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Air Force reaches privatization milestone

By Staff Sgt. C. Todd Lopez

WASHINGTON (March 08, 2005) -- The Air Force recently surpassed the 10,000-home milestone in its military family housing privatization program.

In February, Air Force officials closed a deal privatizing more than 1,300 homes at Hickam Air Force Base, Hawaii. This means the Air Force now has more than 10,900 privatized homes.

The privatization deal at Hickam is the 13th the Air Force has entered into. Air Force officials closed their first military family housing privatization deal at Lackland AFB, Texas, in August 1998. About 420 homes at the base were privatized. Today, those homes have a 96.6 percent occupancy rate.

Following Lackland, deals closed at Robins AFB, Ga.; Dyess AFB, Texas; and Elmendorf AFB, Alaska. Today, construction at all four of the bases is complete, creating more than 2,300 new or renovated homes for Air Force families. Families living in those homes appear to like where they live, said Col. Bob Griffin, Air Force housing division chief.

"We survey our customers on a quarterly basis," he said. "For Lackland, Robins, Dyess and Elmendorf, we see very good customer satisfaction. Not in just the housing, but in the responsiveness of the developer," he said.

Over the next four years, through use of local community housing, privatization and traditional military construction, service officials plan to reduce the Air Forceís worldwide housing inventory of more than 107,000 to about 86,000, with about 60,000 in the United States. Officials expect nearly three-quarters of stateside homes will be privatized, Colonel Griffin said.

Before the Air Force privatizes any housing, it first calculates needs based on mission requirements and manning projections, the colonel said.

"By the end of 2009, we expect to privatize 72 percent, or about 45,500 of our U.S. based housing inventory," he said.

Privatization means the Air Force allows private developers to take ownership of military family housing on installations. While the Air Force will still own the land, the developers will own the homes, maintain and upgrade them. Funding to pay developer costs are provided by collecting rent from the housing occupants.

Today, about 59,000 homes worldwide are deemed "inadequate" by Air Force standards. An "inadequate" home is generally defined as a home that fails to meet Air Force size, condition and functionality criteria. Air Force officials plan to bring those homes up to standard through the privatization process.

"Privatization will allow us to leverage dollars we have in the program in order to provide more quality housing faster," he said. "If we were trying to fix our inventory through traditional military construction and maintenance, we would need about $5.6 billion to achieve our goals."

Developers who enter into a privatization deal agree to bring homes up to Air Force standards through new construction or renovations within a very short development period. While each deal is unique, across the program the developers have provided $9 for every Air Force dollar spent providing Airmen with newer, better homes, Colonel Griffin said.

"When we talk to the privatization developer, we tell (him or her) what we would tear down, what we would renovate and also how many new houses we need to build," he said. "We price out what it would cost to do that if the government was going to build it."

When developers submit proposals on the project, they let Air Force officials know what upgrades will cost. Oftentimes, the contractor offers more than what the Air Force is asking for, but at a lower price.

"The developers who get these deals are meeting our requirements, within financing parameters, and exceeding them by bringing in desired features and enhancements," he said.

Some of those enhancements include new homes versus renovations, lawn care at no charge to the resident, community centers, swimming pools, basketball courts, walking trails and parks.

"These are additional features like you would see off base but aren't always provided to people on a military base," Colonel Griffin said. "When a privatization developer comes in, (he or she brings) the whole thing. (Developers) provide the house we ask for, or more, and also add in more things because they are trying to build a community and get people to move in."

Airmen who choose to live on base in privatized homes will collect basic allowance for housing, the same as those who choose to live off base. They will in turn pay the allowance to the developer in the form of rent. The rent for privatized homes will be set so that, along with average utility costs, the Airmanís allowance will safely cover it, Colonel Griffin said.

"The only way a member might have to pay out of pocket is where utility bills are concerned," he said. "We will have forecasted the average cost of utilities for a particular home and built it into the rent payment. If a member goes into a house and is spending a lot more, or consuming a lot more energy than what we forecast, then there is a possibility (he or she) would have to pay more."

One motive behind privatizing military family housing is the Air Force does not have to pay to maintain the homes or keep them up to standard -- the developer does. And because developers enter into 50-year privatization deals with their own money, the best way for them to recoup their investment is to ensure the homes remain attractive to military families, Colonel Griffin said.

"We do not guarantee the property manager a tenant," he said. "It is up to them to (market) their houses alongside any other commercially available house out there to Airmen and their families."

If a developer is not attracting tenants into housing for other reasons, such as a change in mission at a particular base, Air Force officials will allow them to broaden the pool of potential tenants, Colonel Griffin said.

"The target population for privatized housing is active-duty military members, but that is not the only group allowed to live in those homes," he said. "The Air Force allows developers to rent to other groups through a process called a 'waterfall.' When there is a shortage of active-duty Airmen to rent the homes, developers may fill empty housing units with reservists, Air National Guardsmen, government civilians or military retirees."

Failing that, developers may even rent the homes to civilians, though Colonel Griffin said they would need to pass a security screening.