Military Housing Privatization
A top Department of Defense priority - and among the most important aspects of our Service members' lives - is the quality of their housing. About a third of our personnel live in D-o-D-owned housing…much of it in need of revitalization or replacement.
D-o-D owns about 300,000 housing units. Approximately 200,000 units are old and in need of extensive repair.
However, using traditional military construction practices and funding, it would take 30 years and about $16 billion dollars to improve them to an acceptable condition.
In January 2000, Secretary Cohen announced a major 3-prong initiative to improve military housing, which includes the following components:
increase housing allowances to eliminate the out-of-pocket costs being paid by Service members for off-base housing in the United States;
increase reliance on the private sector through privatization; and maintain military construction.
The first prong is intended to lower average out-of-pocket costs from 18.8 percent currently, to 15 percent next year, and eliminate them all together by fiscal year 2005. This will be accomplished through a gradual increase in housing allowances, making more money available to Service members to pay for housing.
Service members will realize an immediate impact from higher allowances because it will improve the quality and availability of existing off-base housing options.
The initiative also further strengthens ongoing efforts to eliminate D-o-D's inadequate on-base family housing by fiscal year 2010 through the increased use of privatization as well as traditional military construction, the last two prongs of this effort.
The D-o-D's Military Housing Privatization Initiative, which was signed into law in 1996, provides powerful tools to help acquire, operate and maintain D-o-D's housing.
These tools help D-o-D decrease expenses and eliminate traditional costs by fundamentally revising the way we fund and build housing.
The initiative also provides incentives to the private sector to better leverage private sector financing.
As the Performance Scorecard for Military Housing Privatization shows, we've made progress, but more needs to be done. Over 1,000 units were privatized in fiscal year 1998. Nearly 2,700 additional units were privatized in fiscal year 1999, bringing the cumulative total to about 3,700 units.
We're working on privatizing an additional 24,300 units this year, to reach a cumulative total of approximately 28,000 units in fiscal year 2000.
Larger allowances increase the income available to private sector developers, improving the quantity and quality of privatized housing. The Department will continue to review and encourage housing privatization projects by each Service.
The combination of increased allowances and expanded use of privatization will allow for more efficient use of current family housing construction funding, the third prong of Secretary Cohen's initiative.
Increased availability of quality private sector options will relieve some pressure for on-base housing, reduce the need to maintain older, high cost units, and better allow resources to be devoted to improving and maintaining needed on-base housing.
Using all three prongs of Secretary Cohen's housing initiative together will greatly improve the availability and quality of living for our Service members, which will help us attract and retain top-quality personnel.