Stung the recent failure of four privatized base housing project, the Air Force is trying to breath new life into the ventures, scaling back on their size in hopes of getting them restarted.
According to Air Force Times, the service is looking for a new contractor to finish the four projects, launched more than three years ago at Moody AFB, GA; Hanscom AFB, MA; Patrick AFB, FL and Little Rock AFB, AR. The Air Force now plans to build or renovate a total of 1,767 homes at the four installations, compared to nearly 3,000 under the original proposal.
Contracts for the larger developments were awarded in 2004 to American Eagle Communities, a partnership between a Connecticut firm (Carabetta Enterprises, LLC) and the Shaw Group, based in Baton Rouge, Louisiana. Work on those projects was halted earlier this year after American Eagle fell hopelessly behind schedule, and private developers halted financing.
A plan for salvaging the failed developments was outlined earlier this week during a town hall meeting at Little Rock AFB. During that forum, the commander of Little Rock's host wing, Brigadier General Rowayne Schatz, announced that his installation's privatized housing project would be sold to another firm, which would resume work on the development sometime next year.
“We think right now the best way, the fastest way, to get these projects moving again is through a sale to another developer who has a more proven track record in military family housing projects,” said Brig. Gen. Rowayne Schatz, the commander at Little Rock.
Schatz said three developers visited the four bases in late October, and all three developers seemed interested in bidding on the project.
He said he hopes a sale can be completed by the end of the year so construction could be restarted early next summer. But he called that timeline “optimistic.”
General Schatz also told the Times that the service and private financiers are leaning toward bundling the failed projects into a single package, making it more attractive for a new developer. That approach would (at least theoretically) allow work on all four developments to resume at the same time.
Meanwhile, the service has also determined that base housing needs at three of the installations have declined, allowing a reduction in the overall scale of the project. A recent survey calculated that Little Rock needs only 659 units (compared to 1,200 in the original estimate). The requirement at Patrick has dropped from 552 homes to only 164 units, and the need at Hanscom is declined from 784 to 459. The survey also determined that Moody needs at least 600 new and renovated housing units, a total similar to the original estimate, calculated in the late 1990s.
The dramatic drop in the number of housing units needed at those three installations underscores an obvious fact--the private sector can often do a much better job in serving the market than the "hybrid" approach tried by the Air Force. Rather than give up their housing allowance and move into dilapidated, 50-year-old quarters, many Air Force families opted for home ownership.
As we've noted in previous posts, median home prices in two of the markets--Valdosta, GA and Jacksonville, AR--are well below the national average, putting homes within the reach of many military families. We still wonder if a program encouraging home ownership could have prevented the privatization debacles at Moody, Patrick, Hanscom and Little Rock.
While some privatized developments have been successful, that success has come at a price, allowing developers to "define" military communities, and putting corporate profits ahead of unit morale and cohesion. Those points were eloquently stated in a recent Air Force Times op-ed, authored by the service's Deputy Judge Advocate General (JAG), Major General Charles Dunlap, Jr.
The timing of Dunlap's op-ed is clearly no accident, nor is its contents. We still believe that General Dunlap's concerns are shared by other flag officers, who are worried about the long-term consequences of privatized military housing.
Safe, affordable housing is a key quality-of-life issue, particularly for young enlisted families that are often squeezed in high cost-of-living areas. For the sake of those families, the four failed projects should be salvaged. But, their continuation should come with a couple of caveats. First, there must be an investigation into how a financially-shaky firm (American Eagle) accumulated $3 billion in DoD housing contracts, and proceeded to bungle them badly.
Secondly, the Pentagon needs to show Congress--and taxpayers--why privatization is a better deal than providing incentives for home ownership. If DoD can't make that case, then it's time for a new approach in military housing, based on genuine, free-market solutions and not the government/corporate mix that failed so badly at those four Air Force installations.