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11th CES: Privatization is about choice for Airmen

By C. Todd Lopez

BOLLING AIR FORCE BASE, Washington, D.C. (June 14, 2007) -- The housing privatization effort at Bolling Air Force Base is, in part, about saving the Air Force money by transferring responsibility for maintaining homes to a private developer. But the privatization deal is also about giving Airman choices in family housing.

"When an Airman considers housing for his family, maybe location is more important than size," said 11th Civil Engineer Squadron commander, Lt. Col. Thomas Carroll. "Or maybe size is more important than location -- we do have a lot of folks that choose to live way out in Manassas, for instance. But if an Airman is satisfied with a space on base, and they like the neighborhood, they can choose that. The whole point of privatization is that the Air Force has adopted this policy of free choice."

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As part of that policy of choice, all Airmen at Bolling, except those required to live in the dormitories, will receive a basic allowance for housing. With that money, they can choose to rent housing that is available on the installation, or they can choose to take their BAH and rent housing off base, Colonel Carroll said.

Airmen who choose housing on base will pay most of their BAH to the privatization developer in the form of rent. Rent for the housing unit a member lives in will equal their authorized BAH, minus 110 percent of the average utility rate for their style of housing unit. That remaining portion of an Airman's BAH is meant to be paid to utility companies. In all, Colonel Carroll said, under privatization, an Airman can expect to see zero net change in their income.

Privatization means the Air Force allows private developers to take ownership of military family housing. While the Air Force will still own the land under those homes, the private developers will own the housing units. By transferring ownership to a private developer, the Air Force is no longer responsible for maintaining homes or keeping them up to standards. Instead, the developer takes on those responsibilities.

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 Carroll said.

"We believe that a well maintained home that is kept to standards and is adequately modernized for today's modern family, translates directly to improved quality of life," Colonel Carroll said. "One of General Moseley's priorities is taking care of Airmen, and quality of life in housing is one way we are properly taking care of our Airmen."

Despite the Air Force's best efforts to maintain the high standards it has set for base housing, the service is not in the business of renting and maintaining property -- it is in the business of maintaining, training and equipping an airborne war-fighting force.

"We are at the mercy of Congress to determine the quality of our housing, so sometimes houses may not be the quality we want them to be, due to competing priorities," Colonel Carroll said. "But under privatization, it is in the developer's best interest to keep those houses up to standards and attractive to renters, so they can keep them occupied and keep their income stream intact. So we believe private developers can and will do a better job of ensuring base housing meets our high standards."

Colonel Carroll also pointed out that most civilian housing developers don't have government oversight, but the developers who will manage housing at Bolling will. If the developer fails to maintain houses at Bolling to Air Force standards, they will be in breech of their contract.

"We are not going to let them turn this into a slum," Colonel Carroll said.

Today, there are 1,343 existing housing units on Bolling. Of those, 815 will be demolished as part of the privatization deal. The developer will also build 141 new homes. At the completion of the privatization, there will be 669 housing units available for rent.

Most of the homes to be demolished are in the Hickham Village and Doolittle Park housing areas, as well as the housing area immediately to the west of Chappie James Boulevard as Airmen enter Bolling through the South Gate. Some of the homes along Westover Avenue will also be demolished, while 24 of the homes there -- designated as part of an historical district -- will be remodeled.

In addition to building new housing at Bolling, the developer will also provide a community gathering center and two new outdoor swimming pools.

While Bolling will eventually have 669 housing units available on base for rent -- a decision made by the developer to exceed Bolling requirements -- the Air Force actually determined 627 units would meet its needs. Those needs were determined by studying the projected population of Bolling, based on its current and future mission; the current demand for base housing at Bolling; and the availability and attractiveness of housing in the local civilian market.

Colonel Carroll said the studies showed that 627 homes would be enough to meet the future housing needs at Bolling.

"We have more than 1,300 housing units on this base, and our current housing occupancy rate is at 88 percent occupied, with a near non-existent waiting list," he said. "In the past, we've used all sorts of stop-gap solutions to keep these houses occupied. But what we found was our people started choosing to live off base, and our occupancy rate started to drop. The statistical facts prove we don't need the number of houses we currently have."

The market analysis studies used to determine housing needs at Bolling are conducted every three years, Colonel Carroll said. If in the future those studies show more housing is needed, there will be room to build on Bolling.

Hickham Village will be the first housing area to be demolished, and Airmen must begin to move out of their homes by September. Airmen living in that housing area -- about 127 families -- were recently surveyed about their intentions once they are forced to leave their homes there. Colonel Carroll said about 98 of those families indicated they would like to stay on base.

"I have enough housing on base now to accommodate all of them," he said. "But some will have to move to Doolittle Park, which is also slated for demolition. Depending on how long they are staying at Bolling, they may have to move twice. But we are trying to minimize telling people they have to leave base, if they want to stay."

Colonel Carroll said Airmen who are forced to move from their current base housing unit will move at the government's expense, whether they choose to move into another base housing unit, or they choose to move to an off base residence.

At a recent town hall meeting, some Bolling residents expressed concern that the privatization deal would allow non-military civilians to move into Bolling base housing.

Within the privatization deal, there is a clause, sometimes referred to as a "waterfall," that allows the developer to rent on-base homes to non-Air Force tenants. Before that can happen, however, the housing occupancy rate for the 627 homes the Air Force required under the agreement, must drop below 95 percent for more than a month. That means about 32 homes must sit empty for more than 30 days before the developer can rent to the "second tier" of potential occupants.

That "second tier" consists of military families from the Air Force's sister services.

But the developer has chosen to provide 42 more homes than the Air Force actually asked for. Because of those additional homes, the vacancy rate required to rent to non-Air Force members actually rises. With 669 homes to be available on base, more than one in 10 must lie vacant before the contractor can rent to anyone besides Air Force families.

Other tiers in the "waterfall" clause include military retirees, employees of the Department of Defense, and employees of other federal agencies. Base housing occupancy must fall below specific thresholds before any of those communities can be tapped into as potential renters. Only the last tier of the "waterfall" clause includes the general civilian population.

Also during the town hall meeting, some residents expressed concern over rental costs for members living in homes not designated for their pay grade.

The Bolling Housing Office attempts to ensure Airmen are moved into homes deemed grade-appropriate. But on occasion, it has been necessary to allow Airmen to move into homes that are not designed for their pay grade, Colonel Carroll said.

When base occupancy rates are extremely low, for instance, the Housing Office may offer a junior noncommissioned officer the opportunity to move into a home designed for a senior NCO, as incentive to keep him on base. Likewise, if a senior NCO comes to Bolling and grade-appropriate housing is not available, she may be willing to move her family into a unit designed for a lower pay grade.

Despite the occasional situation where an Airman is living in a base housing unit that is not designed for their pay grade, rental costs will not be adjusted to compensate for any perceived housing discrepancies. Rental costs for all Airmen in base housing will be calculated the same way, Colonel Carroll said.

"Under the housing privatization deal, rent is equal to BAH, no matter where you live," he said. "The financials of this deal are written to allow a certain degree of flexibility into the system and still have the project be viable."

Colonel Carroll pointed out that while housing units at Bolling may be flagged locally for a specific pay grade, the unit may actually exceed the standards the Air Force has set for that pay grade. He said that trend is likely to continue under privatization.

Bolling base housing residents will eventually be expected to sign a lease with the developer. Colonel Carroll said that lease signing is likely to happen in August, after the privatization deal is finally closed.

He also said members will have "military clauses" in their leases that allows them to end their leases prematurely, and without penalty, in the event of a permanent change of station. Forced moved, he said, would also release members from their housing leases.

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