7.1: Public-Private Partnerships

Increased reliance on public-private partnerships

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Public-private partnerships provide private-sector capital and expertise to build and manage housing for America’s military families. DoD is using temporary authority to enter into arrangements with private developers to renovate and construct more modern housing for military families. These arrangements can be formal public-private partnerships with direct government investment or more informal partnerships with government loans or loan guarantees. Experience to date shows that with such public-private partnerships, it is possible to construct and renovate many more "privatized" housing units, quickly, at substantially reduced costs to the government than through normal military construction. To assess customer satisfaction with these projects, DoD plans to do an annual tenant survey. • At Fort Carson, CO, the Army has obtained 210 of the 840 new housing units and 177 of the 1,823 renovated units from the private sector. The renovation and construction is projected to be completed by the end of 2004. Based on limited customer response, the Army indicates personnel are pleased with the new and renovated housing. The cost to the Army to privatize the housing is $10 million to guarantee a loan. Using traditional military construction funding, it would take 12 years or more and cost $229 million (23 times the cost of privatization) to upgrade these same housing units. • At the Naval Station Everett, WA, the Navy entered into a 30-year limited partnership with a private developer to construct 288 housing units off base, of which 40 are expected to be completed by October 2001. Construction is expected to be completed by July 2002. The Navy invested $12 million in the partnership and provided $6.7 million in differential lease payments to make the housing more affordable. Using traditional military construction funding, the project would have cost $53 million (three times the cost of privatization) to upgrade these same housing units. • At Camp Pendleton, CA, the Marine Corps is providing land and a direct loan to a private developer to renovate 512 existing units and construct 200 new units. The project is expected to be completed by January 2002. The cost to the Marine Corps is $19 million. Using traditional military construction funding it would take six years or more and cost $87 million (4 1/2 times the cost of privatization) to upgrade these same housing units. • On March 15, 2001, the Air Force awarded a contract at its base in Elmendorf, AK for the construction of 420 new housing units, renovation of 200 existing units, and conveyance of another 208 units. The Air Force is providing $23 million to guarantee a private-sector loan and provide a government direct loan to help finance the development. Using traditional military construction funding, it would take $128 million (5 1/2 times the cost of privatization) to upgrade these same housing units.

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