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Army's Residential Communities Initiative In Fort Hood, Texas

Presenters: Mahlon Apgar IV, Assistant Secretary of the Army for Installations and Environment
June 29, 2000 1:00 PM EDT

Thursday, June 29,2000 - 1:03 p.m. EDT

Special Briefing: Army's Residential Communities Initiative In Fort Hood, Texas

(Also participating were Representative Chet Edwards (D-Tex.), Maj. Gen. Geoffrey Miller, deputy chief of staff for Personnel and Installation Management, U.S. Army Forces Command, and Peter Koziol, Chief Executive Officer, Lend Lease Actus)

Col. Ed Veiga, Army public affairs: Thank you for coming. The Army is proud to announce today its latest Residential Communities Initiative success story designated for Fort Hood, Texas.

Joining us for today's historic announcement are the Honorable Mr. Mahlon Apgar, assistant secretary of the Army for Installations and Environment; the Honorable Chet Edwards, U.S. congressman from the 11th District in Texas, which includes Fort Hood; Maj. Gen. Geoffrey Miller, deputy chief of staff for Personnel and Installation Management at U.S. Army Forces Command; and Mr. Peter Koziol, chief executive officer for the corporation of Lend Lease Actus.

To make today's announcement, we'd like to begin with Secretary Apgar.

Apgar: Thank you, Col. Veiga.

On behalf of Secretary of the Army Louis Caldera, good afternoon, ladies and gentlemen.

Providing our soldiers and their families with safe, attractive, affordable housing and supportive communities is a major priority for the Army, and today is a major milestone in achieving our vision. I'm pleased to announce that we have awarded the contract to renovate, build and manage the Army family housing communities at Fort Hood to the Fort Hood Military Housing LP, a joint venture of Lend Lease Actus of Napa, Calif., and Trammel Crow Residential of Atlanta, Ga. This firm was selected in a full and open competition with other leading development and home-building teams throughout the United States.

We're making great strides to bring Army housing up to contemporary standards, thanks to the guidance and support we've had from Congressman David Hobson and Joel Hefley, who chair our oversight committees. They have helped the Army develop an innovative approach that we call the Residential Communities Initiative, or RCI for short.

We've also had extraordinary support from Congressman Chet Edwards of Texas, co-chair of the House Army Caucus, whose district is home to Fort Hood, one of the Army's premier posts and home to more than 110,000 soldiers, civilians and family members. Congressman Edwards is here with us today and will speak to you shortly.

RCI is all about taking care of our soldiers and their families. Over 60 percent of our soldiers live in family housing. As Secretary of the Army Louis Caldera has put it, we recruit soldiers, but we retain families.

We want our Army family communities on post to be as exceptional as our operational and training facilities. RCI is designed to do just that. Through RCI, we are offering to America's housing industry, the most efficient and effective housing industry in the world, the potential for long-term partnerships to improve our family housing around the nation. These partners will design, build and operate livable communities for Army families that include various types of family housing and the amenities and support services that most Americans enjoy in their neighborhoods. To finance these projects, our partners will leverage public funds with substantial private investment.

RCI is one part of a larger plan spearheaded by Secretary of Defense William Cohen to improve the military's quality of life by increasing housing allowances for soldiers using the military housing privatization authorities wherever possible, and increasing funding for military housing on posts where privatization is not feasible. This is the largest military housing privatization project awarded thus far in the Department of Defense, and it is the first project awarded under the Army's new request for qualifications, or RFQ, process.

In partnering with Fort Hood Military Housing and integrating their capital, experience, creativity and skills, the Army expects to achieve five goals.

First, to ensure that all eligible soldiers and their families have access to attractive, affordable housing by renovating or replacing inadequate existing housing and by building new housing to eliminate the family housing deficit at Fort Hood.

Second, we want to improve the appearance and functions of the Army residential community while protecting cultural resources and meeting our environmental stewardship standards.

Third, we look to our partner to provide ancillary supporting facilities that enhance the Fort Hood residential community.

Fourth, we want to maintain positive relationships with the adjacent local communities.

And finally, we expect our partner to provide effective management and operation of Fort Hood's residential community on a long-term basis.

The developer will invest an estimated $300 million for renovation and construction at Fort Hood. The project is valued at approximately $4 billion over 50 years, and is estimated to generate savings to the government of more than $300 million. The request for qualification, or RFQ, process I mentioned is the result of a fresh approach the Army has taken to the government procurement process.

The RFQ defines the qualifications we are seeking in prospective partners, the criteria for selecting them, and the problems and needs they're there to meet. Through the RFQ we ask industry to demonstrate why they should be selected and how they can help us achieve our goals. This stands in sharp contrast to the traditional government request for proposal in which firms are given detailed military specifications and asked to bid against them.

Under RCI, soldiers who reside on-post will receive the basic allowance for housing, the BAH, and pay rent to the developer. These rental revenues will cover all development costs, operations and maintenance costs, and debt service. The developer will then be responsible for building, renovating, maintaining and managing all of the family housing units, including grounds maintenance, road and sidewalk repair and maintenance, and numerous other tasks. The project will also include the addition of playgrounds, green areas, community and recreational centers, youth centers, and housing and administrative facilities within the community.

The Army will benefit from the experience, the expertise, the efficiency and the entrepreneurship of the private sector to improve the quality of life for our soldiers and their families. Our goal is to eliminate all of the Army's inadequate housing by 2010, and we look forward to working with Congress to create and sustain livable communities not only at Fort Hood, but at our other pilot projects -- Fort Carson, Colo.; Fort Lewis, Wash.; and Fort Meade, Md. -- and ultimately in many other Army posts throughout the nation.

Thank you for joining us, and I'd like to introduce Congressman Chet Edwards.

Edwards: Secretary Apgar, General Miller, Mr. Koziol, and ladies and gentlemen, it's a thrill for me to be here for two reasons. One, this is a good news day for Army families in my district, and eventually in the months ahead for Army families throughout the country. And secondly, Mr. Secretary, I want to thank you for giving me an opportunity to leave Capitol Hill if only for a few minutes. It's nice to get off the Hill after the sessions we've had there for the last several weeks.

Today's announcement is good news for American taxpayers and great news for Army soldiers and their families. This program means taxpayers will save hundreds of millions of dollars. For Army families, it means they will live in more modern housing, in neighborhoods with better parks and playgrounds. This program is the right thing to do, because our soldiers' families deserve no less.

It is the smart thing to do because keeping the best and brightest requires our commitment to their quality of life.

Two-thirds of today's active-duty Army soldiers are married, with many of those having children. Our nation asks Army families to make extraordinary sacrifices. That is why I believe we have a solemn obligation to provide them with comfortable homes and safe livable neighborhoods. The Residential Communities Initiative is all about providing a better quality of life for Army families.

You know, as the father of two small children, few experiences touch me or impact me more than when I go to Fort Hood, to a gymnasium, and see small children waiting for their mom or dad to come back home after deployment for months to some far-away place in this world. That experience always reminds me of the incredible sacrifices made, not only by our soldiers, but by their spouses and their children.

And I will never forget, for as long as I live, the experience when I was there late one night several years ago. I was walking down the first row of soldiers about to get on a plane to deploy to Bosnia. And the second soldier I met was a young man probably in his early 20s, a wife perhaps a year or two younger than that. She had one child, a baby in her arm, and was pregnant, about to have in the near future her second child.

And as a person whose wife was three days away from giving birth to our first child, I just will always remember the impact it had on me, when we started talking about children. And he said -- very politely, he said, "Sir, I missed the birth of our first child because I was in Desert Storm, and I will miss the birth of my second child because I will be in Bosnia." This young soldier didn't complain about that fact because he said, "Sir, I know I am doing what my country asked me to do." I will never forget the sacrifices he and his family made for all of us.

I don't know where that young soldier is today. But I want to tell him and all others like him, Army families, that when you sign a contract to serve your nation in uniform, our nation is going to fulfill our solemn moral obligation, our contract with you to give your family quality housing and a safe neighborhood, and to give your children a quality education. RCI is a giant step forward in honoring that contract.

As co-chairman of the House Army Caucus, I want to thank and congratulate the secretary of the Army for his leadership on this program. I want to thank Congressman Dave Hobson, with whom I work very closely on this program over the last several years, for making this is a better planned program.

And on a very personal note, I especially want to thank Secretary Apgar for his incredible dedication to this program. In my opinion, if medals were given for hard work and tenacity and vision, then Secretary Apgar would deserve a gold medal. I can tell you factually that, over the last several years as we had hurdle after hurdle and challenge after challenge and delay after delay, there were many times when I was tempted to say, you know, let's just go on to something else, and let's go back to the old way of doing things. But it was because of Sandy Apgar that I and several of us in Congress remained committed to this program because we saw his dedication, not so much to the program, although that was deep, but his commitment to improving the quality if life, housing, for our military families. It was that commitment to a better life for our families that kept me and others going. And that's one of the reasons, I think, we are here today.

Secretary Apgar, it's been a long and winding road, and we're not home yet. But I want to thank you, from my perspective as the Army chairman -- or Army Caucus co-chairman, rather, for making this very important day possible. The real winners today are the American taxpayers, Army families and all American families who benefit from a strong national defense.

Thank you very much.

Apgar: General Miller?

Miller: Mr. Secretary, Mr. Congressman, our new partner, on behalf of Gen. Jay Hendrix, the commanding general of Forces Command, it's truly a great day for soldiers across Forces Command, and a great day especially at Fort Hood, Tex. The award of the contract to Lend Lease Actus begins a long-term partnership that will provide modern, high-quality housing that is an essential element in providing the quality of life our military families need so desperately.

Our Army has changed. Today over 60 percent of our soldiers are married, increasing the need for quality family housing, recreational areas and green space where our families can grow. As we all know, we reenlist soldiers, but we also reenlist families. This is another part of the Army's focus on how we can take care of soldiers and their families.

Our partnering with the private sector provides our Army the opportunity to accelerate the construction of new family housing, revitalize existing housing and modernize the entire Army system with supporting amenities enjoyed by most American neighborhoods today.

At Fort Hood, RCI will renovate nearly 6,000 units and construct an additional 1,200 homes in the next few years.

We are truly making a revolutionary change in how we improve our Army communities, the hometowns of the Army family. The Fort Hood RCI partnership, along with other ongoing programs, are the opportunities for us to demonstrate the Army's focus on providing the very best quality of life for soldiers and families, who daily demonstrate their commitment to what makes our nation great.

Mr. Secretary, Mr. Congressman, thank you so much from all of our soldiers and all of our families, for making this happen. Thank you.

Koziol: Good morning. I am the chief executive officer of Lend Lease Actus, and I had about two hours to prepare this speech. But I am very proud and pleased to be here.

We have such enthusiasm within our organization and support from top down, to make this project a huge success for the military men and for the military and the U.S. people. Words can't describe it.

In any event, Lend Lease Actus and its joint-venture partners look forward to partnering with the Army and Fort Hood leadership on the first RCI project. We spent over three years building our consortium and our structure for military housing privatization. And I can emphasize with the Army the difficulty it is to do something as complex as privatization.

During those three years, we have come to the table prepared. And we have 100 percent of the combined resources of Lend Lease Actus -- Lend Lease Corporation, a AA-rated global organization, Trammel Crow Residential Partners and our other joint-venture partners to make family housing something we can all be proud of today and forever.

Our intent is to work closely with Fort Hood leadership, soldiers and family members of the local community of Fort Hood, including small business, so the pride will not be ours alone. We thank you for this opportunity and look forward to getting to work.

Apgar: We might take time for a few questions. Elaine? John? Chuck?

Q: Two questions: Could you firm up the number of units that are involved here? The release said 60. You had mentioned about 6,000. But I believe General Miller said 6,000 to be renovated and 1,200 more to be built? Can you firm up the numbers at all; what's -- (inaudible)?

Apgar: The specific number of houses we have today is about 5,500. And those are going to be renovated and/or replaced, depending on the development partners and the Fort Hood team's analysis of condition over the next six months or so.

In addition to that, we have a family-housing deficit. And in order to meet that deficit and close it, we are authorized to build up to an additional 1,140 -- approximately -- units. And that will set the maximum number on post. The specific analysis of how many are to be renovated, how many demolished or replaced and rebuilt, and how many newly built, is part of this next six months of planning that I referred to.

Q: A second quick question. You mentioned this is the first RCI pilot location, but you've broken ground in March on another privatization project at Fort Carson. What is there different about that that is not included in the RCI?

Apgar: Well, thank you. It's a good question and a source of a little confusion.

Actually, there are four pilot projects under RCI. Fort Carson was the first. Fort Carson was procured under the request-for-proposal method that I referred to. Fort Hood is the first to be procured under the request for qualifications, the change process. But all four of these, including the two forthcoming pilot projects at Forts Lewis, Wash., and Fort Meade, Md., are being managed from a programmatic point of view as a pilot program with four sites, four projects.

The two different procurement methods are frankly part of the test. The notion of the pilot to evaluate, which is more effective for the long term and part of our mission in treating these as real-time pilot projects, is to test a variety of innovations not only in procurement, but in planning, in financing, in development and construction, and in management. And we're taking that mission very seriously, because this is both complex, but also the forerunner of what we expect to become a major new strategy for the Army.

Q: How many years will it take to do this?

Apgar: The overall life of the contract is expected to be 50 years, although that is part of the subject of the negotiating period in the next six months or so, the planning period. If it is, indeed, 50 years or a long term, there will be various break points during that life at which the contract could be restructured or even terminated. But the expectation is a long-term contract, and the reason for that is to ensure that there is continuity and consistency and a true partnership, not simply a plan, build and leave contract, as in general the military has experienced.

Q: What I meant was how long will it take to renovate or replace these buildings? Fifty years I'd accept.

Apgar: Well, it's a good question. And because the detailed plans have not been yet developed, we can only estimate.

For a project of this scale and complexity it probably will take between 6-10 years to fully move through the entire 6,000-plus units. And then don't forget that over five decades those same properties perhaps 20 years later will be once again upgraded or renewed in some form, just as they would in the private sector.

So we're taking this total horizon, and now we're going to begin, as soon as the agreements are signed, this intensive period of joint planning between the Army, our new development partners, and the community, to ensure that we then have a very specific timetable and schedule, and the expectations can be set.

Q: The 50 years, I take it, you referred to at Fort Hood -- do you anticipate using this as a kind of rule of thumb for your other projects, too? And will this outfit also do the other three, or just this one?

Apgar: Well, let's take the second first, because it's absolutely definitive. Each of the pilot projects is being procured as an independent project. We have held industry forums, first in Dallas for Fort Hood, then in Seattle-Tacoma for Fort Lewis, recently in Baltimore for Fort Meade, and in each case are informing the industry, through various means, inviting proposals, using the RFQ method, evaluating those proposals independently. And so there is no presumption that any one firm would be selected again, although all firms are invited to apply as many times as they may wish, through the program.

Q: And will this strictly be domestic, or do you plan to do the same thing overseas, using private firms and other localities?

Apgar: Well, that's a leading edge question, because the authorities at this point apply on to the U.S. And the logic of that, of course, is that we have a robust and dynamic private market, and we also own our posts. Overseas, through various status of forces agreements and other means, we don't actually have direct control of the real estate, and of course the industries and marketplaces are vastly different. Whether or not someday these authorities might be adapted or applied overseas is a question of your speculation as much as mine. But at this point, it's entirely domestic.

Q: Which one's next? Is it Fort Lewis or --

Apgar: Fort Lewis and then Fort Meade.

Perhaps Congressman Edwards might like to speak to this point of extending the authorities, as well as Fort Hood.

Edwards: Well, I -- if we lived in a dictatorship, we'd be in good shape, because I'm for extending the authority. But I think this program, now that we're starting to see dirt move, will be well accepted on Capitol Hill.

And I think the point I'd like to emphasize, going back to your question, in terms of timing, the -- what in effect we're doing is compressing a 40-year renovation cycle into a 6- to 10-year cycle.

You know, it's not very attractive to a young soldier today to say, "Soldier," and to his or her spouse, you know, "we want you to feel good about your housing. We've got a 40-year plan to improve housing at Fort Hood." And we might need some help with the numbers, but I think we're looking at cutting time down by about 75 percent for the major renovation part.

More specifically, I believe the hope is that we will see dirt turning at Fort Hood perhaps as early as next March, and so that soldiers, when Col. Veiga goes back down to Fort Hood in several weeks before his tour of duty is up at Fort Hood, we may have some finished, renovated housing. So I think that's going to really be exciting to the families that are there and the families that are moving into Fort Hood.

And it's -- I think it's because of our recognition of the inadequacy of the traditional military construction budget that you will see members of Congress supporting this program, and I think having something to look at tangibly will be very helpful in that process. So I'm very hopeful that we will extend this program throughout the rest of the Army and throughout the other services as well for the next several years.

Veiga: We have time for one more question and then we'll have to wrap up. Thank you very much.

Apgar: Thank you.

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