Guide to the Monitoring of Real Property Management (Chapter 2-3)

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Table of Contents

Introduction

A. General framework

B. Investment

C. Ongoing administration

D. Transactions

E. Suggested further reading

Introduction

Objective of the guide

This Guide is intended to assist managers in implementing the government's real property policies and to monitor and assess how well this is done within departments. The Bureau of Real Property and Materiel prepared the Guide in consultation with the Working Group on Custodian Assessment, which is composed of representatives from program and real property operations and members of the audit and evaluation community. Accordingly the Guide is intended to serve both managerial and assessment purposes. For management purposes departments may wish to identify and expand on issues not raised in the Guide. Likewise auditors may find that it can serve as a basis for lines of inquiry that they will have to tailor to the kind of review and the department involved.

The Guide is organized into four sections:

1. general framework: dealing with topics such as the accountability framework and information systems for real property management;
2. investment: looking at the investment, long-term capital planning and project activity aspects of real property decision-making;
3. ongoing administration: focusing on issues arising in the course of a department's administration of real property, such as accommodation standards, revenue opportunities, and environmental/accessibility/heritage considerations; and
4. transactions: reviewing the activities of real property acquisitions and disposals.

Each section begins by describing the intent of the policies it covers. The sections also include key questions and checklists to help you assess the performance of the real property activity. When the questions relate to a specific policy in the "Real Property" volume of the Treasury Board Manual, they include a reference to that policy. For example, the reference (Chapter 1-3) at the end of a question would indicate that the relevant policy can be found in Chapter 1-3 of the "Real Property" volume. When the policy is in another volume, the volume title is provided. Questions that do not contain such references are derived from good management practice.

The questions are intended to alert you to the relevant policy issues. The checklists are intended to provide you with examples of how to address these policy issues. Some of these examples directly reflect the government's policy requirements, others reflect good managerial practices that go beyond the requirements of Treasury Board policy.

Keep in mind that both the policy requirements and the managerial practices are general in nature, and that common sense is behind both. Before making any real property decision, practitioners should ask themselves these four simple questions:

• Does it make sense both to the department and to the government as a whole?
• Does it accomplish its goal in a cost-effective manner?
• Is it good public policy?
• Is it fair to Canadians?

Sometimes, an affirmative answer to these four questions will mean making a decision that does not conform to a policy requirement. In such a case, the decision-maker must support the decision in a Treasury Board submission. If the decision does not conform to a good managerial practice, the decision-maker should be ready to substantiate the decision if questioned.

Any assessment of how well managers are implementing government policies and good managerial practices should recognize that there are always reasonable exceptions to general rules. The Guide is not a set of rules to be blindly followed in all situations. It is meant to provide managers and auditors with a framework that helps them make good real property decisions and assessments of those decisions.

Monitoring responsibility

A number of departments and agencies have roles and responsibilities monitoring the performance of a variety of real property functions, as follows:

Custodian departments

Custodian departments are accountable for holding real property and carrying out real property activities in an appropriate manner. Departments should have monitoring processes and systems to ensure they can monitor the results of their internal policies, practices and procedures. Furthermore, departments should refer to the Auditor General's recommendations on Quality in the Constructed Project. A major benefit from the pilot audit for 1993 (Auditor General's Report, pages 50-51) is that the methodology will be used by building owners and managers in the public and private sectors to assist in evaluating the condition of their real property holdings.

Treasury Board Secretariat

The Bureau of Real Property and Materiel of the Administrative Policy Branch, Treasury Board Secretariat, advises the President and members of Treasury Board on real property transactions and on matters related to federal land use in both a regional and local context. It also develops policies for the overall management of the federal real property portfolio.

The Treasury Board Secretariat ensures that policies are appropriate, that departments understand the requirements established by government and that custodians meet government policies within the context of their own circumstances and priorities. In addition, the Bureau of Real Property and Materiel reports to Treasury Board on the state of the government's real property portfolio and assists with departmental assessments, as required by Treasury Board, the President of the Treasury Board or the Secretary of the Treasury Board.

To monitor real property activities, the Treasury Board Secretariat (TBS) uses information sources such as:

• agreements departments and TBS have reached in the Shared Management Agenda exercise;
• ongoing contacts and formal bilateral meetings with departmental representatives;
• submissions and supporting documentation submitted to the Treasury Board;
• Area Screening Canada and the Directory of Federal Real Property;
• reports and submissions to Treasury Board, including Long-term Capital Plans, departmental MYOPs, Annual Management Reports, and Annual Accessibility Reports;
• other departmental documentation requested by Treasury Board;
• departmental internal audits and program evaluations;
• departmental data bases that include directories and financial information related to real property, such as the PWGSC Real Property Data Base;
• reports received from other departments and agencies such as Human Resources Development Canada, Health Canada, Environment Canada and the Federal Heritage Building Review Office (FHBRO), as well as the Auditor General's annual reports to Parliament;
• financial management, internal audit and program evaluation reports across government; and
• assessments of Treasury Board policies.

The Treasury Board Secretariat should also help departments monitor their real property activities by giving them feedback on the information departments send to TBS.

Other departments and agencies

• Natural Resources Canada monitors energy management in federal government facilities, conducts surveys on Canada Lands and administers mineral rights.
• Environment Canada develops environmental policies and provides advice on environmental matters such as environmental impact assessment and land use.
• Health Canada is responsible for public service health services including conducting, monitoring and providing advice to the Treasury Board on occupational health standards for public service workplaces.
• Canadian Heritage provides advice on heritage buildings through the Federal Heritage Buildings Review Office (FHBRO).
• Human Resources Development Canada, under the authority of the Canada Labour Code, develops standards for safety (including fire) and health in federal workplaces, and monitors compliance.
• The Office of the Human Rights Commissioner monitors and reports on the accessibility of federal real property under the authority of the Canadian Human Rights Act.
• The Office of the Auditor General monitors and reports to Parliament on the use of real property by departments, Crown corporations and agencies of the Crown. It also audits capital assets projects through special reviews and comprehensive audits.
• The Royal Canadian Mounted Police, if requested, reviews physical security arrangements for real property and advises custodian departments on these matters. It also develops related government-wide standards, and inspects, tests, and evaluates physical security equipment and specifications.
• Common service organizations, at the request of their client departments, may monitor policy adherence in real property activities undertaken by the departments or by the service organizations acting on behalf of departments.

General framework

This section outlines ways to assess the overall management of each department's real property operations. Key questions about managerial and real property information and managerial systems primarily relate to the requirements in Chapter 1-1 of the "Real Property" volume.

Management framework and accountability

A good framework is essential to the efficient and effective management of a department's real property operations. Treasury Board policy sets out general principles that departments can use to develop such a management framework. Departments must define and implement the specific frameworks for their real property management. They must also develop, maintain and apply appropriate organizational authority, policies, practices, systems and technical, administrative and financial structures to manage the real property in their custody.

Key questions

1. Has the department defined and implemented an organizational and informational framework for the management of real property it administers? (Chapter 1-1)
2. Has the department delegated authority to appropriate levels in the organization to ensure effective management of its real property inventory?
3. Is the real property management function adequately supported by technical, administrative and financial expertise?

What to check

• The department's real property management framework provides the resources and data to ensure that the real property held for program delivery is managed efficiently and effectively.
• The department, when requested, can provide information on its real property management framework, including organization, financial authority and information systems, needed to assess its performance in real property management.
• The department has developed appropriate real property management policies, practices, procedures and information systems and managers are aware of them.
• Delegation of authority and accountability, at levels appropriate to efficient service delivery, has been clearly defined.
• Reasonable controls are in place to prevent fraud and abuse.
• The department's real property management framework facilitates action supporting government policies and does not inhibit action with complex processes.
• Copies of relevant Treasury Board and other policies are readily available to staff involved in real property management.
• Staff are qualified and receive training that develops and maintains the skills they need to execute their current and future responsibilities effectively.
• Copies of departmental real property plans, policies and decisions have been distributed appropriately and instructions have been followed.

Real property information systems

An appropriate information system is an important element of any real property management framework. Information systems and the records they hold help staff make informed decisions. Government policy requires that departments maintain accurate records of the real property they administer.

Key questions

1. Is an information system in place to support real property functions and decision-making processes? (Chapter 1-1)
2. Does the department maintain accurate records of the real property inventory under its administration? (Chapter 1-2)
3. Does the department provide current and accurate information in a timely manner when required by central agencies and others outside the department?

What to check

• A real property information system is in place that readily provides information concerning restrictions on use, accessibility, contamination, cost, and other attributes of each property that the department administers.
• The real property information system identifies, where appropriate, the capital, historic and current operating and maintenance costs and cost trends of facilities.
• The department uses its real property information system to determine when and how to maintain, preserve or replace real property consistent with program needs.
• Real property information from other federal organizations is integrated into the departmental system.
• Automated processes and tools are being used effectively, where appropriate, in accordance with government plans for electronic data dissemination and decreased use of paper.
• The information system is cost effective, and program needs determine how much information is gathered and how frequently it is updated.
• The use of shared information systems and software within the department and within government has been examined and such systems and software are used wherever appropriate.
• The department provides current and accurate information in a timely manner to other departments and to the Directory of Federal Real Property, as required.
• The department participates in the Area Screening Canada Program.
• The department provides information to other custodian organizations and central agencies in a manner that is readily usable.
• The annual Information Management Plans of the department reflect the needs of the real property function (see requirements in the "Information Management" volume of the Treasury Board Manual).

Investment

Real property is an important government asset. It is government policy that departments acquire, maintain, preserve and dispose of real property to the maximum long-term economic advantage of the government. To ensure that they make real property decisions in this policy context, departments should conduct an investment analysis for each decision. By using consistent investment criteria, they will be assured that their decisions fall within government investment objectives.

Long-term planning, supported by an effective information management system, provides the context for good investment decision-making. It is another essential ingredient in effective real property management, as real property assets usually generate their benefits and their liabilities over many years.

Effective project planning is needed to ensure that projects follow the investment strategy of the government and are consistent with the department's and government's long-term capital planning.

Key questions

1. Is the department making real property investment decisions based on a full analysis that includes the life-cycle costs of the investment? (Chapter 1-3)
2. Does the department assess alternatives to minimize the cost of investments to the government?
3. Does the department's long-term capital planning reflect its real property activities?
4. Are the department's project activities consistent with the government's and department's investment and long-term capital planning objectives?

What to check

Investment

• The department conducts full assessments of the life-cycle costs of each investment decision including costs of acquisition, operation, maintenance, leasing and fit-up, renovation and restoration; other costs related to the real property accountability framework (such as costs to preserve heritage buildings, meet accessibility standards and preserve the environment); direct and indirect costs of disposing of the property, such as realty fees, survey fees and decontamination costs; and grants in lieu of taxes.
• Investment analyses consider trade-offs between different investment options, examine opportunity costs and take into account the time value of money and the effect of real property management costs on departmental overhead.
• The department has assessed alternatives, including consolidating facilities within the department or with other departments' facilities.
• Definitions and analysis of real property requirements are linked to the analysis of program needs.
• Tenant departments define their operational requirements, such as location, in a way that does not arbitrarily exclude minimum-cost options available to the custodian providing the facilities.
• The department considers the advantages and disadvantages of each investment option or alternative, and links each to program needs.
• In deciding to reduce short-term infrastructure funding, the department takes into account the total costs of deferred facility maintenance, including the possibility of shortened facility or systems life, and higher operating and maintenance and repair costs.

Long-term planning

• Long-term capital strategies related to real property are prepared, reviewed and updated in accordance with Treasury Board real property management policy objectives.

Project planning

• Project activity and proposals fall within approved capital plans and lease plans and established investment criteria, and the Long Term Capital Plan reflects project funding schedules.

Ongoing administration

This section helps departments assess their ongoing management of the real property they administer. The policy areas covered primarily relate to the requirements in Chapters 1-2, 1-4, 1-6, 1-7, 1-8 and 1-9 of the "Real Property" volume. The section is divided into the following topics:

• review of real property
• revenue opportunities
• environmental considerations
• accessibility considerations
• accommodation and use of facilities
• heritage considerations
• real property common services

Review of real property

Departments should review their real property holdings periodically to ensure that the lands they administer continue to support the department's programs. The principle that the government only holds real property to support program delivery is fundamental to the present federal real property management policy framework. For this reason, government policy requires that if a property is no longer required for program purposes, it should be sold.

Under government policy, departments should systematically assess the condition of the real property they retain so that real property can be maintained and preserved to the maximum long-term economic advantage of the government.

Key questions

1. Does the department conduct regular reviews of the real property it administers? (Chapters 1-1, 1-2 and 1-3)
2. Do the real property assets held by the department meet program needs? (Chapters 1-2, 1-3)
3. Does the department assess the condition of real property in its inventory? (Chapter 1-3)
4. Are facilities operated efficiently?
5. Does the department assess alternatives to minimize the cost of real property to the government?

What to check

• The department regularly reviews and evaluates its real property in terms of the real property's efficiency and effectiveness, adherence to real property policy, environmental risks, revenue-generating ability, appropriateness to program needs, accessibility, heritage designation and other relevant factors.
• Each real property asset is linked to program needs.
• Properties no longer required for program purposes are identified as soon as possible to minimize carrying costs before disposal.
• The length of time between the date of identification of excess property and the initiation of the disposal process is reasonable.
• The length of time between the initiation of the disposal process and the date of sale or transfer is reasonable.
• The department uses each property in accordance with the principle of highest and best use, keeping in mind the program requirements for the property and the option of using other property to deliver the program.
• Property meets the present and anticipated needs of the program at the lowest cost.
• Property is adaptable to the anticipated needs of the program.
• The department regularly assesses the physical state of its real property inventory.
• Definitions and analysis of real property requirements are linked to the analysis of program needs.
• The amount of unused and underutilized space as a percentage of total space is minimal.
• The costs of maintaining and operating the facility are reasonable when compared to alternatives.
• The department has assessed alternatives, including consolidating facilities within the department or with other departments' facilities.
• Vacant or underutilized real property is leased, sold or surrendered.
• The department, when deciding whether to retain underutilized property, has calculated and reviewed the property's opportunity cost (operating and maintenance costs, grants-in-lieu, etc.).

Revenue opportunities

Departments should always strive to achieve the highest and best use, consistent with program objectives, of the property they administer. Government policy requires that departments seek opportunities to earn revenue through the wider use of the real property they administer for their program use. In appropriate circumstances, wider use of the real property can also enhance or complement program delivery as well as provide a source of additional revenue to the government. In all cases, however, the paramount consideration is the use of the property for program delivery, and the secondary uses of the property should not detract from that primary use. In addition, any secondary uses of the property should be compatible with the land-use controls on the property.

Key questions

1. Does the department identify and pursue opportunities to earn revenues through the wider use of real properties, when such opportunities are consistent with program need? (Chapter 1-4)
2. Does the department ensure that its revenue-generating measures do not negatively affect its programs and that all secondary uses are consistent with applicable land-use controls? (Chapter 1-4)

What to check

• Real properties are periodically assessed for revenue-generating opportunities.
• The department assesses the benefits and risks of each opportunity.
• The department assesses the impact of each secondary use on program delivery, and ensures that program use is not adversely affected.
• Costs of secondary uses do not exceed revenues generated or other benefits to the Crown.
• The department determines which land-use regulations apply to its properties.
• Revenue-generating activities conform with applicable federal, provincial and municipal land-use controls.

Environmental considerations

Departments should always be aware of the effect their use of real property has on the environment. Government policy requires that departments acquire, use and dispose of real property in a manner consistent with the principle of sustainable development which it defines as development which ensures that:

• "the use of resources and the environment today does not damage prospects for their use by future generations;" and
• "the management of our economic system maintains or improves our resource and environmental base".

Key questions

1. Is the department applying the principle of sustainable development to the real property within its portfolio? (Chapters 1-1 and 1-8)
2. Does the department assess risks to the environment? (Chapter 1-8)
3. Does the department maintain information on the environmental condition of its real properties appropriate to the risk each property poses to the environment? (Chapter 1-8)

What to check

• The department's real property policies, procedures and practices reflect the principle of sustainable development.
• Energy (gas, oil, hydro, water) consumption per square metre of space is monitored and compared to other comparable facilities, and conservation measures are implemented when appropriate.
• Real property is managed so that it is not in conflict with federal environmental statutes, regulations and orders.
• The department undertakes environmental audits, assessments and reviews when appropriate.
• The amount and type of information in the department's real property records is commensurate with the risk each property poses to the environment.

Accessibility considerations

Accessibility to federal facilities by persons with disabilities is a legal as well as a policy requirement. Under the Canadian Human Rights Act, it is a discriminatory practice for federal organizations to deny persons with disabilities access to Crown-owned or Crown-leased facilities. In addition, government policy requires that departments ensure that persons with disabilities can gain access to, and use, federal real property.

The government has adopted a technical standard, the Barrier-Free Design Standard (CAN/CSA-B651-M90). Appendix B of Chapter 1-6 of the "Real Property" volume of the Treasury Board Manual, entitled "Barrier-free Design:  Implementation Requirements", outlines how and when departments should implement the technical standard to make their facilities accessible in accordance with government policy.

Key question

1. Can persons with disabilities gain access to and use real property administered by the department? (Chapter 1-6)

What to check

• Wherever practicable, persons with disabilities have the same level of access to and use of the department's facilities as the general populace does.
• Partial or total exemptions of facilities from the accessibility requirements are only made when allowed under the circumstances detailed in Appendix B of Chapter 1-6 of the "Real Property" volume of the Treasury Board Manual (Barrier-free Design: Implementation Requirements).
• A systematic departmental process is in place to identify, substantiate and approve exemptions to the accessibility requirements.
• The department consults the Interdepartmental Technical Committee on Accessibility during the developmental and final stages of any major variances to the technical standard.
• Minor variations from the technical standard or implementation requirements approved by the department are consistent with the general intent of the government's accessibility policy and do not void the general accessibility of the specific property.
• The department submits plans and reports on implementation of accessibility improvements to Treasury Board in a timely manner as required.
• Where the technical standard or implementation requirements do not satisfy the needs of federal employees with special needs, the department identifies and consults such employees and appropriate action is taken to address deficiencies in a manner that, where practicable, meets accessibility requirements.
• The number of complaints about inaccessibility of the real property is minimal.

Accommodation and use of facilities

Government policy requires that departments administering federal real property provide a safe, healthy and productive environment in their facilities. They should do this while using the minimum functional space required to meet users' operational needs. Departmental quantity and quality standards for accommodation and use of facilities must take into consideration the operational requirements and program objectives of users, and the practices and standards of other public- and private-sector organizations of comparable size and mandate.

Key questions

1. Does the department maintain a safe, healthy and productive environment for the users of its facilities? (chapter 1-7)
2. Has the department established quantity and quality standards for normally recurring allocations and fit-up of real property, and is it using them in the resourcing process? (chapter 1-7)

What to check

• The accommodation conforms with all relevant legislation, policies and standards and no safety and health deficiencies are outstanding in respect of the facility or the use which is made of it.
• The department has identified quantity and quality standards and, where appropriate, deviations from them, as part of the approval process for budgets or projects (e.g. Long-Term Capital Plan, Multi-Year Operational Plan or project approvals).
• The quantity and quality standards allow for the use of commercially available technology and energy management strategies over the life cycle of any improvement.
• If the department is the tenant of another custodian department, the standards were developed with and are in harmony with those of the custodian department.
• The department has established a process to ensure open and public accountability for the allocation and use of space, (e.g. metres held, people housed), and maintains records about its allocation and use of space in its facilities.
• The department has entered into written agreements with the tenant or custodian department that describe their respective responsibilities for meeting government policy objectives.
• The department, if a custodian, has established a process to resolve disputes between users and the custodian.

Heritage considerations

It is government policy to protect the heritage character of Crown-owned buildings. While the Minister of Canadian Heritage is responsible for approving the heritage designation of federal buildings, custodian departments remain responsible for all decisions affecting the heritage conservation of Crown-owned buildings under their administration.

Key question

1. For a Crown-owned building 40 years old or older, has the department obtained appropriate heritage advice before undertaking any action that may affect the heritage character of the building, including altering, dismantling or demolishing the building? (chapter 1-9)

What to check

• Before altering, dismantling or demolishing a federal building 40 years old or older, the department has asked the Federal Heritage Buildings Review Office (FHBRO) to evaluatec it.
• For a building having a "classified" heritage designation, the department protects the heritage character of the building using FHBRO standards and guidelines. If it proposes to alter, dismantle or demolish a "classified" building, the department must consult FHBRO first.
• For a building having a "recognized" heritage designation, the department obtains appropriate heritage advice before making any alteration to the building. If it proposes to dismantle or demolish a "recognized" building, the department must consult FHBRO first.

Real property common services

Government policy requires that departments obtain all services related to real property in accordance with the Treasury Board's Common Services policy. Under this policy, departments must obtain certain mandatory services from a designated federal service organization. The number of mandatory services has declined in recent years as the Common Services policy has evolved.

The policy also lists optional common services that departments may obtain either from the relevant federal common service organization or from the private sector. Departments may wish to use the common service organization as a knowledgable intermediary in obtaining optional services from the private sector. Decisions on obtaining optional common services should be based on cost-effectiveness, efficiency, prudence, probity and service to the public.

Key question

1. Does the department obtain mandatory common services from a designated service organization and optional services from either the common service agency or the private sector? (Chapter 1-1)

What to check

• The department procures both mandatory and optional services in accordance with the Treasury Board's Common Services policy.
• When acquiring optional services, the department:
• makes sound business decisions when deciding whether to acquire the services from common service organizations or other sources of supply, taking into account the department's full corporate costs to administer the services;
• acquires the services while maintaining a high regard for timeliness, efficiency, effectiveness, prudence, probity and value for money; and
• considers the impact of the service on the public.

D. Transactions

This section looks at ways to assess the department's performance in the management of its real property transactions. The policy areas covered primarily relate to the requirements in Chapters 1-2, 1-4, 1-5, 1-8, 1-9 and 1-12 of the "Real Property" volume. The section is divided into three topics: general, acquisition and disposal.

General

This part looks at several elements common to the efficient and effective management of both acquisitions and disposals: solicitation of offers, adherence to government policies, use of appraisals and estimates, and the obtaining of legal advice.

Key questions

1. Is the process of soliciting and selecting offers reasonable, fair and open? (Chapter 1-5)
2. Do departmental transactions comply with all policy requirements contained in the "Real Property" volume of the Treasury Board Manual? (Chapter 1-12)
3. Are appraisals and estimates used appropriately in real property transactions? (Chapter 1-5)
4. Does the department obtain legal advice for real property transactions at an appropriate stage? (Chapter 1-12)

What to check

Solicitation of offers

• A public solicitation of offers is made, unless inappropriate.
• The department documents the full details and circumstances of each situation, including any decision to not solicit public offers, prior to the transaction and retains this information in the relevant files.
• The department begins the process of soliciting offers promptly, leaving time to consider all viable options.
• If best value rather than price is to determine which offer is selected, the factors and criteria that determine the best value are identified prior to the solicitation of offers and these criteria remain constant during the solicitation and selection process.
• Requirements permit a reasonable number of suppliers to bid. Operational requirements, such as location, must not arbitrarily exclude minimum-cost options available to the custodian providing the facilities the user requires to deliver its programs. The department should minimize the number of special purpose or unique requirements and specify materials that are readily available at competitive prices. Facility specifications should employ materials and features that may be acquired at the least cost.
• An appropriate method of solicitation of offers is used.

Adherence to other Treasury Board policies

Appraisals and estimates

The department used the estimate or appraisal as an input when determining market value.

The estimates or appraisals are current, taking into consideration local market conditions and all relevant factors of the property. The department has assessed the quality of the appraisal.

Legal advice

Acquisitions

The fundamental policy principle underlying any acquisition of real property by the government is that the property is needed to support the delivery of government programs. Once this need has been determined, various other government policies apply to the transaction to ensure that the acquisition process is open, fair and efficient, and achieves its objective with minimal risk and expense to the government.

Key questions

1. Does the department's acquisition strategy and analysis incorporate the following considerations

What to check

Program considerations

• The acquisition analysis has linked all acquired real property to particular program requirements.

Appropriateness of the acquisition strategy

• The acquisition analysis rules out the possibility of using existing departmental real property.
• The acquisition analysis examines the options of constructing, leasing, purchasing or using federal property currently administered by other departments or Crown corporations.
• The option selected is in the best interests of the department and the Crown.

Investment criteria

• The department has specified acquisition requirements to permit the minimum cost consistent with requirements.
• The department only pays the expenses of the vendor in circumstances that warrant such payment. Payments to vendors should be reasonable and in the public interest.
• The net present value per square metre of leased facilities, which includes associated costs such as moving expenses, is the best value available.
• New leases of presently leased facilities are negotiated early enough to allow for the pursuit of other options.
• The department monitors the number and cost of lease overholds.
• The investment decision is supported by market surveys and analysis.

Restrictions or encumbrances

• The department has assessed any reservations, encumbrances, or encroachments on the property to ensure they do not affect the program use of the property.

Heritage considerations

• When considering purchasing a building that is 40 years old or older, the department obtains the advice of the FHBRO regarding potential heritage designations and the estimated costs of maintaining such designations.

Environmental considerations

• The acquisition analysis includes sufficient information to determine the environmental condition of the real property and the department decides that the real property can be made environmentally compatible with its intended use.
• The department assesses the environmental condition of the property and documents any deficiencies.
• If necessary, the department modifies the property to render it environmentally compatible with its intended use.

Accessibility

• Leases and occupancy agreements contain provisions that the property is or will be rendered accessible.

Selection of offers

• The selection process documents the offers received and the selected offer is the lowest-priced offer or represents the best value.

Treasury Board and departmental approvals

• The department is aware of its Treasury Board authority levels for the acquisition of real property.
• Managers are aware of the department's internal authority levels for the acquisition of real property.
• Acquisitions by the department in excess of the departmental authority levels under Treasury Board policy have received Treasury Board approval.
• Managers are aware of all other Treasury Board and departmental policies relating to real property acquisitions.
• The department obtains Treasury Board approval for acquisitions that do not comply with Treasury Board real property policies.
• Acquisitions have received all necessary internal approvals.

Disposals

A department may dispose of federal property for two reasons. The first reason is that the property is no longer required for the purposes of one of the department's programs. In this case, government policy requires that the property be sold. The second reason is that the disposal itself assists in or complements program delivery. This type of disposal is normally done through a lease or licence. In both types of disposals, various government policies apply to the transaction to ensure that the disposal process is open, fair and efficient, and achieves its objective with minimal risk and expense to the government.

Key questions

1. Do the department's disposal strategy and analysis incorporate the following considerations:

What to check

Property sensitivity

• The department has assessed the property to determine whether any characteristics exist that may make its disposal unusual, such as high public visibility, aboriginal claims, high value, extreme environmental contamination, important heritage significance or large size.
• If any such characteristics exist, the department has consulted with Treasury Board and other relevant central agencies and departments prior to developing a disposal strategy.

Appropriateness of the disposal strategy

• The department has assessed the future needs of the program and:
• • a sale is appropriate as the property is no longer or will not soon be required for program purposes;
  • a lease, licence or easement is appropriate as the property will soon be or continues to be required for program purposes
• When choosing between a lease, licence or easement, the department chooses the most appropriate instrument that is more effective than the alternatives.

Market value

• The department disposes of the property at market value.
• The assumptions used in arriving at the market value are reasonable.
• Documentation shows that market value was appropriately determined and was achieved.

Selection of offers

• The department accepts the highest offer or the offer representing the best value.
• The department receives offers and considers appraisals and estimates as appropriate.

Priority circulation

• Properties being disposed of by sale are circulated to priority purchasers (other departments, Crown corporations, provincial and municipal governments) before being offered to the public.
• Where appropriate to protect the interests of the Crown, transfer documents for priority sales or transfers to other levels of government address the potential for rezoning and resale of the property for a profit by the purchaser, while taking into account that the property is surplus to government requirements.

Heritage classification

• Before finalizing the disposal strategy, the department has asked FHBRO to evaluate all buildings on the property 40 years old or older.
• For all buildings on the property having a "classified" heritage designation, the department has consulted FHBRO before finalizing the disposal strategy.
• For all buildings on the property having a "recognized" heritage designation, the department has consulted FHBRO before finalizing the disposal strategy.

Environmental considerations

• The department has assessed the environmental condition of the property before disposal.
• Disposal strategies are based on information about the environmental condition of the property.
• The department reviews the relevant environmental legislation, approved practices and criteria.
• Where justified, remedial action is identified and carried out either before disposal or as a condition of it.
• Evidence exists that the level of remediation undertaken is justified.
• If the department decides to dispose of a contaminated site subject to the purchaser undertaking the remedial work, it obtains a guarantee that the purchaser will clean up the contaminated site within a reasonable length of time. The disposal agreement provides for financial and performance guarantees or other form of indemnification.
• Leases, licences and easements contain provisions to ensure that the tenant adheres to relevant environmental legislation and to protect the government from liability resulting from contamination of the property by the tenant.
• Leases, licences and easements ensure that properties contaminated by the tenant during the term of the agreement are cleaned up to current federal standards.

Mineral rights

• Mineral rights retained by the government on the sale of a property are transferred by the department to Natural Resources Canada.
• All dispositions of mineral rights have been authorized by Natural Resources Canada.

Special considerations for leases

• Lease terms are as short as is reasonable for program uses and objectives.
• Lease terms are no longer than either the depreciation period for proposed leasehold improvements or the amortization period for loans normally granted by chartered banks for leasehold improvements such as those proposed.
• The department reviews or adjusts rents at least every five years unless it considers this action inappropriate.
• Leases deal explicitly with the issues of maintenance, liability, and vesting of tenant improvements made during the term of the lease. When appropriate, leases should require the tenant to restore the property to its original condition at the end of the lease term, at the option of the Crown.

Special considerations for licences

• The term of the licence is as short as is reasonable for the use involved.
• All costs to the department related to the licence, including the costs of granting, administering and terminating the licence, are recovered from the revenues.

Special consideration for easements

• The department assesses the value of the property before and after the granting of the easement, and assesses the impact of the easement on the use of the residual and adjacent federal real property.
• The total accumulated reduction in value is kept to a minimum and is at least covered by the consideration received for the easement.
• The term of the easement is limited to the shorter of the specified term or the period of actual use. The easement includes provisions to terminate the easement on expiry of its stated use. No easements extend beyond the actual use for the purposes stated and no use continues beyond the stated term of the easement.
• The easement contains a provision for the return of the property to its original condition at the expiration of the easement, at the option of the Crown.

Treasury Board and departmental approvals

• The department is aware of its Treasury Board authority levels for the disposal of real property.
• Managers are aware of the department's internal authority levels for the disposal of real property.
• The department obtains Treasury Board approval for disposals above the departmental authority levels under Treasury Board policy.
• Managers are aware of all other Treasury Board and departmental policies relating to real property disposals.
• The department obtains Treasury Board approval for disposals that do not comply with Treasury Board real property policies.
• Disposals have received all necessary internal approvals.

E. Suggested further reading

The following is a list of additional sources of information about the federal real property system and policies affecting federal real property management.

Treasury Board Manual

The Treasury Board Manual is the compendium of policies and guidelines on management areas within the Treasury Board's jurisdiction. It has five major components. Each component consists mainly of policy volumes but may also include supplementary volumes that are largely procedural. The volumes of particular relevance to the real property manager are:

Personnel Management component

• Employee Services

• Occupational Safety and Health

Information and Administrative Management component

• Access to Information

• Communications

• Contracting

• Information Management

• Materiel, Risk and Common Services

• Capital Plans, Projects and Procurement

• Real Property

• Privacy and Data Protection

• Security

Program Management and Comptrollership component

• Program Management and Comptrollership Framework

• Chart of Accounts (supplementary)

• Comptrollership

General Management component

• Review, Internal Audit and Evaluation

• Treasury Board Submission Guide (supplementary)

The Manager's Deskbook

The Treasury Board Secretariat prepared the Manager's Deskbook as a reference tool for senior managers. It outlines key central agency policies and processes.

Understanding Federal Real Property Management

Understanding Federal Real Property Management, a paper updated periodically by the Bureau of Real Property and Materiel, Treasury Board Secretariat, contains an overview of the federal real property system.

Federal Real Property Act and Federal Real Property Regulations

The Federal Real Property Act and Regulations are the general legislative bases for federal government real property transactions. Unofficial consolidations of the Act and Regulations are contained in Chapters 2-1 and 2-2, respectively, of the "Real Property" volume, Treasury Board Manual.

Departmental real property policies

Many departments have internal policies relating to real property management.

Date Modified: 2000-06-15