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From Army drab to fab

Private-sector managers bring modern upgrades to military housing

By John Salustri
An American Flag Proudly Displayed.

Mention the phrase “military life” and an image of bare barracks with rows of cots might come to mind. Nothing could be further from the truth for today’s military service members, whether they be lone service people or family members. In fact, according to Mary Jayne Howard, CPM, accommodations in military bases around the country could rival Class A rental housing.

“They’re top shelf,” says Howard, whose history with military housing dates back to 1996, when Congress established the Military Housing Privatization Initiative (MHPI) to attract private-sector financing and expertise to upgrade living conditions. In fact, Howard was one of the initial trainers of the military’s housing personnel, which included civil servants, when the military first approached IREM to assist in education on best management practices. Today, she consults on individual base initiatives.

Each military unit has its own version of MHPI. The Navy and Marine programs are referred to as Public Private Ventures; the Air Force program is called Housing Privatization; and the Army calls it the Residential Community Initiative. Each service is responsible for evaluating the housing needs of its service people; determining which of its installations should be privatized; establishing the program’s policies and procedures; carrying out the private developer solicitation process; and monitoring its projects.

“The military came to IREM because they knew we had the best training.” —Mary Jayne Howard, CPM

Indeed, new approaches to military housing are bringing the homes from Army drab to fab. The Wi-Fi-enabled, comfortable and often technologically smart accommodations that represent military housing today are a far cry from conditions before privatization.

“Many of the base homes were over 100 years old,” Howard explains. In addition, “the service people did their own maintenance, so over a century you could imagine how homes provided for families could deteriorate.” Issues that are top-of-mind for professional property managers, such as mold, mildew, lead paint and bedbugs, “would not be as apparent to them as to us.”

Major upgrades

The initiative has not been without its hitches, and today further improvements are being enacted. But as Robert H. McMahon, assistant secretary of defense for sustainment, told a recent gathering of representatives from all the military branches and private-sector partners, there have been “tremendous improvements to on-base housing as a result of the initiative. Over the course of the first 20 years of the program, $32 billion was invested in the housing, with more than 125,000 homes either built new or receiving a major renovation.”

Post-privatization, “The military came to IREM because they knew we had the best training,” Howard says. Her first experience, as one of several IREM instructors working across the country providing the training, was with some 125 students in North Carolina. Today she estimates her own tally at more than a thousand in camps nationwide.

If it’s hard to distinguish between a Class A apartment in the private sector and today’s military accommodations, there are notable differences—if not in design, certainly in reporting and communication structures. While the specific reporting trail might vary from base to base, typically, “A private equity firm will come in and buy the facilities,” says Howard. “They basically set up a program with the military to replace or renovate the existing housing or leave it as is.”

Much like a private-sector asset manager, the private equity firm will engage the property manager, essentially “to serve as the equity firm’s eyes and ears and to interact with the base housing manager and staff.” They in turn report to the base commander and ultimately to the inspector general.

The decision to build or renovate housing is made jointly by the private equity firm and its military team, and upgrades are penciled out in an operating budget, just like you would for any business, Howard explains. “The property manager and the military housing people get together and do the budget based on past occupancies.” If the housing spend exceeds the budget, it’s back to the drawing board for the team. As in the private sector, the equity firm is looking for ROI, but, as Howard points out, “that return can come long after the housing is built and occupied, depending on how the deal was structured.”

And therein lies another major departure from the private sector to the military. It’s not unusual that service people numbering in the thousands could ship out at virtually a moment’s notice, wreaking havoc on those occupancies.

“You can have a full housing facility,” she says. “You’ve budgeted a certain occupancy and expect a certain income and a certain return that you plan to reinvest into new buildings. And all of a sudden 3,000 residents are gone [on deployment].” Clearly, military housing is not for the faint of heart.

Often, they leave behind families, a consideration that underscores another difference between the sectors, one that also emphasizes a greater understanding of personal needs in the new military. “Sometimes, when the service person ships out, the family is left with no support, and it becomes a one-parent household,” says Howard. Issues abound, from maintaining a sense of home to childcare.

“We put together teams that can assist,” she continues. “Our group will go and hang pictures, move furniture, do the things that aren’t part of a typical property manager’s responsibilities. We even have people who will help with homework.”

More work ahead

MHPI has made numerous advancements in the quality of housing and communication over the last 20 years. However, as amenities and technology in military housing continue to evolve, military branches and industry partners seek program improvements. In the above-mentioned meeting, Robert McMahon concluded the proceedings by promising more such gatherings in the future, “to ensure everyone is on track and making good progress.”

“We’re partners,” McMahon told the private sector and military brass at the meeting. “We’re teammates. We have to do this together. We have to do the right thing.”

Howard is in complete agreement. “The cooperation of all involved is paramount to the program’s success, and communication is the key,” she says. “I believe the program has been successful, and the housing has been upgraded as the funds allow. The training of military and private personnel remains the key to its continued success.”

Maggie Callahan

John Salustri is a contributing writer for JPM.

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