PSPCAccommodation

Management

PSPCReal Property

Program

22

Questions

Discussion

REAL

PROPERTY

NOVEMBER 2018

REAL PROPORTY FUNDING ACCOUNTABLITIES FOR CLIENT DEPARTMENT’S

FINANCIAL OFFICERS

FROM THE PERSPECTIVE OF A TYPICAL CLIENT DEPARTMENT’S REAL PROPERTY TEAM

23

REAL

PROPERTY

NOVEMBER 2018

REAL PROPORTY FUNDING ACCOUNTABLITIES FOR CLIENT DEPARTMENT’S

FINANCIAL OFFICERS

FROM THE PERSPECTIVE OF A TYPICAL CLIENT DEPARTMENT’S REAL PROPERTY TEAM

24