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Base Housing Transformation


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The private housing revolution
Program’s first decade ends era of cookie-cutter homes, same-rank neighborhoods and military maintenance calls

By Karen Jowers
Staff writer

From her sagging house in Old Hillside at Fort Lewis, Wash., Army wife Lucy Mooney could see workers building her new life.

“I could see the progress every day. I couldn’t wait. I knew I was getting out of a falling-apart house into a brand-new house, which, in eight years in the Army, we’ve never had,” said Mooney, who moved into her new home in September.

Her old house: demolished.

The new digs met all her expectations and more — open, airy space, lots of lighting, lots of storage space.

Ten years after Congress gave the Defense Department the authority to work with private developers to fix dilapidated housing, Mooney is not the only one waxing rhapsodic about progress in the military’s privatized housing program. It’s visible and ramping up.

In these new housing areas at bases such as Lewis; Wright-Patterson Air Force Base, Ohio; and Naval Base Kitsap, Wash., the usual trappings abound — “Welcome home, Daddy!” signs for returning troops, for example.

But it just doesn’t feel like the military housing most people know — the old Capehart and Wherry housing tolerated just for the chance to live on base. Those houses were built after World War II to ease a severe military housing crunch — and have had few renovations since.

That’s quickly changing under privatization. The concept calls for the services to give ownership of all or most of an installation’s housing to private developers, who can renovate old houses and build new ones faster than the traditional military construction process. The private developers then also maintain the homes out of military housing allowance payments.

Some families find the new housing so appealing, so unlike anything else they’ve experienced on base, that they can scarcely believe it.

When Navy Chief Fire Control Technician Bill Cahill’s family drove him home for the first time after his ship pulled into Kitsap last October, they had to work to convince him that the 2,160-square-foot, two-story house was theirs. He thought it was at least a two-family duplex.

“I thought I had gone from Chief Cahill to Adm. Cahill,” he joked. “It’s amazing.”

The kitchen is loaded with modern appliances and has an open layout for entertaining. The family room has hardwood floors; the upstairs laundry includes a sink. Storage is plentiful, with two walk-in closets in the master bedroom suite. The master bath has “his and hers” sinks.

“My bathroom is huge,” Vicky Cahill said.

Extras abound. “There are cable and phone connections in every room,” Bill Cahill said. “In the past, we had to do power strips for all the gadgets we plug in.”

For Army Staff Sgt. James Mooney, knowing his wife and family were in quality quarters was a comfort as he headed to Iraq again. Their Old Hillside quarters lacked deadbolt locks, and the doorknob lock often stuck.

“At least going back this time, I know they’ll be secure,” he said.

The privatization effort is not just about building new housing from the ground up. In almost one third of privatized contracts already awarded, older houses are being renovated — usually gutted and rebuilt. Builders are also merging smaller two-bedroom units into larger three- and four-bedroom units.

At Fort Lewis, old Capehart housing has undergone major renovations to add garages, wall-to-wall carpeting, energy-efficient windows and doors, and master bedroom suites with walk-in closets. There are covered porches with railings, and kitchens are much less cramped.

‘Haves’ and ‘have-nots’

Before the Mooneys moved into their new house, they were among the “have-nots” — with lots of company among military families.

Considering some of the problems families put up with in older housing that has been privatized but is awaiting renovation, an impatience with the pace of privatization is not hard to understand.

Michele Lopez lives at Quantico Marine Corps Base, Va., where her enlisted husband’s housing allowance pays for an old house in Argonne Hills that will be demolished eventually.

Within weeks after they moved in, the bottom floor flooded twice with sewage that bubbled out of the kitchen sink, caused by tree roots growing into pipes in the yard. The management company, Lincoln Property Company, put the Lopezes up in a hotel each time, dug up the yard to fix the problem and sanitized the house.

And after Lopez complained about the mold in her kitchen cabinets, the company replaced them with brand-new cabinets, and cleaned the mold behind them.

Still, “I’m constantly feeling like I have to clean the house,” she said. “I have to bleach everything to keep me halfway sane.”

Meanwhile, she sees beautiful new military housing going up a few miles away on Quantico. But she’s been told that until their neighborhood is ready to be razed — probably in late 2007 — her family won’t move into a new house.

Culture changes

Under privatization, developers usually set rent at the military occupant’s housing allowance.

This means that in some privatized housing, troops pay different rents for the same house simply because they get different Basic Allowance for Housing payments based on rank. For example, an E-4 and an E-7 at Wright-Patterson Air Force Base, live in different neighborhoods but have houses with similar floor plans and size — yet the E-7’s rent is higher.

And then there are those like Lopez, who lives in a substandard house but pays the same rent as those in new houses.

Joe Sikes, director of the Defense Department’s Housing and Competitive Sourcing Office, said there is no rule that rents for privatized housing must be based on a person’s rank and BAH payment. The entire premise of privatized housing is that rents should be based on the local market, he said.

Sikes is drafting a memo to remind service officials that privatized developers can charge less — or more — rent than an occupant’s BAH rate, as off-base landlords always have done.

In some privatized housing where occupancy rates have gone down because of the low quality of the housing, developers have, in fact, been charging lower rent than occupants’ BAH, allowing the occupants to pocket the difference.

Conversely, some people living in newer on-base privatized housing conceivably could face rents greater than their BAH. That’s not likely to be popular with service officials or families — but the point, officials say, is that it’s no different than the choices military families have always faced in seeking off-base housing. Some make the decision to dip into their own pockets to cover part of the cost of larger, newer housing than their BAH would accommodate.

“We’ve not yet had a case of a developer charging more [than BAH],” Sikes said.

In San Diego, BAH has risen more than was projected, giving the developer flexibility to charge different rents. The developer is about to lower rents in some of the area’s more remote housing.

“Eventually over time, all rents will be based on what the market will bear,” Sikes said. That will depend not only on the condition of the units, but also location, size and other factors, such as proximity to certain schools.

The culture is shifting, Sikes said. When privatized housing efforts began, many residents were mad about the very idea of paying rent to live on base, even though they had, in effect, been paying rent all along in government-owned housing by forfeiting their BAH.

That simply was invisible on Leave and Earnings Statements. Now, people see BAH in their statements, although it goes right back out as an allotment or check to the private developer.

No privileges of rank?

The issue of BAH and rents is not the only culture shift ongoing in privatized housing; ranks generally are more closely mixed than in traditional housing.

“A lot of people have complained about people of different ranks living next to them,” Sikes said.

In some cases, this has been a necessity as developers try to match available housing stock to those who need it as they renovate, demolish and rebuild.

Not all complain. At Fort Belvoir, Va., residents snapped up houses in the new “urban town center” section of the post’s privatized housing, even though the 25 houses are open to all ranks. The homes are built on top of 11 shops that just opened.

“We want our communities to mirror what’s outside the gate,” said Ivan Bolden, who runs the Army’s Residential Communities Initiative. “It’s more than building houses — it’s ancillary services. That’s why we thought a town center idea would work.”

In nearby Northern Virginia communities such as Reston and Herndon, “this is the concept,” he said.

The idea of people of widely varying ranks living next to one another will be a fact of life in privatized housing, although the services will still probably set some boundaries.

“It won’t be as strictly divided as it was in [government-owned] housing,” Sikes said. “But they won’t be as intermingled as in the civilian community.”

Backlog of problems

When privatization was just launching, one concern was how well maintenance issues would be handled. But the new private owners seem to be aggressive on that front, even in older homes.

Along with building or renovating as quickly as possible, companies work fast to improve maintenance.

“We have to be competitive with the market outside the gate,” said Kimberlee Schreiber, managing director of Equity Residential at Fort Lewis.

“Service members are getting nicer homes — and better service,” said Mary Kellogg, general engineer for Fort Lewis.

Equity Residential’s Fort Lewis Communities has a vast fleet of maintenance vehicles ready to roll and warehouses stacked with spare parts for old as well as new appliances and fixtures.

A certain amount of catch-up goes on, some private companies say, when they inherit a backlog of problems from the military. In some cases, the military ceased most maintenance work months before the privatized housing contracts were awarded to hold down costs.

“Without question ... homes have not been maintained” to standards, which means higher start-up costs, said Kathryn Thompson of American Eagle Communities LLC, whose projects include Kitsap in Washington. “When an installation learns it’s going to privatize housing, they back off on maintenance and put [the money] toward other things — which is understandable.”

Private developers are now plowing service members’ BAH rent payments back into the maintenance and renovation of housing — another reflection of private market forces at work.

“We’re motivated to please the customer because they don’t have to choose to live [in privatized housing],” Thompson said.

Indeed, about 60 percent of military families still live off base. And with hefty increases in BAH in recent years, families have more options.

When families can afford it, they vote with their feet, either because they don’t want to live in the only housing available on base, or they just prefer to rent or own housing outside the gates.

Indeed, the Government Accountability Office reported that nearly half of private military housing developers have rented some units to people other than military families to keep up occupancy rates.

Typically, if the developer can’t rent a unit to a military family, the company will offer it first to a single or unaccompanied active-duty member, then to military retirees, Defense Department civilians and contractors, and finally, to the general public.

At Wright Patterson Air Force Base, privatized housing has a military family occupancy rate of 95 percent, but the developer has begun renting some older two-bedroom units to single troops.

At Fort Hamilton, N.Y., occupancy slumped when BAH rates jumped, said Col. Tracey Nicholson, garrison commander.

“I think it was because of the quality of the housing,” she said, which included a “monstrosity” of a heating system in the high-rise buildings that kept residents from personally controlling their unit thermostats.

“When they see the quality of homes GMH [the private developer] is delivering to us, there will be a mad rush back into the gates,” she said.

The wave of the future

Unlike Fort Hamilton, some new privatized housing is smaller than the older government-owned housing was.

“People ask us how we can give up that BAH and not buy a house. For us, it’s worked better,” said Angel Errigo, whose husband Dave is an Air Force senior master sergeant at Wright-Patterson. “We did some house-hunting, but gas prices were going up, and houses in our price range were far from base.”

Although their three-bedroom house is smaller than others they’ve lived in, they love it.

“We’ve decided less is better,” she said. “If it doesn’t fit, we get rid of it.”

Staff Sgt. John Maningas and his wife Kelly, on the other hand, spurned a new three-bedroom house, preferring to stay in their older but larger Wherry-era home at Wright-Patterson, built in the early 1950s and renovated in 1998 before privatization.

At more than 2,000 square feet, their home is larger than the new ones being built. The new ones do have a more open floor plan, but “I’d rather have the space,” Kelly Maningas said.

The Maningases have since moved on to another assignment.

Even after privatization is complete, service members will see big differences in the size and amenities of housing from one installation to the next.

For example, the four-bedroom house of the Cahills, the Navy family at Kitsap, is more modern, more airy, and about 300 square feet larger than Air Force Col. Ronald Deak’s house at Wright-Patterson.

Deak’s house is a great step up from many he’s lived in before, but it’s far from the biggest his family has ever lived in. But, he said, he understands how the new paradigm works — BAH rates are higher at Kitsap than at Wright-Patterson, so the developer at Kitsap gets more rent and thus can put more money into the housing.

That’s an inevitability, the Pentagon’s Sikes said.

“The developer builds specific to the geographic area so it doesn’t look like traditional housing,” he said. “Our projects are somewhat beholden to the income stream generated by the project, which is based on [housing] allowances. So you’re going to be able to do more in higher-BAH places like [Washington state] than at Wright-Patterson.”

In another sign of market forces at work, families often aren’t bound by old military regulations on the number of bedrooms they’re allowed.

When Marine Capt. Brent McClellan and his wife Stacey lived at Quantico, they loved having a brand-new home with a bedroom for each of their three children, even baby Kayla. Under government housing rules, she would have been sharing a room with older sister Regan or brother Brayden.

“When you can split the kids up, it reduces the stress. It makes life so much better,” McClellan said. “The average captain could not afford anything like this out in the community” in Northern Virginia.

“We thought about buying, but houses here are completely out of our range,” said Sgt. 1st Class Christopher Woolley, who lives in the Vernondale community at Fort Belvoir.

His privatized house would easily fetch $800,000 outside the gates, he said, but he gets it for his housing allowance of about $1,800 per month.

Children living in Belvoir’s new neighborhoods have space to run and play in the “village green” areas separating rows of homes and town houses. A community center sits at one end of one village green, where families can gather in a cozy sitting room.

At the other end of the green is a golf course. “How many places can you find enlisted people living on a golf course?” said Command Sgt. Maj. Andre Douglas, who until recently was the post’s top enlisted soldier.

“I’ve never lived in housing this nice,” he said, walking through a 1,900-square-foot, three-bedroom model home for junior enlisted families.

Douglas and other sergeants major still living in the older sections of Fort Belvoir are waiting their turn. That’s the basic priority order for privatized housing — junior enlisted troops first, then senior enlisteds and officers.

Danielle Lee, who lived with her husband, Marine Sgt. Keola Lee, in new privatized housing in Lyman Park at Quantico before they recently got a new assignment to Camp Pendleton, Calif., said there is plenty to love about the Quantico quarters: “Clean. Appliances all work, and they’re new. A microwave … carpeting … the kitchen is cleaner and easier to maintain. More bedrooms. Parks. More places for the kids to play. Safer. Better family environment.”

Simply put, she said, it was “the nicest house we’ve ever lived in.”

Next article also from the Army Times.

Renovation, construction move ahead as developers take over housing areas

By Karen Jowers
Staff writer

Defense officials are gathering steam in their 10-year effort to privatize family housing.

As of August, officials have awarded 62 contracts for 132,031 family housing units. About 60 percent are waiting their turn for either renovation or replacement. Over four years, contracts will be awarded for 49 more projects to privatize another 66,615 units.

About one-quarter of the units were deemed adequate and not in need of any work.

As of July, major renovations have been completed on about 28 percent of inadequate units, and 26 percent of new construction is done. Work generally takes five to seven years to finish after contracts are awarded.

“By early next year, this will be the largest housing program in the history of the Defense Department, including the big post-World War II programs,” said Joe Sikes, director of the Pentagon’s Office of Housing and Competitive Sourcing.

Those early programs included about 85,000 Wherry homes and 170,000 Capehart homes.

But just as privatization hits its stride, along comes a new round of base realignments and closures — and decisions to reposition units from overseas. That means large numbers of families will be showing up at installations whose original housing privatization plans do not account for them.

Defense officials are talking to communities to come up with a plan, Sikes said. “If everybody looks at each other waiting to see what happens, nothing happens,” he said. “Communities are sort of stumped. They would like to know what we intend to do, and what we want them to do. Local communities are not going to come in and try to build houses if we’re going to provide them. They would just be competing with us.”

Normally, the military turns to historic market trends in laying housing plans in a given location. In the current scenario, “that’s useless information,” Sikes said.

Doubling the number of families on the market in a short time renders previous market information irrelevant, he said.

At the dawn of privatization in the mid-1990s, some 180,000 family housing units in the worldwide military inventory of 300,000 units were labeled inadequate. Officials estimated it would take 30 years and $16 billion in military construction funds to fix the problem.

Some $14 billion has been spent on or committed to privatized housing projects to date, but only $1 billion of that has come from the Defense Department. The private sector has pumped in more than $13 billion in total development costs to these deals, a level of leverage far beyond the Defense Department’s original goal of getting a ratio of at least $3 in housing improvements for every government dollar spent.

To date, the focus of defense and service officials has been on military families’ satisfaction, the timeliness and quality of construction.

With over half of the planned total of privatized housing units turned over to private developers, defense officials now are looking at the relationships between the developers and the services.

“Ten to 15 years from now, that’s what’s going to determine whether we have [the developers] running the housing, or whether we go in a different direction,” Sikes said.

The military’s challenge now is to ensure developers live up to their contracts while not being so “over-controlling” that developers start bailing out in the long term “because it’s so hard to do deals with the government.”

“It’s a fine line,” Sikes said.


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I wish they would spend some money on the PMQ's in Trenton. I practically had to threaten them with legal action to fix the insulation on the 2nd floor.  Or the lack there of.  They didn't even flinch when I told them I had a 2 month old daughter and winter was just around the corner.  I was told to buy extra blankets.  I think I am buying next time.