State Real Estate Czar Rosenfeld Unveils Office Consolidation Agenda

Sixty years ago an earthquake rocked the business world. In three frenetic months the “dealers and dreamers” of the nascent Roosevelt Administration rewrote the laws governing securities, agriculture, labor and trade.

The net effect of those changes was to move the financial capital of the world from Wall Street to Washington and to forever plant government in the middle of the playing field of business and trade.

These fundamental changes have never been reversed, and ours remains a mixed, rather than a private economy with a substantial role permanently reserved for the public sector.

We are midst of a recession whose only rival in modern times is the events of six decades ago. And if there was ever a role for government in the economy, that role should be evident today.

Those of us who have the privilege of working in the public sector, either temporarily or permanently, feel a special obligation to create a positive role for government in this difficult time. The traditional response, at least since Roosevelt, has been countercyclical public works spending. But the means for financing that spending have already been spent. Therefore, a new approach must be found — fast.

Reshaping California's Assets 

With all the attention that has been recently focused on federal government efforts to thrash out a budget, a jobs program and a deficit reduction plan, few have noticed the significant changes that have occurred in Sacramento. Quietly and effectively, the governor and the legislature together have produced a state budget to preserve California's all-important credit rating and have conquered one of the most serious and divisive issues of our time: workers' compensation reform. On a host of other fronts the administration and the legislature have made significant progress towards improving the business climate and "marketing" California as a place to create jobs. 

Some of these changes have occurred in the management of the state's real property. Specifically, the results of Governor Wilson's 1991 Executive Order on asset management are beginning to take form. Among its salient points, the Executive Order required that the state: 1. Plan and consolidate its 34 million square feet of office facilities, and 2. privatize the delivery of services wherever feasible. 

Long-Range Planning 

A series of regional plans, now covering San Francisco, Los Angeles, the inland Empire, and Sacramento have been drafted to project long term space needs and develop consolidation and cost containment strategies. In some markets new consolidated facilities can be accommodated most economically in existing buildings, including some historic structures, while in other markets they will require new construction. In every case they will create jobs in the hard-hit design and construction industries. 

For example, the Bay Area Regional Plan has produced a master development program to replace earthquake damaged buildings, renovate historic structure, and create new state facilities in the San Francisco, Civic Center, downtown Oakland, and at regional State Service Centers in the East Bay and on the peninsula. A private sector design/build RFP will be issued for the 800,000 square foot San Francisco Office Building and 700,000 square foot Oakland Office Building early next year, with award anticipated in July and groundbreaking before the end of 1994.

Breaking New Ground 

This program is projected to reduce state occupancy costs in the Bay Area by 35 percent and create almost 10,000 new jobs in Sacramento. Eighteen major agencies have been studied and ranked for potential consolidation. Two private sector contracts have been awarded with groundbreaking anticipated in September and November of this year. Two other major requirements are out to bid and it may be possible to award three or four more projects to the private sector before the end of the year.

The Inland Empire Plan, covering San Bernardino and Riverside counties, prescribes four major and up to 20 minor consolidations, all of which will reduce cost and create jobs. The state is moving with opportunistic speed to lease or acquire existing space where feasible or build new when required. 

Currently on the governor's desk for approval is a consolidation plan for state facilities in Los Angeles County. The plan includes a comprehensive review of the 2.8 million square feet of office space currently controlled by the State of California at 250 locations in Los Angeles County. If approved, it will recommend consolidation into a series of regional offices throughout the county with a major consolidation in the downtown historic core. Several elements of the plan are already underway including a search, being organized by Beitier Commercial Realty for up to 200,000 square feet in the Long Beach area. Similar consolidation efforts are expected in the San Fernando Valley, West Los Angeles, San Gabriel Valley, South Central and Southeast Los Angeles County. It is expected that the full plan will be released within a month. 

All of these efforts reflect a new style of business for the State of California. For example, the state is creating new bidding procedures which are fair, fast, and comparable to private sector models. We have simplified and modified our contract documents and have made special efforts to reach out to the private sector for the delivery of services. 

Perhaps of all of our accomplishments in the past few months, the most symbolically significant is our new janitorial bidding specification which has been reduced from 70 to 4 pages. The hopefully not-so-subtle message of this entire program is that the State of California wants to be a tenant with which you would like to do business. We are trying to make ourselves user-friendly, available and willing to invest our resources to improve the built environment and help restore confidence and stability in the real estate market. We have also developed the most comprehensive minority, women and disabled veterans business enterprise participation requirements in our history in order to accomplish the significant social goal of increasing diverse participation in our programs. 

Another significant thrust of each of our consolidation efforts has been a genuine commitment to work with local government in the siting, design and, in some cases, even the construction and financing of our new facilities. Land use remains, in our minds, an essentially local issue and we hope to use our facilities requirements to restore the viability of central business districts and promote local redevelopment goals. 

Not the least of the good news is the recent announcement that Rich Mayo has agreed to join the state as Southern California Regional Manager for Real Estate and Buildings and will be instrumental in implementing our asset management strategies in the Southland. 

Between the plans, the policies and the personnel, the total result of this initiative is statewide public works program, one of the largest ever. But unlike any other counter cyclical spending program of government, this one is intended to save money every step of the way. The state is committed to involved the private sector as deeply as possible in this process and to expedite through every available means the bidding and award of projects which can create private sector jobs. 

Among the dusty symbols of the "100 days", to be found in textbooks and on museum shelves, is the blue war eagle of the National Recovery Act. It was a decal awarded to governmental agencies and businesses who participated in the controversial recovery program. 

In one talon the eagle held a machine gear, in the other talon was a lightning bolt. Inscribed underneath were the words: "We do our part."