Housing: Privatized housing - Military Housing - Military Times

Housing: Privatized housing

Privatization — having private firms build, own, maintain and operate housing on government land — is helping the services repair or replace inadequate housing and build new housing much more quickly than they could on their own.

Through privatization, new houses have been springing up at military installations, and old houses are being demolished and replaced or are undergoing major renovations. The units and their improved amenities — many have garages, for example — are comparable to housing found in civilian communities, since they are built to local and/or state construction standards.

Improving the quality of housing is a priority for the Defense Department because good, affordable housing is a key factor in recruiting and retention.

Construction and renovation for some privatization projects have already been completed. Overall work associated with all privatization projects should be completed between 2014 and 2017, depending on the developers and the contracts that will be awarded. By tapping private-sector resources and expertise, defense officials are speeding up the pace of new construction, replacement and renovation at a lower cost.

In the privatization structure, service members pay rent that is based on BAH affordability. The rental income of the privatization project helps the private companies borrow private capital for up-front construction needs, including renovation and quality new construction built to community standards. The projects’ rental income stream, like any private-sector housing, covers the normal operating expenses of the project. In addition, reserve accounts are established to help provide for long-term maintenance, renovation and modernization of the units.

When housing is privatized, the government no longer owns it, although the government in most cases still owns the land. Military members are not assigned to the units but instead referred to the property manager.

The privatization projects are structured to provide preferential occupancy and rent to military members. But the private companies can rent to others, including single troops, retirees and civilians, if the occupancy rate falls below certain levels for a period of time.

Military members have a choice whether to use their BAH to rent a privatized unit or other residence on the economy, or to reside in government housing, if available, and forfeit BAH. Service members’ housing allowances generally cover the rent, utilities and insurance for privatized housing.

There is much more flexibility for residents in privatized housing. For example, families may negotiate with developers to extend their stay after the service member is transferred to another base, or for other reasons, such as allowing families to stay so their children can finish school.

Spouses of service members who die on active duty may be able to negotiate to stay longer than government policy would normally allow. Much depends on the demand for housing at the base.

Contracts for 87 privatization projects have been awarded, involving more than 173,000 housing units.

The Army, Navy and Marine Corps have transferred all their remaining inadequate housing to their private-sector partners, which will renovate/replace and maintain the housing. Officials expect to award contracts that will increase the number of privatized housing units to about 193,000 by the end of 2009.