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Senators seek answers to housing project troubles at Hanscom Air Force Base

Posted December 28, 2007 10:00 pm

Patrick Ball

The privatized housing project at Hanscom Air Force Base is years behind schedule and has been under a work stoppage for months. A recent letter from senators Edward M. Kennedy and John F. Kerry to Michael W. Wynne, secretary of the Air Force, is calling on the Air Force develop a plan to remedy the situation.

The letter identifies privatized housing initiatives at Hanscom, Little Rock (Ark.), Moody (Ga.) and Patrick (Fla.) Air Force bases, all owned by American Eagle Communities, as "dramatic exceptions to the generally successful privatized housing initiative of the Department of Defense," and expresses concern over the "level of failure" of the projects "which have been under work stoppages for months, are years behind schedule, and are tens of millions of dollars over-budget."

Based on the problems involved with these four projects, the senators believe introducing legislation to amend the current military housing privatization authorities may be necessary, and in the letter requested the Air Force provide "specific proposals for quickly restoring these projects to health as well as proposed changes to oversight and management processes" by Jan. 31.

According to Col. Thomas J. Schluckebier, 66th Air Base Wing commander, the Air Force closed the deal on the project in October 2004 and the first demolition occurred around February 2006; by May of that year, there were about 200 contractors working on the housing. Schluckebier said, as he understands it, those contractors stopped coming to the base because they did not get paid, or did not get paid sufficiently.

A spokesperson for Kennedy said the senator has heard from a number of subcontractors and was concerned that they have not been paid for work they have performed.

Dave Kelly, general manager for Kane Perkins, which delivered ready-mix concrete to the project, said his company was paid "on a regular basis" while doing the work, though it "got slow toward the end."

Kane Perkins filed a claim on the bond when work stopped, and just recently received their final payment, Kelly said.

Representatives from American Eagle did not return repeated calls for comment.

Mike Hawkins, chief of public affairs for Air Force Center for Engineering and the Environment, which manages the privatized housing projects, said the slowdown in the four projects was largely the result of construction slowdowns and some things that bondholders were not comfortable with, which caused the bondholders to withhold funding.

"All I can say, factually, is that there were issues identified in the various projects that we noticed that we brought to the attention of the project owners and tried to remedy them," Hawkins said. "Our goal has always been to work with our project owners to facilitate the completion of these housing facilities.

"It is now at the point, where, in order to move the project forward … they want a new project owner," Hawkins said.

Schluckebier said the work American Eagle has done, as far as managing the housing from day-to-day, has been acceptable, but the project has been behind schedule from the start. American Eagle started work on 126 units and only 17 are complete, with 109 units "in some form of construction," Schluckebier said.

"Depending on the schedule that you use, but [according to] our most liberal schedule … we should, at this point, have, oh, about, 300 houses completed," Schluckebier said. "I think the negative part of it is we have people living in inadequate houses."

Hawkins said American Eagle is looking to sell the four projects to move them forward. "The whole idea is to get them back on track to get the housing needed for our people," Hawkins said.

Schluckebier said the Air Force does not have confidence that American Eagle can complete the project. "We hope that the sale is completed in January, which will allow us to enter into negotiations with a single developer to determine where we go from here. … It's time to provide our people with the housing they deserve."

Sen. Kerry, according to Press Secretary Brigid O'Rourke, wants to make sure the problems associated with the American Eagle-owned projects do not recur.

"The need for, and timing of, legislation will depend on the steps the Air Force takes to restore these housing projects to health." If, in fact, the senator decides to introduce legislation, it would be done "in a way so as not to harm existing successful projects," O'Rourke said.

According to Hawkins, boiled down to its simplest explanation, the privatization initiative involves the Air Force negotiating a 50-year real estate deal with developers and financiers (bondholders who put the money up to construct the houses). The project owners are tasked with taking the money available and building the houses or improving available housing. The income flow comes from the Air Force personnel who live there, who turn over their housing allowance.

Hawkins emphasized that the privatization program has been a huge success for the Air Force, in that it has created almost 11,000 units of "top quality affordable housing for the military and their families over eight years." They've obligated $216 million through direct loans, whereas it would have cost $3.13 billion is what it would have cost to construct the housing through traditional military means.

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