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Joining ranks.

If you've stayed out of the line of fire in the military housing battle, you may want to reassess your position. New regulations have made the market a much better target.

Sixteen years ago, Dujardin Development Co. signed a contract to build housing on a naval base in Bangor, Wash. The company built 100 HUD-style units to rigid military specifications.

Perhaps too rigid.

The government stated exactly which products to use in the homes, such as a specific brand of fire-resistant carpet in the hallways. "It became expensive quickly," says William Fowler, vice president of the Everett, Wash., company.

Dujardin's experience isn't surprising, given that military construction before 1996 included strict requirements about the way military housing units were to be built. A Department of Defense book covered every specification, all the way down to hallway carpet thickness. Government-contracted builders were snagged in a catch-22.

"Every time there was a requirement, it brought the cost of the project up," says Craig Wallwork, vice president of defense housing at Picerne Properties' Washington, D.C., office. "The military had to then hire a team to oversee proper installation of each product," adds Wallwork, a former Marine Corps lieutenant colonel and onetime director of Marine Corps housing. "The regulations levied on builders made [military construction] too expensive for most private-sector builders to even consider."

Bidding for Dollars

Two years ago, the dilapidated condition of military housing and a lack of government funds forced the military to rethink its construction strategy. As a result, President Clinton signed the 1996 Defense Authorization Act, allowing the Defense Department to get private capital to leverage government dollars for improving military housing conditions--a victory for enlisted personnel and their families.

"The military wants out of housing," says Kitty Barry, property manager of Capstone Management in San Antonio. "It's not cost effective, and they, are not in the housing business." Capstone manages the first communities ever built jointly by a private builder and the military. The communities, located in Corpus Christi, were built last year under a limited partnership between the Navy and Landmark Organizations, a builder based in Austin, Texas (see "Double Vision," page 176).

The partnership between the Navy and Landmark reflects the relationship between government and builder under the military's new housing system. The process starts when one of the armed services asks for review of a site with housing needs. Along with the service in charge of the site, the Defense Department's Housing Revitalization Support Office (HRSO) and a private-sector finance expert evaluate the site to determine its problems and create building specs. The team drafts a request for proposal (RFP), spreading the Word through national, state, and local newspapers and the Internet.

Each RFP is unique to the service and the needs of the base the housing will serve. Bidders--builders, developers, and contractors--attend a preproposal conference, where they ask financiers, HRSO, and military representatives questions about the site. Interested bidders then submit proposals to the service for review; one proposal wins the bid.

The Defense Department estimates that 60% of the military's 300,000 on- and off-base housing units badly need renovating or replacing. The department estimates it would take up to 40 years and cost taxpayers nearly $30 billion for the military to bring the housing up to par, but says private-sector builders would take only 10 years to do the job, at a cost of just $1 billion to taxpayers. Translated, the government's hard costs would equal $117 a square foot, compared with private-sector costs of $81 a square foot. It's easy to see why Defense wants a few good privates.

So why isn't every builder joining the military ranks? For one thing, builders who submit unsuccessful bids stand to lose about $200,000, the average cost of putting together a proposal, according to Wallwork. Recognizing this hurdle, the Air Force asks bidders for a prequalification profile before issuing an RFR Unqualified bidders spend only about $10,000 initially, says Wallwork. The Army, Navy, and Marine Corps, on the other hand, still ask for qualifications as part of an RFP.

Land may pose another obstacle. Not every RFP includes existing military land. Dujardin and Landmark supplied the land for their projects. Indeed, one of Dujardin's larger costs in developing Country Manor in Everett, Wash., stemmed from the land cost, says Fowler (see "10-Year Payoff," page 175).

But if the military owns the land, as is the case with on-base housing, builders targeting new markets can hit the bull's-eye. Picerne Properties, for example, submitted a proposal to build for the Fort Carson, Colo., Army base, one of only four bases to issue an RFP since Clinton signed the Defense Authorization Act. Winning the bid would mark Picerne's entry into Colorado.

The military is moving cautiously because it's important to get it right the first time. Each completed project teaches the military how to modify and improve the process for the next one. "The military is starting slowly," says Wallwork. "As they improve the [housing] program, they'll gain momentum." After all, Rome wasn't built in a day.

FOR MORE INFORMATION

For more information the military's housing program or potential sites, see BUILDER Online at http://www.builderonline.com/builder/ monthly or contact: Housing Revitalization Support Office, Crystal Square 4, Suite 105, 1745 Jefferson Davis Highway, Arlington, Va. 22202 Phone: 703-602-3551

RELATED ARTICLE: CASE STUDY ONE

10-Year Payoff Naval Station Everett, Wash.

Dujardin Development Co. broke ground for Country Manor at Smokey Point last April. The company is developing and building the community, which welcomes civilians well as military personnel. The first units became available for residency last fall, and the development should be finished early this year.

With red tape covering their lips, Dujardin and the Navy would not disclose the terms of their limited partnership, but it's known that the Navy invested $5.9 million for the $20 million project. Without Dujardin's help, the Navy's investment would generate only one-third of the community's units.

What's in it for Dujardin? Under the agreement, all property will be leased; however, six years after the project's completion, 20% of the units will be eligible for sale, with priority and discounts given to Navy families. Afterward, the leasing arrangement will be in effect for the remaining houses for four more years.

When the 10 years are up, the Navy will have received an equitable return from naval families' purchase of 20% of the community. Meanwhile, the limited partnership will dissolve, leaving Dujardin with full ownership of the remaining 80%.

When complete, the 31-acre Country Manor will consists of 180 attached units and five single-family units, at a density of six units an acre. Plans include two, three, or four bedrooms; unit sizes range from 1,160 to 1,556 square feet. Activity courts, a walking and jogging trail, and a tot lot add touches of community living.

[ILLUSTRATION OMITTED]

RELATED ARTICLE: CASE STUDY TWO

Double Vision Naval Air Station Corpus Christi, Texas

Landmark Organizations was the first private-sector builder to shake hands with Uncle Sam when the company agreed to develop and build 404 off-base naval housing units, all attached, in the Corpus Christi area.

Landmark divided the project into two communities, Hawks Landing in Kingsville and Bridge Pointe Landing in Portland. Neither is restricted to military families, but the limited partnership agreement states that for 75 days following the communities' completion, only military personnel can lease. After that, civilians are welcome to test the waters.

The Navy contributed $9.5 million to the $30 million project. At the end of the 10-year limited partnership, the attached units will be independently appraised. One-third of the net value will go to the Navy, along with the service's equity contribution of $9.5 million. In the meantime, the Navy determines rent charges, normally at market-rate values. Rent is the same for military and civilian residents.

Hawks Landing contains 102 units (26 apartments and 76 townhouses) that range from 983 to 1,143 square feet. By September 1997, Hawks Landing was fully leased and occupied, 90% military and 10% civilian. The community totals 16 acres at a density of 6.4 units an acre.

Located on 40 acres, Bridge Pointe Landing holds 302 units (50 apartments and 252 townhouses) ranging from 983 square feet to 1,278 square feet at a density of seven units an acre.

Both communities feature all the amenities of civilian communities: pools, sports fields, basketball courts, play lots and tot lots, and picnic areas. The two also include covered parking, buses, social activity facilities. with business centers, fitness facilities, and cold spas.

"This is a win-win situation for the developer and the military," says Kitty Barry, property manager at Capstone Management in San Antonio, the communities' property management company. "It gives the military a competitive edge, while opening opportunities to the private sector."

[ILLUSTRATION OMITTED]

RELATED ARTICLE: Sites to Behold

Requests for proposals currently being drafted:

Robins Air Force Base, Ga. Phone: 912-926-3533, ext. 158, or 912-926-5110 Fax: 912-926-7598/3590 E-mail: mhobday@wrdiss1.robins.af.mil or amckinle@pk.robins.af.mil

Marine Corps Logistics Base, Albany, Ga. Phone: 803-820-5810, Fax: 803-820-5730 E-mail: PEBrannon@efdsouth.navfac.navy.mil

Marine Corps Base, Camp Pendleton, Calif. Phone: 760-725-5995, E-mail: barrerajo@pendleton.usmc.mil

The military asked the Housing Revitalization Support Office to visit and assess the following for possible new construction, but the bases are still sitting on the front line waiting to open fire.

Service Visit Completed

Army

Fort Campbell, Ky./Tenn. Fort Bragg, N.C. Fort Hood, Texas Fort Stewart, Ga. Fort Lewis, Wash.

Navy

Naval Station, Norfolk, Va. Naval Education and Training Center, Newport, R.I. Naval Station, Fort Worth, Texas Naval Air Station, Meridian, Miss. Naval Air Station, Brunswick, Maine Naval Complex, Jacksonville, Fla. (Mayport) Naval Training Center, San Diego/Cabrillo, Calif. Naval Station, Everett II, Wash.

Air Force

Elmendorf Air Force Base, Ark. Tinker Air Force Base, Okla. Dyess Air Force Base, Texas Keesler Air Force Base, Miss. Kirtland Air Force Base, N.M. Mount Home Air Force Base, Ind. Columbus Air Force Base, Miss.

Marine Corps

Marine Corps Base, Camp Lejeune, N.C. Marine Corps Air Station, Beaufort, S.C.

Still to be Visited

Army

Fort Sill, Okla. Fort Wainwright, Ark. Fort Eustis, Va. Fort Meade, Md. Fort Hamilton, N.Y. Fort Riley, Kan. Fort Dix, N.J. Fort Detrick, Md. Fort Lee, Va. Fort Sam Houston, Texas Fort Irwin, Calif. Presido of Monterey, Calif. Fort Shafter, Hawaii Fort Polk, La. Fort Leonardwood, Mo.

Navy

Public Works Center, Pensacola, Fla. Naval Complex, Pearl Harbor, Hawaii Mitchell Complex, N.Y. Naval Submarine Base, Bangor, Wash. Naval Station, Pascagoula, Miss. Corpus Christi II, Texas Naval Submarine Base, New London, Conn.

Air Force

Peterson Air Force Base, Colo.

Marine Corps

Marine Corps Air Station, Cherry Point, N.C. Stewart Army Subpost, N.Y. Marine Corps Air Ground Combat Center, Twentynine Palms, Calif. Marine Corps Logistics Base, Barstow, Calif.
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Title Annotation:construction of military housing
Author:DePietropaolo, Rebecca
Publication:Builder
Date:Feb 1, 1998
Words:1814
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