THE VIRGINIAN-PILOT
Copyright (c) 1996, Landmark Communications, Inc.
DATE: Sunday, April 14, 1996 TAG: 9604130280
SECTION: BUSINESS PAGE: D1 EDITION: FINAL
SERIES: The Military Goes Into Business
SOURCE: BY MYLENE MANGALINDAN, STAFF WRITER
LENGTH: Long : 139 lines
In the future, military housing might look less like spartan barracks and more like ranch homes straight out of ``Better Homes and Gardens.''
At least, that's the plan.
U.S. Department of Defense and Navy officials formally introduced a new housing privatization program to Hampton Roads last week. They want the private business people to become contractors, developers, financiers and landlords of houses and apartments occupied by troops.
Indeed, military officials want ``out'' of the housing business altogether. That way, they say, the military can save money and also have more affordable, attractive homes for its service people. Or so they hope.
Before the government can relinquish its decades-old role, however, private builders and contractors need to be assured they can make it work. And so far, many questions remain. The Pentagon also has been slow releasing information on the program, some local housing officials and private developers said.
Still, private housing starts are under way as test projects at military posts in Texas and Washington state.
In Hampton Roads, prospective construction sites are being surveyed by the Navy, Army and Air Force, said Robert L. Meyer, director of the Housing Revitalization Support Office.
The idea is another example of how the structure of the U.S. military is changing. Budget cuts and downsizing have forced military brass to look for ways to trim costs without sacrificing quality.
Post-Cold War warriors are generally younger, better educated and married with children. Stiff demands are made on them to be competent in different technologies. They're more likely than previous generations to make the military a career rather than ``a phase.''
Because recruits and officers stay in the services longer, military leaders worry more about their quality of life. Housing is a key factor. And by all accounts military housing needs upgrading.
``This inadequate housing affects our ability to retain a professional force and degrades our readiness,'' Secretary of Defense William J. Perry said. ``The quality of housing has declined for more than 30 years because of a lack of priority and because earlier attempts at solutions have run into regulatory or legislative roadblocks.''
The Pentagon is serious about tackling the problem.
In its proposed 1997 budget, the DoD has allotted $714.3 million for the construction of military housing. Just under $3.1 billion will go to renovation. That includes razing decrepit buildings and adding modern appliances to those that can be salvaged.
One such project is in Norfolk. The Navy is spending $50 million to renovate its Ben Moreell housing complex near the Norfolk Naval Base. The 607-unit apartment complex - originally 1,300 - is being converted into 388 houses that range from three bedrooms to five bedrooms. It's slated for completion this fall.
Hampton Roads stands to gain a lot from the DoD program.
The Navy flagged the Norfolk Naval Base as one of its top priorities. Cheatham Annex near Williamsburg also made the initial list. The Army identified Fort Eustis on the Peninsula as one of its top nominees for the program.
It makes sense.
Hampton Roads boasts the largest concentration of Navy families in the country with about 50,000. San Diego ranks second with about 40,500. Navy officials also project Hampton Roads will have the nation's second-largest deficit in housing by the year 2001.
That's why they've already visited the area and looked at Carper Housing development, a complex of 600 townhouses scheduled for demolition, in Virginia Beach as a potential candidate for the program. If it's selected, the housing construction project could be worth about $40 million, local Navy officials said. A report on the area's status will be released near the end of April or the beginning of May.
Although many questions still exist, developers, Realtors, mortgage bankers and others who attended the Second District Housing Conference last week expressed interest and enthusiasm.
``We've looked at the program. It makes a lot of sense,'' Ripley said. ``I applaud them for what they're doing.''
A portion of the DoD's effort has been directed toward the Family Housing Development Fund, part of the housing privatization program aimed at enlisting private sector support. The DoD allotted $22 million to the program in its 1996 budget. Funding could reach $20 billion in 30 years, according to DoD documents.
Although the military still renovates and builds some of its own quarters, it would rather not be left with all the responsibility, especially maintenance and renovation.
The 1996 Defense Authorization Act, passed about a year ago, gave the Defense Department the power to tap the private sector for that. It could seek private financing and services associated with construction and housing.
Each of the military services will determine which sites need the most immediate attention. The service, in consultation with the Housing Revitalization Support Office, an oversight consultant agency, will then form a partnership with a private construction company, contractor, developer or other entity.
Depending on the need, companies might build units on base. Or they'll be hired to build houses in surrounding neighborhoods.
What's revolutionary about the housing privatization program is the way the military is delegating the work. It wants a say - but not necessarily a role on housing project management teams. It doesn't necessarily want to own the housing, either. It wants to invest in it and it wants that investment protected, which means making certain the housing is maintained.
``It's a new concept,'' said Ronald Ripley, president of the Tidewater Association of Realtors who is involved in multifamily housing. MEMO: NAVY FAMILY HOUSING UNITS IN HAMPTON ROADS
Hampton Roads has the largest concentration of Navy families in the
country. The total for 1995 was 50,935 (not including troops who live on
ships or in base barracks). Here's how it breaks down: 5,042 occupy
government housing
22,516 own private dwellings
23,223 rent private dwellings
154 own mobile homes
FAST FAX:
The 1996 Defense Authorization Act has granted the Department of
Defense, through the Housing Revitalization Support Office, several new
authorities:
Loan or rental guarantees: The DoD can guarantee mortgage payments,
mortgage insurance, provide limited guarantee against major deployments
or other reductions. The DoD also can guarantee rent and occupancy
levels to assure that rental units are occupied to a specified level in
the agreement.
Leasing: The DoD may lease family housing units that have been
acquired or newly built. The landlord would handle operations and
maintenance. The DoD may also lease land.
Differential Lease Payment: The DoD can pay the difference between
negotiated rent and the basic allowance service members receive for
housing.
Investments: The department can invest in nongovernmental groups
involved in acquiring or building family housing. These would be limited
partnerships that allow DoD to contribute cash, land or facilities as
its share of the partnership. The department would not have any
management role.
KEYWORDS: MILITARY HOUSING by CNB