Client: Sonoma County (CA)
GG+A was part of a team that prepared a facilities master plan for Sonoma County. The plan included the development of a long-term real estate strategy for Sonoma County facilities. The comprehensive county facilities plan comprised a service delivery plan, real estate plan, and financial plan. GG+A prepared the financial analysis to quantify the total occupancy costs Sonoma County is forecast to incur under a status quo or “base case” scenario for office space it owns and leases to house its existing workforce. The base case scenario reflected a static real estate portfolio. In other words, no office properties are assumed to be purchased or sold and all existing leases are assumed to continue on a recurring month-to-month basis or be renewed upon expiration.
GG+A built a comprehensive financial model to evaluate and compare costs in the base case scenario to alternative scenarios to house the County’s workforce. The financial model simulated the annual occupancy costs of leasing and owning office space over a long-term, 21-year time period (2010 through 2030). The approach used to analyze the portfolio permits decision makers to prepare for the timing and magnitude of incremental added costs that will be necessary to maintain and enhance the real estate portfolio to facilitate improved service delivery.
GG+A also evaluated the results of alternative scenario occupancy costs assuming a lower cost to finance bonds issued to finance construction of the new campus buildings. Also presented was an analysis related to achieving a “cost-neutral” position when considering the long-term occupancy costs of the base case versus standard and employee mobility alternatives identified by Gensler. The purpose of the sensitivity analysis was to provide quantitative benchmarks that County officials and staff can consider in order to inform their implementation decisions, and whether the likely incremental net occupancy costs associated with any or all of the alternatives are justified by operational and service delivery improvements that may not have been quantified.
GG+A also provided an analysis of financing alternatives and the potential sources of funding and types of funding mechanisms of campus facility development costs for Sonoma County including:
• leveraging the savings from not having to pay annual lease payments for the rental of office space for County employees that would no longer be needed because such functions would be relocated and consolidated at the campus;
• leveraging the savings from the more efficient use of office space than currently obtained and less need for space due to the decline in the number of County employees;
• leveraging the savings from the avoidance of needed capital replacement or major maintenance and repair costs for building facilities that would no longer be used; and
• proceeds from the disposal of real estate assets made surplus because of the consolidation at the campus.
Types of funding mechanisms reviewed include certificates of participation, credit tenant lease financing, and other financing permutations.