Property Asset Management Plan

Strategy, Framework and Action Plan 2019 to 2023

Corporate Services, Council Offices, School Place, Kirkwall, Orkney, KW15 1NY

V1 – October 2019 DRAFT VERSION

IMAGE: The cover displays the Orkney Islands Council crest, the title “Property Asset Management Plan”, the subtitle “Strategy, Framework and Action Plan 2019 to 2023”, and the address “Corporate Services, Council Offices, School Place, Kirkwall, Orkney, KW15 1NY”. It also contains photographs representing digital working, transport, renewable energy, the Orkney islands and cruise ships.

Contents

1. Executive Summary
2. Introduction
3. A Corporate Approach To Property Asset Management
   • 3.1 Property Data
   • 3.2 Strategic Overview
   • 3.3 Governance
   • 3.4 A Corporate Approach to Property Asset Management
   • 3.5 Effective Property Asset Management
   • 3.6 Defining the Decision Making Process
4. Asset Management
   • 4.1 Approach to Property Asset Management
   • 4.2 Operational Property
   • 4.3 Non-operational Property
   • 4.4 Surplus Property
5. Current Property Asset Performance
   • 5.1 Energy Performance
   • 5.2 Condition
   • 5.3 Suitability
   • 5.4 Condition and Suitability Performance
   • 5.5 Operational Property Revenue Costs
   • 5.6 Accessibility
   • 5.7 Performance of the Non-operational Property Portfolio
6. Capital Programme
7. Financial Outlook
8. Review of Asset Management Objectives
   • 8.1 Effective Asset Management Plans and Policies
   • 8.2 Accurate Asset Information
   • 8.3 Monitoring and Reporting Asset Performance
   • 8.4 Financial Planning
   • 8.5 Community Planning
9. Digital Land and Property Data
10. Community Empowerment and Asset Transfer
11. Action and Implementation Plan
12. Appendix 1 – Operational Property
13. Appendix 2 – Non-operational Property

1. Executive Summary

The Council owns a diverse range of land and property assets that make an important and positive contribution to achieving our corporate objectives. The quality, condition, suitability and sustainability of our property assets have a direct bearing on the quality and deliverability of front line services. It is therefore extremely important that these assets are managed in a proactive and efficient way.

Strategic asset management of land and buildings is the activity that ensures that our property is optimally structured to best align with the Council’s corporate objectives. Our properties must support the main business of the Council which is to provide services.

This Property Asset Management Plan provides an overview of the quantity, existing uses and current performance of Orkney Island Council’s property assets. It identifies future actions and potential risks and seeks to provide a well-managed property portfolio to support the delivery of Council services.

There is also a range of key drivers which serve to shape the content of the plan. The key drivers are mainly development issues, performance measures and future activities. The local economic position will also drive the need to use property effectively and efficiently and will shape our property requirements in the future.

Information on the quality of property held by the Council is used to inform future planning decisions for its use, value (financial and non-financial) and opportunities for development. Delivering a high performing property portfolio is an essential part of implementing a long term strategy which support’s the Council’s objectives and makes best use of the resources available.

There is a significant level of investment, expenditure and activity relating to property assets and the Council must ensure best value. We will continue to ensure the strategic decision making process treats property assets as a corporate resource which drives and delivers services and results in improved decision making and a high performing property portfolio.

2. Introduction

Effective and efficient use of property by Orkney Islands Council is vital in ensuring the delivery of many of the Council’s key objectives. There are of course significant challenges in sustaining a comprehensive property portfolio throughout Orkney due to the geographic layout and low population density in many parts of the Orkney mainland and isles, that is resources cannot always be centrally located.

The Council’s approach to property management has moved forward since the publication of our last asset management plan in June 2016. That plan led to the successful implementation of a corporate approach to property management.

A structured and programmed strategy requires long-term management of our property portfolio in order that the best solutions are provided. Short term or constantly changing strategies will not produce an optimum solution and will result in needless waste of resources, abortive expense and a lower quality of service delivery. Ongoing budget pressures faced by the Council requires robust and coordinated planning across a range of service areas.

This plan considers the Council’s property portfolio as defined by CIPFA (The Chartered Institute of Public Finance & Accountancy) and therefore other types of asset do not feature within the scope of this plan. Excluded assets are Open Spaces, Roads, Street Lighting and Infrastructure (including marine, airfields and burial ground infrastructure), Fleet/Plant, Housing and Information Computer Technology.

Asset Management is a crucial process which aligns the Council’s business and property strategies, ensuring the optimisation of our property assets in a way which best supports our key business goals and objectives. This involves ensuring efficiency in the use of our assets and developing a property portfolio which is well maintained and affordable within the terms of the best value available to the Council.

The objective is to provide the right property asset, in the right location, at the right price and quality.

Work continues with the analysis of our business needs in terms of accommodation requirements: location, size, facilities and so on. We will continue to review how our property portfolio can be used to best suit service requirements.

With regards to the importance of property asset management, it should be noted that:

• Property matters contribute to the public’s perception of Orkney Islands Council.
• Effective property asset management can drive overall service improvement and enhancements, including efficiencies and savings without loss of service.
• Construction of new and maintenance of existing property accounts for a significant amount of the Council’s expenditure.

3. A Corporate Approach To Property Asset Management

Property assets are owned corporately by the Council and their management is coordinated across the organisation to maximise benefits and to support the delivery of the Council’s key objectives as set out in the Corporate Strategic Plan 2018-2023.

The key drivers for changes in the demand for public services are:

• Changing public needs and priorities.
• Increasing public expectations on quality and ease of access to joined up public services.
• Local community aspirations.
• Community Empowerment (Scotland) Act 2015.

The local drivers for changes in the provision of public services are:

• Budget priorities in the face of increasing operating costs.
• The need to identify and adopt new efficient and flexible ways of working.
• Opportunities to collaborate and work closely with community groups and partners.

We aim to manage our property assets in a balanced manner which takes proper account of the Council’s service requirements and of the upkeep of our assets to ensure their optimum use over the long term.

3.1 Property Data

An important aspect of good asset management is having comprehensive and meaningful data about property. Data is a key driver which supports good decision making, performance monitoring and operational and strategic planning. The Council continues to develop the quality and quantity of data it holds about property assets.

A consequence of the continued refinement of the Council’s property data is that some of the facts and figures referred to in this report are similar, but not identical to the information presented in the previous version of this property asset management plan.

The classification of some of our properties has changed over time, as does the accounting value of all property assets which is regularly assessed and updated. The cost of maintenance varies, the unit cost of energy changes and perhaps more importantly, so does the actual energy an asset uses. This may be as result of changes in service delivery or it might be due to other external factors such as legislation. The key message to take from all of these variables is that change is a natural consequence of the Council’s activities and we endeavour to manage change in a professional and effective way, including property asset management.

3.2 Strategic Overview

The key strategy in respect of our approach to asset management is set out in the Corporate Asset Management Plan 2019 to 2023. That plan identifies the main types of asset which require effective management to ensure all assets assist the Council to deliver on its objectives.

The primary objective of this Property Asset Management Plan, which sits below the Corporate Asset Management Plan along with other individual asset plans, is to manage the Council’s property assets effectively and efficiently to deliver on Council objectives by ensuring the most appropriate properties are available to all service delivery partners. This continues to be a critical necessity given the local and national economic context.

3.3 Governance

In 2017 a review of our governance process for property management resulted in an increased level of delegation being awarded to the Executive Director of Corporate Services for property related decisions. The revised Scheme of Delegation has been in operation since early 2018 and has enabled faster, more responsive and efficient decision making on a wide range of property matters such as sales, acquisitions, commercial and community leasing. A report on the implementation of the new governance arrangements was considered and endorsed by the Asset Management Sub-committee at a meeting in March 2019.

3.4 A Corporate Approach to Property Asset Management

In line with good practice, the development of a corporate approach to property asset management has enabled the Council to take a stronger corporate view with oversight across all service area needs. A corporate approach to property management is now embedded in many aspects of the Council’s procedures and we will continue to develop and refine this approach.

The Property Asset Management Plan 2019 to 2023 sets out the proposed objectives and processes required to continue to develop and deliver a corporate approach to property asset management. The following sections of this plan highlight the key tasks and issues to be considered including property performance, benchmarking, strategic and capital planning and the effective day to day management of property.

An Action and Implementation Plan is detailed in section 11 of this document which will be developed, refined and delivered as work on property asset management progresses.

3.5 Effective Property Asset Management

Effective property asset management is vital in addressing a number of key challenges for our property portfolio. Property assets must be used to maximise benefit to service areas in the most efficient and effective manner. The exception is where property assets are held for investment purposes rather than for service requirements and in this case the focus will be on balancing the financial return against revenue costs incurred on maintenance.

Strategic asset management of our property assets can be summarised as follows:

• Ensuring properties are managed effectively and demonstrate that they deliver best value.
• Linked with changing business, corporate and organisational objectives.
• Maintaining and improving the portfolio of properties as required to support the delivery of Council services through a variety of service delivery models, including co-location and joint working with partners.
• Compliance with statutory obligations such as the Equalities Act 2010 and health and safety standards.
• Ensuring the property portfolio meets the current and future needs of local communities.
• Ensuring the property portfolio can meet, or exceed, sustainability targets.

IMAGE: A diagram shows the relationship between the Property Asset Management Plan, the Service Asset Management Plans, Service Plans, Carbon Management Programme, Performance Monitoring, Corporate Asset Management Plan 2019 to 2023 and Corporate Strategic Plan 2018 to 2023. These are linked through Corporate Property Asset Management, the Asset Management Sub-committee, the Capital Planning & Asset Management Strategy Group, stakeholders, performance, the Senior Management Team and Finance.

3.6 Defining the Decision Making Process

The diagram below shows the corporate property asset management ethos which will encompass all property related decisions. Corporate management of property assets must consider stakeholders, service areas and the performance of property including its cost and value.

The needs of stakeholders are reflected in the Council’s objectives and those of each service area through various service plans. Analysis and reporting of property performance and its associated revenue cost to sustain and maintain an appropriate operating environment must be sufficient to enable strategic review and decision making at regular intervals.

The Council’s governance arrangements for property has been reviewed and is now better aligned with a corporate approach to property asset management.

The Council’s Corporate Asset Management Plan 2019 to 2023 sets out a framework for asset decisions to be made. The proposed property decision making process is replicated here:

• Property Asset Management Plan
• Service Asset Management Plans
• Service Plans
• Carbon Management Programme
• Performance Monitoring
• Corporate Asset Management Plan 2019 to 2023
• Corporate Strategic Plan 2018 to 2023
• Corporate Property Asset Management
• Asset Management Sub-committee
• Capital Planning & Asset Management Strategy Group
• Stakeholders
• Performance
• Senior Management Team
• Finance

4. Asset Management

4.1 Approach to Property Asset Management

Centralising day to day property asset management in one service area allows for the overarching corporate strategies outlined in this plan to be evenly and equally applied across all service areas and eases the burden of property management resources used within a wide variety of service areas.

The strategic lead for property and asset management sits within the Corporate Services directorate. The Head of IT and Facilities is the lead property asset manager with responsibility for administering the Council’s strategic property management and ensuring that corporate efficiencies are delivered.

4.2 Operational Property

Operational property is defined as property (land or building, or part of a building, or both) used in the production or supply of goods or services or for administrative purposes. That is, property from which the Council delivers a service directly or uses in the delivery of a service in the event that the service is delivered at another location. For instance, schools, care homes and the Council Offices at School Place are examples of operational property. Depots and workshops used by the Council to support roads maintenance and waste collection services are also operational even though services are not delivered directly to the public at these locations.

As of June 2019 the Council manages 226 operational assets, which includes 196 buildings with a gross internal floor area of 134,110m², an increase of 12,908m² (10.6%) compared to the last plan. The condition of these operational property assets can enhance or adversely impact on the quality and range of services delivered. These statistics can change at any point in time due to changes in operational service delivery arrangements. For example, when the new care home in Stromness becomes operational in early 2020 the existing facility at St Peters House will close with a net increase in operational floor area but no change in the number of operational properties overall – the new facility is larger and the old care home will no longer be classified as operational when the new care home opens.

IMAGE: A governance diagram shows Policy & Resources Committee at the top, linked to the Asset Management Sub-committee, Officers Capital Working Group and Senior Management Team. The lower level includes the Carbon Management Plan, Repairs & Maintenance Programme, Technical & Performance, Capital Planning & Asset Management Strategy Group, Asset Management Board, Service Committees and Service Users.

In real terms, whilst the floor area and quantity of assets has increased compared to the previous assessment in 2016, our expenditure per square metre has reduced by £3 per square metre.

16 operational assets are leased in from the private sector and these include ground leases, office accommodation, an industrial unit and residential care facilities. The annual cost to the Council of leasing in property is currently £54,364.56 in rental costs in addition to revenue costs incurred on other property elements such as rates, insurance and maintenance. This represents a reduction of approximately £38,000 per annum in rental costs when compared to the previous plan.

Operational property is a significant issue for the Council, especially given our remote, rural geography and the spread of our community across many populated Islands, including the Orkney mainland. We require a wide variety of type and size of property, some multipurpose and some specialised, for the delivery of services.

Some operational property must be located at specific places within our community, such as schools and ferry waiting rooms for example, whereas the location of other operational property assets is flexible and has little impact on service delivery. Some operational property is required to deliver statutory services and other operational property supports discretionary services.

The Council spends £7.64M per annum on operational property, as detailed in the graph below.

IMAGE: A pie chart titled “OPERATIONAL PROPERTY - REVENUE COSTS” shows: Rent, £54,365, 0.7%; Repairs and Maintenance, £1,327,634, 17.3%; Grounds Maintenance, £50,850, 0.7%; Cleaning, £1,525,191, 19.9%; Insurance, £144,127, 1.9%; Rates, £2,420,987, 31.6%; Other, £15,231, 0.2%; and Utilities, £2,121,879, 27.7%.

A Repairs and Maintenance budget of £1.32M is spent each year in addition to expenditure on capital projects to improve the customer experience, to provide a safe and comfortable working environment for staff and implement changing service delivery requirements which may arise through service improvement or legislation.

Assets from which Council Services are delivered (Operational Property)

A summary of the type and number of the Council’s operational land and buildings is shown below:

More information about the Council’s operational land and property is included in Appendix 1.

4.3 Non-operational Property

Non-operational property is defined as property which isn’t used for the direct delivery of services. This classification also applies to land held for long term capital appreciation, land held for an undetermined future use and property which is currently under construction, development or redevelopment for future use for investment purposes.

Non-operational property includes the Council’s investment portfolio which includes industrial estate sites and buildings.

The Council owns 170 non-operational land and property assets, comprising 86 buildings and 84 land assets. This includes 127 non-operational investment property assets which are leased, or are currently available to lease, for investment purposes in addition to a number of strategic land and property assets.

The Council spends £0.47M per annum on non-operational property, as detailed in the graph below.

IMAGE: A pie chart titled “NON-OPERATIONAL PROPERTY - ANNUAL REVENUE COSTS” shows: Rent, £43,098, 9.0%; Cleaning, £34,596, 7.2%; Insurance, £21,890, 4.6%; Repairs and Maintenance, £118,684, 24.8%; Other, £10,385, 2.2%; Rates, £107,508, 22.5%; Grounds Maintenance, £10,578, 2.2%; and Utilities, £131,669, 27.5%.

The Council’s non-operational investment property generates an income of approximately £1.55M per annum. Non-operational investment property also consumes large revenue and capital resources in maintenance ranging from minor works required at tenancy change to major works which may be required to modernise aging property, and to ensure investment property assets remain in a desirable condition to appeal to potential new tenants.

The Council operates a letting policy in respect of its 76 industrial estate property assets which supports businesses operating in key industry areas. The primary sectors which the Council strives to support are:

• Manufacturing (primarily for export).
• Renewable energy.
• Business sector where the market is outside Orkney or there is no service locally.

In addition to the above criteria consideration is also given to businesses which assist the Council in its objectives to:

• Diversify the economy.
• Raise average wage rates; and/or
• Overcome barriers to export.

The Council’s non-operational properties can be used to support local economic development opportunities such as new business developments, growth and skills enhancement. Reviewing the performance of non-operational investment properties will drive decisions on future investment requirements.

Non-operational Property Assets

More information about the Council’s non-operational land and buildings is included in Appendix 2.

4.4 Surplus Property

Service requirements for assets change over time, sometimes relatively quickly and at other times more slowly. Financial pressure on service delivery budgets encourages services to plan ahead, enabling early identification of a potentially surplus asset and allowing an action plan to be developed and implemented before the asset stops being useful. This helps minimise any delay with marketing surplus property for sale or reallocating it to another service.

Disposing of property assets which are no longer required for any purpose can generate a capital income, reduce revenue expenditure on property costs and reduce the management burden on the property team. Releasing surplus properties provides opportunities for the private sector to utilise these assets for a variety of purposes including commercial use, development or residential.

An overview of our approach to the identification and management of surplus property is shown below.

IMAGE: A three-stage process diagram shows “Identification of Potentially Surplus Land and Property Assets”, assessed by condition, suitability, performance and service need; “Consultation with Services and the local Community Council”, considering alternative uses, development opportunities and community interest; and “Report to Asset Management Sub-committee”, leading to retaining the asset for strategic reasons, reallocating it to another Service or disposal.

The principles of the surplus property process outlined above remain unchanged since the previous plan. We are committed to planning effectively to minimise revenue costs and release surplus property to the community where disposal is the preferred option.

5. Current Property Asset Performance

Performance indicators are an important part of monitoring the status and areas of change of the Council’s property assets as the better we understand our property portfolio, the better we are able to manage it.

The Council’s asset management software (Concerto) enables effective monitoring of our property assets performance. Regular and effective property performance monitoring across the portfolio helps to identify those assets which are underperforming. This informs the capital planning process so that resources can be directed to the areas of highest priority.

The Head of IT and Facilities will continue to lead on the monitoring and review of property asset management outcomes and actions and will report regularly to the Asset Management Sub-committee and the Executive Director of Corporate Services.

5.1 Energy Performance

The Council is committed to reducing our carbon emissions through the Council Plan 2018-2023 in which a clear objective to achieve a low carbon Orkney is stated. We support that objective through our management of carbon emissions from our property portfolio. Between 2006 and 2019 the Council achieved an 20% reduction in emissions from the baseline which was established in 2004-05.

In May 2007 the Council committed to a carbon emissions reduction target of 11% by 2014. In April 2016 the Council approved a new Carbon Management Programme for the period 2016 to 2026 which will continue to drive efficiencies and improvements in carbon emission levels across all areas of the Council including properties, vehicles, ferries, waste management and more.

The Council is a signatory to the Scottish Climate Change Declaration and we recognise the importance of following best practice to secure efficiencies and improvements necessary to enable us to deliver on our carbon emission target. By transitioning to a low carbon Council we aim to make ourselves more resilient from the fluctuating wholesale energy market and by increasing our use of locally generated electricity we can potentially secure savings in revenue expenditure. Orkney now generates over 100% of our electricity demand each year, and this net export helps reduce the national grid carbon intensity. Orkney does not have access to the natural gas grid so the Council recognises the importance of electricity as a heating fuel.

Where buildings are fitted with renewable energy systems such as wind turbines and solar photovoltaic these systems help offset fossil fuel heating and so reduce our fuel costs and carbon emissions. Where possible heat pumps are used in preference to oil boilers, this again reduces the Councils heating emissions. All new build properties as now fitted with heat pumps and where boiler plant needs to be replaced heat pumps are considered as the default option.

In April 2016 the Council formally signed up to the ‘Building Innovative Green Hydrogen systems in an Isolated Territory’ project (BIG HIT) which is a partnership arrangement spanning six EU countries and able to access European funding to invest in projects which are based around hydrogen technology. Part of the project includes consideration of introducing hydrogen as a heating fuel source within publicly owned buildings. Shapinsay Primary School has now been fitted with a 30kW catalytic hydrogen boiler system which will heat the school classrooms when the system is commissioned late 2019. The project will also look at the use of hydrogen technology in vehicles and ferries in addition to exploring property options. Scottish Government have recently announced funding for a new build Hydrogen powered ferry trial which will take place in Orkney.

Orkney Islands Council is committed to electrification of transport and in conjunction with the Scottish Government has installed a network of Rapid and Standard charging point in public carparks and public buildings through the county. The programme is set to continue with another six charge points due to be installed in 2020. The council currently operates a small fleet of electric vehicles, which also included a number of Hydrogen fuel cell electric vehicles.

Orkney Islands council is a partner in the UK government innovate programme, the ReFLEX (Responsive Flexibility) project aims to increase the flexibility and availability of renewable energy generated within a constrained area (in this case the Orkney grid). In order to do this a variety of technologies are to be employed to increase on site storage and manage energy usage. For Council assets the impact is through the upgrading of Building Management System hardware and software which will be used to measure building performance and energy usage. These results will be used as a guide to which buildings are underperforming and require either a fabric upgrade or replacement heating plant. It is also hoped that the project will integrate with existing and planned renewable installations (both heating and generation) associated with Council buildings to reduce revenue costs and carbon emissions from our assets.

5.2 Condition

Condition is defined by the Local Government Benchmarking Framework (LGBF) as:

“the proportion of internal floor area of operational buildings in satisfactory condition”

This indicator measures the percentage of gross internal floor area of operational accommodation which can be considered as either:

• A. Good – Performing as intended and operating efficiently.
• B. Satisfactory - Performing as intended but showing minor deterioration.
• C. Poor - Showing major defects and/or not operating as intended.
• D. Bad - Life expired and/or at serious risk of imminent failure.

Property condition surveys are prepared and updated whenever there is a change in the status or condition of an element of each operational property. The data arising from these surveys, along with ongoing inspections arising from day to day reactive maintenance, is compiled into annual investment programs which are prioritised and matched with service delivery requirements.

IMAGE: A pie chart titled “OPERATIONAL PROPERTY - CONDITION” shows: A. Good, 36,457m², 27.5%; B. Satisfactory, 82,199m², 62.1%; C. Poor, 4,335m², 3.3%; and D. Bad, 9,460m², 7.1%.

In 2016/17, 96.2% of the internal floor area of the Council’s operational buildings was found to be in satisfactory condition (that is grade A or B).

The condition of the current operational property portfolio is shown above and indicates an reduction in position from the reported 2016/17 position. A total of 89.6% of the internal floor area of our operational buildings are in satisfactory or good condition (that is grade A or B), a reduction of 6.6% since the previous assessment. Information about each property assets condition rating is included in Appendix 1. It is worth noting however that the recorded floor area of operational properties has increased by 12,908m² (10.6%) as stated earlier in section 4.2.

The second graph above separately shows the condition of the Council’s 22 operational schools, although this data is also included within the first graph as well. All of our schools are in satisfactory condition (that is grade A or B).

IMAGE: A pie chart titled “SCHOOLS ONLY - CONDITION” shows: A. Good, 23,041m², 39.6%; and B. Satisfactory, 35,125m², 60.4%.

The reported condition of our property assets should not conceal the need to ensure adequate long term funding is required to sustain and improve upon the condition of the estate as it ages. It must also be noted that future changes in legislation may require greater levels of investment to maintain property in addition to the regular cost of maintenance and revenue outlays such as utilities and insurance.

5.3 Suitability

Suitability is defined by the Local Government Benchmarking Framework (LGBF) as:

“the proportion of operational buildings that are suitable for their current use”

This is an assessment of the fitness for purpose of property and can prove difficult to measure accurately and consistently. Suitability goes beyond any question of condition and is concerned with how well an asset is suited to its current purpose. Suitability changes with use and therefore an operational property may achieve a low score for suitability for its current purpose however reshaping service delivery (or providing an entirely different service from the building) could result in a higher suitability score without the need for investment.

Suitability assessments are ranked as either A, B, C or D:

• A. Good – Performing as intended and operating efficiently.
• B. Satisfactory - Performing as intended but showing minor deterioration.
• C. Poor - Showing major defects and/or not operating as intended.
• D. Bad - Life expired and/or at serious risk of imminent failure.

Suitability assessments are carried out at a maximum of 5 year intervals or where a change of use occurs at a property. The Local Government Benchmarking Framework definition is “suitable for its current use” and means it is assessed as either performing as intended and operating efficiently or performing as intended but showing minor deterioration (i.e being in Category A or B of the noted condition category). The measurement of suitability requires that the properties meet any statutory requirements (including health & safety requirements) as well as the operational requirements of the service.

IMAGE: A pie chart titled “OPERATIONAL PROPERTY - SUITABILITY BY FLOOR AREA (M2)” shows: A. Good, 37,681m², 28.4%; B. Satsifactory, 73,825m², 55.7%; C. Poor, 11,375m², 8.6%; and D. Bad, 9,571m², 7.2%.

In 2016/17, 89.6% of Council buildings were found to be suitable for their current use.

The suitability of the current operational property portfolio is shown in the first graph above and shows an improved position from that reported in 2016/17 stated above. A total of 84.1% of the internal floor area of our operational buildings is satisfactory (that is grade A or B), a reduction of 5.4% since the 2016/17 assessment.

The second graph above separately shows the suitability of the Council’s 22 operational schools, although this data is included within the first graph as well. 86.6% of our schools floor area is satisfactory (grade A or B), an increase of 1% compared to the previous assessment in 2016/17. 13.5% of schools are rated as Poor (grade C), which is an improved position compared to the 2016/17 assessment.

IMAGE: A pie chart titled “SCHOOLS ONLY - SUITABILITY” shows: A. Good, 23,713m², 40.8%; B. Satisfactory, 26,621m², 45.8%; and C. Poor, 7,832m², 13.5%.

5.4 Condition and Suitability Performance

The following table shows the current overall performance of operational property in respect of condition and suitability.

High performing operational property is graded A or B in one or both categories. The Green shaded boxes show that 151 (77%) of operational properties are performing well.

38 (19.4%) properties are in the Amber area of the table which shows these properties are not performing at a satisfactory level and if no corrective action is taken within an appropriate timescale the grades will be revised down.

7 (3.6%) properties are performing very poorly and are located in the Red area of the above table. Information about each property assets condition and suitability rating is included in Appendixes 1 and 2.

The Council works hard to sustain and improve the Condition and Suitability of our operational property portfolio and identify opportunities for reshaping the operational property portfolio to best suit service objectives within available budgets.

5.5 Operational Property Revenue Costs

The revenue cost of the Council’s operational properties equates to an expenditure of £56.69/m² which is further explained in the graph below. The Council has 134,110m² of operational property comprising 196 buildings which deliver the full range of services provided by the Council.

The Rates component is unavoidable in so far as our occupation of buildings incurs Rates at a fixed cost. Reducing expenditure on Rates could only be achieved by occupying less property.

Insurance is a relatively small component of the revenue cost per m² and is managed through competitive tendering in accordance with the Council’s financial regulations.

Repairs and Maintenance (R&M), Cleaning and Utilities (electricity, water, heating etc) are the main cost elements which are within the Council’s control and therefore these are the elements which we can plan to reduce. These elements account for £37.07 (65.4%) of the total revenue cost per m².

We will endeavor to minimise revenue expenditure on operational property through effective competitive tendering for maintenance work and capital projects, identifying underperforming property and reviewing opportunities to make changes to the operational portfolio to improve performance in line with corporate objectives and service delivery requirements.

IMAGE: A pie chart titled “OPERATIONAL PROPERTY - REVENUE COSTS PER M2” shows: Other, £0.11, 0.2%; Repairs and Maintenance, £9.88, 17.4%; Grounds Maintenance, £0.38, 0.7%; Cleaning, £11.37, 20.1%; Insurance, £1.07, 1.9%; Rates, £18.05, 31.8%; and Utilities, £15.82, 27.9%.

5.6 Accessibility

The Equality Act 2010 serves a number of purposes including imposing a duty on employers and service providers to make reasonable adjustments to overcome barriers in gaining and retaining disabled employees and ensuring equal public access to goods and services.

The legislation requires the Council to take all reasonable steps to reduce and eliminate the physical barriers in respect of access to and use of goods, facilities and services including access to public buildings, leisure facilities, to healthcare, housing and transport.

An assessment of the accessibility of the Council’s operational property assets has been carried out and the current status is shown below.

This indicator measures the percentage of Council buildings which are accessible to the public and the percentage of these in which all public areas are suitable for and accessible to disabled people. It should be noted that not all of our operational buildings are accessible to the public and therefore these are excluded from the assessment.

The graph below shows that currently 51.9% of the Council’s operational properties are considered to be fully accessible.

IMAGE: A pie chart titled “OPERATIONAL PROPERTY ACCESSIBILITY” shows Fully Accessible at 51.9% and Not Fully Accessible at 48.1%.

The remaining 48.1% of our operational property is not yet fully accessible. This is attributable to small scale improvements which have not yet been able to be implemented, and in some cases is due to significant alterations being required which have not been implemented to date.

The analysis does not reflect those properties which are almost fully accessible but fall short on one or more minor point.

We need to identify what improvements are required to be carried out and to find alternative solutions where the delivery of this objective isn’t achievable. In addition to ensuring that publicly accessible property meets an appropriate standard, we will also deliver a high quality and accessible working environment for staff.

5.7 Performance of the Non-operational Property Portfolio

The Council owns 170 non-operational land and property assets, comprising 86 buildings and 84 land assets.

We will monitor key aspects of performance of the non-operational property portfolio however as this type of property is typically used by third parties the Council isn’t normally responsible for the revenue costs such as rates, utilities and repairs and maintenance. In the event that a non-operational property is vacant the Council will be responsible for revenue costs during the vacant period, and ensuring appropriate maintenance is carried out to preserve or improve the physical condition of the vacant property. In this circumstance the Council will incur revenue costs.

The graph below shows the condition of the Council’s non-operational buildings by floor area, using the same A to D grading system as mentioned earlier in this section. Suitability isn’t assessed for non-operational buildings as there are no public services are being delivered.

IMAGE: A pie chart titled “NON-OPERATIONAL PROPERTY CONDITION BY FLOOR AREA” shows Grade A at 5.6%, Grade B at 66.3%, Grade C at 27.7% and Grade D at 0.5%.

62 (71.9%) non-operational buildings are in Good or Satisfactory condition (grade A or B), 21 (27.7%) are in Poor condition (grade C) and 2 (0.5%) are in Bad condition (grade D). Information about each property assets condition rating is included in Appendix 2.

Our non-operational portfolio needs to be fit for purpose and be able to generate an acceptable rate of return whilst supporting local business needs including new starts, expansion and the development of new industries not currently present. Non-operational property will be subject to regular performance reviews which will facilitate early identification of underperformance and enable forward planning to be carried out to secure and develop the portfolio in line with objectives.

6. Capital Programme

The Council’s capital investment programme details the planned capital investment for non-housing services. The approved capital programme relates primarily to major investment in the social care, education and museum property estate.

The Council carries out a robust capital planning process to determine which capital projects need to be added to the programme. The appraisal process ensures that adequate financial planning is carried out before a commitment is given to include a project on the programme. A corporate approach to property asset management will support the current scrutiny and monitoring of the capital programme appraisal process.

7. Financial Outlook

The Council will continue to face financial challenges in the years ahead which means that effective and efficient use of high cost assets such as property remains a significant factor in the efficient delivery of services.

Property assets are very illiquid, meaning they cannot be constructed, demolished, refurbished, disposed of or acquired quickly. This means that forward planning and identifying future needs is essential to secure existing levels of service delivery and to provide efficient and effective budget management.

Reducing the operational property portfolio will have an impact on some aspects of service delivery and it is therefore essential that any proposed changes are properly planned, managed and implemented within existing resources, and that any changes which impact on the public are fully consulted on.

The Council led an initiative to establish the Joint Property Asset Management Operational Group with community planning partners. The group aims to enable public sector and community agencies in Orkney to improve services through better use of buildings and other property assets by sharing information and working together to develop proposals for use and disposal. The partners recognise the need to work more closely together on property matters to ensure the best use of assets can be delivered across a wide range of public funded organisations.

Property asset management has been identified by the Council’s Change Review Team as a key priority area for making revenue savings to the Council’s General Fund budget. Savings across a number of budget areas may be identified and quantified as the actions of this plan are progressed.

It is therefore essential that a delivery strategy is developed at an early stage rather than delaying action to avoid being forced into making radical and substantial changes unexpectedly at short notice. We therefore seek to identify potentially surplus property assets which can be released for disposal and review our use of and need for property assets to ensure our corporate objectives and service delivery targets can be met.

8. Review of Asset Management Objectives

In 2009 Audit Scotland made some observations about asset management and recommended that Council’s should:

1. Have effective asset management plans and strategies in place.
2. Ensure asset information is up to date, complete and held in an accessible format.
3. Establish robust monitoring and reporting procedures for asset performance.
4. Take whole-life costs in to account in their financial planning.
5. Have effective scrutiny mechanisms in place.
6. Have arrangements for joint asset management planning with community planning partners.

This Property Asset Management Plan builds on the previous version of this plan and the Corporate Asset Management Plan 2019 to 2023, which has been published recently.

The following section provides an update to the Audit Scotland recommendations listed above and the Council’s current position. Whilst some elements of the objectives above have been achieved there remains areas in need of further development.

8.1 Effective Asset Management Plans and Policies

Both the Corporate Asset Management Plan and the Property Assett Management Plan have been successful at raising the profile and effectiveness of good asset management. Governance around property related decisions is much clearer and has become a well-established feature of decision making.

Changes in property decision governance were introduced in 2018 and enables many more operational decisions to be taken more efficiently and quickly than previous arrangements allowed. Property decisions are clearly defined within the Council’s Scheme of Administration and Scheme of Delegation, which provides much needed clarity and efficiency for everyone.

8.2 Accurate Asset Information

The process of compiling property asset data from a wide variety of sources across the Council to aid the development of this Property Asset Management Plan continues to be particularly challenging due to the variety of ways in which property data is stored, handled and managed across the Council.

It remains a priority to ensure the property database system (Concerto) is populated and used in the most effective and efficient way. Achieving this outcome will require a concerted effort across a number of services to ensure continuity and accuracy of property data is established and maintained. Work is at an advanced stage to ensure the core property data is accurate and consistent across all property types. Achieving this will allow more effective assessment of properties to be carried out with less reliance on obtaining and matching up data from other sources, which is time consuming and less reliable.

8.3 Monitoring and Reporting Asset Performance

Annual reports on planned capital and revenue maintenance programmes are submitted for approval to the Asset Management Sub-committee. These reports provide an overview of the current condition and ongoing maintenance requirements of properties however they are not a good substitute for regular assessment of performance.

The current lack of easy access to a range of property costs at a corporate level makes it difficult to monitor financial and physical performance at regular intervals. An important outcome of improved property data quality will be more regular analysis of performance, leading to earlier intervention and decision making around any underperforming assets.

8.4 Financial Planning

The need to adequately budget for the effective and efficient use of property assets remains as important as ever as service budgets are under increasing pressure. Corporately driving services to have a clear understanding of their property needs and the costs and implications of holding property for service delivery ensures that the most effective and efficient budgeting can be undertaken at an early stage.

The Council operates a robust two stage Capital Project Appraisal process when funding for a major capital project is sought. Part of the appraisal process involves demonstrating the revenue implications of the proposed development however there are sometimes poor linkages between early design work and final outcomes which limit the accuracy of the revenue expenditure predicted within the appraisal process. Other factors sometimes change the real revenue position once a new development becomes operational, for example rising energy costs since predictions were initially made.

It is essential that we monitor property revenue cost data effectively across the property portfolio as this analysis can also be a good indicator of future revenue costs in new developments.

8.5 Community Planning

The Council has a long history of working closely with community partners and continues to work co-operatively with Partnership Board members as and when the need arises.

In 2018 a new group comprising community planning partners was created to enable public sector and community agencies in Orkney to improve services through better use of property assets by sharing information and working together to develop proposals for use and disposal. The Joint Property Asset Management Operational Group meets several times a year and provides opportunity for collaborative working between partners and provides an opportunity for wider community benefits to be realised more effectively and efficiently than going solo.

An objective of the group is to share core property data between the partners which can bring improved use of facilities, for example sharing meeting rooms at a wide range of locations, and identifying potential collaborations, or disposal of surplus property which might be of use to a partner of the group.

The current group membership includes:

• Orkney Islands Council
• NHS Orkney
• Highlands & Islands Enterprise
• Orkney Housing Association Ltd
• Orkney Health and Care
• Scottish Fire and Rescue Service
• Police Scotland
• Skills Development Scotland

9. Digital Land and Property Data

It is an aspiration of the Scottish Government that accessing all land and property ownership across Scotland is easily accessible and available to all. The government proposal will provide better access to information to support decision making, while improving accountability and transparency and will create wider social and economic benefits through innovative use of data.

The Council will continue working on its land and property ownership data to ensure that accurate and appropriate information is available and can be easily shared through a national database once developed. The Council’s land and property data will need to be held in a form which is easily accessible through the proposed new database however that is not expected to present any significant problems and is likely to use industry standard property data formats which the Council is already using.

10. Community Empowerment and Asset Transfer

Orkney Islands Council recognises that community asset transfer of publicly owned land and buildings can play a positive role in bringing voluntary and community organisations together to improve the quality of people’s lives and provide better services and provides the Council with a mechanism to empower communities and strengthen their sustainability. The Council is happy to consider any community proposal which can add value to the wider community.

Community ownership or control of land and buildings can make a major contribution towards strengthening communities and creating sustainable places to live. It provides a base for activities and services that might not otherwise be accessible to local residents, and can provide jobs, training and bring income to the local area. More widely, it can provide stability and sustainability for the community group, allowing them to develop new initiatives and support other developing groups and it can create a stronger sense of community identify, cohesion and involvement. The Council is keen to see empowered communities take on a significant role in developing community sustainability, particularly where enhanced local services are available or where existing services can be retained that might otherwise be lost.

The Council has a long history of supporting voluntary and community groups through use of its property, most commonly through leases which are offered on favourable financial terms. The community Empowerment (Scotland) Act 2015 assists community groups in accessing publicly owned land and property assets within their local community.

Part 5 of the Community Empowerment (Scotland) Act 2015 came in to force in January 2017 and introduces a right for community bodies to request any land or buildings they feel they could make use of. The legislation requires public bodies, such as the Council, to assess requests transparently against a specified list of criteria and to agree to the request unless there are reasonable grounds for refusal. Details of the Council’s policy on complying with the Act can be found on the Council’s website.

The Council will work closely with communities and partner agencies to identify opportunities for transferring publicly owned property into community hands, which may be in the form of long leases or through outright transfer of ownership. In all cases however, communities must be able to demonstrate that they have a good business case as well as the skills and resources to take their vision forward and deliver on their stated aims and objectives.

A corporately managed property portfolio will help to streamline the Council’s decision-making process for community requests and will enable the Council to comply with legislation and to better support our local communities when robust and sustainable proposals are developed. The Council works closely with community partners such as Voluntary Action Orkney to advise groups and help them consider potential outcomes which they may wish to deliver.

11. Action and Implementation Plan

The Council’s approach to property asset management is a key part of delivering services across Orkney. In order to ensure the provision of an effective, efficient and sustainable property portfolio to deliver those services it is essential that the following actions are implemented and that these actions form the basis of the Council’s future service planning objectives.

There are also a number of specific actions which must be progressed to enable the Council to meet its obligations and be well placed to manage the whole property portfolio effectively and efficiently:

12. Appendix 1 – Operational Property

13. Appendix 2 – Non-operational Property

Property Asset Management Plan Contact Details

Property Asset Management Plan
2019 to 2023

Corporate Services
Council Offices
School Place
Kirkwall
KW15 1NY

Telephone: 01856 873535

Email: property@orkney.gov.uk

Web site: www.orkney.gov.uk

If you would like this document in any other language or in a different format please contact us using the details above.

IMAGE: A contact-information page displays the Orkney Islands Council crest and the text “Property Asset Management Plan 2019 to 2023”, followed by the Corporate Services address, telephone number, email address, website and an accessibility statement offering the document in another language or format.

Equality Impact Assessment

Form Updated December 2018

The purpose of an Equality Impact Assessment (EqIA) is to improve the work of Orkney Islands Council by making sure it promotes equality and does not discriminate. This assessment records the likely impact of any changes to a function, policy or plan by anticipating the consequences, and making sure that any negative impacts are eliminated or minimised and positive impacts are maximised.

1. Identification of Function, Policy or Plan

2. Initial Screening

1. Race: this includes ethnic or national groups, colour and nationality. No.
2. Sex: a man or a woman. No.
3. Sexual Orientation: whether a person's sexual attraction is towards their own sex, the opposite sex or to both sexes. No.
4. Gender Reassignment: the process of transitioning from one gender to another. No.
5. Pregnancy and maternity. No.
6. Age: people of different ages. No.
7. Religion or beliefs or none (atheists). No.
8. Caring responsibilities. No.
9. Care experienced. No.
10. Marriage and Civil Partnerships. No.
11. Disability: people with disabilities (whether registered or not). No.
12. Socio-economic disadvantage. No.
13. Isles-proofing. No.

3. Impact Assessment

4. Conclusions and Planned Action

Signature: [signed]

Date: 14 October 2019

Name: GRAEME CHRISTIE (BLOCK CAPITALS).

Please sign and date this form, keep one copy and send a copy to HR and Performance. A Word version should also be emailed to HR and Performance at hrsupport@orkney.gov.uk