Office of the Deputy Under Secretary of Defense - Installations and Environment - Military Housing Privatization  
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Please note: Each MHPI project is unique and some of the answers to questions below may vary between project and Military Service - for more information contact the individual Military Service privatization office or your installation housing office. For ease of navigation, questions are listed in the following categories:

Prog Objective Program Objectives

Prog Objective Program Implementation

Business Business / Developer

Tenants Tenants

 

 

PROGRAM OBJECTIVES
- What is military family housing privatization?
- What does DoD’s “community first” policy mean?
- What percentage of DoD military personnel live off post?
- Why is DoD interested in privatizing military housing?
- To whom is the MHPI program primarily targeted?
- Who is permitted to live in MHPI housing?
- What impact will privatization have on individual installations?
- How much will privatization save the DoD?
- What is the status of the Military Housing Privatization Initiative?
- How much housing is DoD planning to privatize?
- What about privatizing barracks, and DoD lodging?

PROGRAM IMPLEMENTATION
- How does DoD budget for Military Housing Privatization projects?
- What does Office of Management and Budget (OMB) scoring of a project mean?  What’s involved with scoring a project?
- How long will the DoD legislative authorities last?
- How are small, local, and minority owned businesses addressed in the MHPI authorities?
- Is DoD involving the local communities and governments?
- What impact will privatization have on local school districts' Impact Aid funding?
- How is a site chosen as a housing privatization candidate? Who makes the final decision whether to privatize?
- Does each Military Service have their own privatization program? How does that work?
- How does a Military Service select a developer for a MHPI project? What is an RFQ?   What is an RFP?
- Why are there so many different approaches to housing privatization? Can’t DoD figure out how best to accomplish the privatization of housing? Isn’t DoD wasting a lot of time recreating deals?
- Who are the Military Service points of contact (POC) for Military Housing Privatization?
- How can I find out about upcoming MHPI projects?

BUSINESS/DEVELOPER FAQs
- Is there a danger of Congress putting a halt to the initiative or modifying it in some significant way?
- What types of financial tools are included in housing privatization?
- How much investment is required in these deals by a developer?
- How much can an investor expect to make on their investment?
- What is the income stream for these projects based on?
- How does DoD develop BAH?
- How does a developer receive service member’s rents at a privatized project?
- Will DoD give developers some guarantee that service members will live in privatized housing?
- How do you factor in the possibility that a military installation being privatized is closed?
- Does the Davis-Bacon Act apply to privatized developers?
- How is renter’s insurance handled on these projects?
- Are property taxes considered in these deals?
- What building codes are followed in these projects? Are new off-base units being built to be especially strong (or at least stronger than the old units), to resist terrorist attack, for instance?
- What is an inadequate unit?
- After a deal is closed, who handles tenant complaints?
- How many military authorities will I need to deal with at these projects—what will the structure look like to address tenant issues?
- How will DoD ensure that a developer performs?
- How can I bid on a project?
- How can I know what I’m bidding on?
- How long does it take for a privatization deal to go from solicitation to award?
- How many companies have been awarded MHPI deals and what did the deals look like?
- How can I find out about upcoming MHPI projects?

TENANT FAQs
~ How does the transition from military to private sector work?
~ How are privatized housing rents determined? How does DoD ensure that the privatized housing is affordable for military members?
~ If these deals last for 50 years, how will DoD ensure they are being managed properly?
~ Does a service member have to live in privatized housing if it is available or risk losing his or her housing allowance?
~ Both my spouse and I are active duty military. If we move into privatized housing, how much will our rent be?
~ What does BAH pay for in privatized housing?
~ Why am I being asked to pay rent on the first of the month when I do not receive my BAH until the end of the month?
~ Who is responsible for start/stop allotments for rent?
~ I am currently living in an old privatized unit that has yet to be revitalized. Why am I paying the same amount of rent as other similar grade service members who are living in newly constructed units?
~ When I get promoted and my BAH goes up, does my rent also go up?
~ Why am I paying directly for my utilities while those in privatized housing on other installations are not?
~ I am moving into a newly constructed privatized house. Can I expect my housse to be energy efficient?
~ We are eventually going to be asked to pay directly for our own utilities. Many of the older homes are not as energy efficient as the newer units. Will there be any allowances for this situation?
~ Why have I been asked to pay a pet deposit when I never before had to pay one to live in housing on the installation?
~ What kind of pets and how many pets am I allowed to keep in my unit?
~ I am currently living in privatized housing. There are civilians also living in our subdivision. Having non-military families living on our base concerns me. How can that happen?
~ I have heard that some of the additional tenants that come from the waterfall policy (i.e., retirees, government employees, civilians, etc.) are paying less than the military members. Is this true?
~ When I have a problem with my privatized family housing unit, who do I go to?
~ Under what terms can the military member terminate the lease and vacate the unit? PCS order only? What if the member chooses to purchase a home in the area--will the leases restrict these decisions?
~ What would warrant an eviction from the privatized housing unit and who has the authority to evict?
~ If the installation commander bars my children from the installation, will this enable me to break my lease?
~ Who will pay for the move if the member chooses to vacate privatized housing?
~ There is a large amount of privatized housing construction occurring on our installation. If I decide to move into privatized housing, will I be required to move more than once?
~ If I decide not to live in privatized housing, will the housing office assist me in finding off-base housing?
~ When I put my name on a waiting list for privatized housing, am I on a waiting list for all privatized housing at the installation?
~ If, because of other commitments, I cannot take a particular privatized house that is offered to me, do I lose my priority position on the waiting list?
~ Will the base still inspect my unit?
~ What if I do not like the options provided to me when I am offered privatized housing?
~ I have 7 children. How many bedrooms am I entitled to in a privatized house?
~ Is there a mechanism for me to voice my concerns about our privatization project?

 





PROGRAM OBJECTIVES

What is military family housing privatization?
      The Military Housing Privatization Initiative (MHPI) is a public/private program whereby private sector developers may own, operate, maintain, improve and assume responsibility for military family housing, where doing so is economically advantegeous and national security is not adversely affected. The MHPI was enacted on February 10, 1996 as part of the National Defense Authorization Act for fiscal year 1996. In 2004, Congress approved the removal of the statutory limit on the amount that can be invested in projects to build or renovate military family housing, and made the MHPI authorities permanent. Under the MHPI authorities, the Department of Defense (DoD) can work with the private sector to revitalize military family housing by employing a variety of financial tools-including: direct loans, loan guarantees, equity investments, and conveyance or leasing of property or facilities. For more information on these authorities, see MHPI Overview.
(Return to FAQ List)

What does DoD’s “community first” policy mean?
      It means that DoD looks to the private sector first to house its Service members. DoD believes the private sector can offer secure and convenient housing to its military personnel and that the military personnel’s presence in the community is a positive influence. Therefore, DoD provides “on-base” privatized housing or military construction housing only when the private sector cannot provide adequate affordable housing. (Return to FAQ List)

What percentage of DoD military personnel live off post?
      Approximately 65 to 70 percent of Service members live in housing in the private sector. (Return to FAQ List)

Why is DoD interested in privatizing military housing?
      The MHPI program was created to address two significant problems concerning housing for military service members and thier families. The first problem was the poor condition of DoD-owned housing. At the beginning of the program, DoD owned worldwide approximately 257,000 family h ousing units both on and off-base. Over 50 percent of the units needed to be renovated or replaced because over the past 30 years they have not been sufficiently maintained or modernized. The second problem was a shortage of affordable private sector housing of adequate quality.
      This situation led to a decline in readiness and morale among Service members. DoD was unable to address the critical housing needs because of existing budgetary constraints. Using the traditional approach to military construction, it would cost taxpayers nearly $25 billion and it would take 20 years to solve this housing problem. MHPI provides a creative and effective solution to addressing the quality housing shortage. For DoD, MHPI results in the construction of more housing built to market standards, for less money than through the military construction process. Commercial construction is not only faster and less costly than military construction, but private sector funds significantly stretch and leverage DoD’s limited housing funds. At the same time, developers and financiers are interested in participating since privatization opens the military construction market to a greater number of development firms, stimulates the economy through increased building activity, and the projects can provide a continuous inflow of capital to investors over a long period of time. (Return to FAQ List)

To whom is the MHPI program primarily targeted?
      Although it is DoD policy to rely on the private market for its housing, in many instances the junior enlisted personnel cannot afford quality private housing within a reasonable commuting distance. Therefore the MHPI program is targeted to these Service members. (Return to FAQ List)

Who is permitted to live in MHPI housing?
      Priority to occupy homes is given to Service members assigned to the installation. However, if there is not enough demand for housing from military personnel and, as a result, occupancy rates drop below a certain level for a defined period of time, the developer can rent to other personnel. The developer must follow a priority list of other possible tenants as defined by the tenant waterfall. For example, the waterfall could be: (1) other military members not assigned to the installation or unaccompanied service members, (2) federal civil service employees, (3) retired military, (4) guard and reserve military, (5) retired federal civil service employees, (6) DoD contractors/permanent employees and then the (6) general public. (Return to FAQ List)

What impact will privatization have on individual installations?
      Ideally, privatization will bring about a dramatic improvement of the installations’ housing conditions for service members and their families, and consequently, an increase in their quality of life, readiness, morale and retention. Major improvements include the quality of housing and responsiveness of maintenance on the housing units. However, some inconveniences will be experienced throughout the transition period during which houses will neeed to be either renovated or constructed, service members may have to relocate from older to improved/new homes, and property management will be handed over to the developer. Nevertheless, this period will hopefully be short, the transition will be relatively smooth, and its benefits will outweigh all of the costs incurred. (Return to FAQ List)

How much will privatization save DoD?
      Given that the money saved by the government avoiding the long-term operation and maintenance costs is offset by paying service members their housing allowance, government dollar savings over the long-term are estimated to be about 10 percent of total costs over the 50 year life of the project.
     However, another measure used to estimate the potential benefit privatization offers, over budgeting and project execution with traditional Military Construction funding, is leverage. DoD policy requires a minimum leverage of 3 to 1 for a privatization project to be considered. This means that a privatized project must generate at least $3 of housing development for every $1 appropriated by Congress to support the project. The leverage ratio is calculated by dividing the estimated cost of a project under Military Construction by the project’s total budget score (appropriated dollars needed to support a project at the time of obligation). For the program as a whole, the leverage has consistently been over 10:1.
      It is important to note, however, that the biggest advantage of privatization is not monetary, but rather the speed at which these homes can be renovated and constructed by the private sector, and the quality of the housing and housing maintenance that the residents receive almost immediately. (Return to FAQ List)

What is the status of the Military Housing Privatization Initiative?
      As of December 2008, the Department has entered into transactions for 93 privatization projects totaling over 183,000 family housing units. (Return to FAQ List)

How much housing is DoD planning to privatize?
      At the beginning of the program, DoD had an inventory of approximately 257,000 family housing units. Current plans are to privatize roughly 190,000 to 195,000 or about 75 percent of existing family housing units worldwide. However there is no ceiling set on the number of units expected to be built or reconditioned under the MHPI. (Return to FAQ List)

What about privatizing barracks, and DoD lodging?
      Under the FY 2003 Defense Authorization Act, the Navy was provided unaccompanied personnel housing (UPH) authority to execute three pilot projects. The Navy has contracted to build two of the UPH projects and is currently studying locations for a third project. The Army is also moving forward with UPH privatization projects, but only for senior enlisted and officers already receiving BAH. As an extension of the family housing program, the Army is working with several of their development partners to provide these units at installations that are located in remote locations or have existing unmet requirements. Several of these projects have already been approved and are being built.
      The Army is also providing the initial pilot for DoD lodging. They have contracted with a developer for a group of thier lodging locations and are working with the developer to create a blueprint for the improvement of the initial group and future lodging facility projects. (Return to FAQ List)


PROGRAM IMPLEMENTATION

How does DoD budget for Military Housing Privatization projects?
      The amount of money that must be allocated for the MHPI depends on the scored cost of the projects that have been approved for a given fiscal year. See question below for more details. (Return to FAQ List)

What does Office of Management and Budget (OMB) scoring of a project mean? What’s involved with scoring a project? How can I learn more about this process?
      Budget scoring is the percentage of dollar value (from 0% to 100%) of a project’s cost that must be allocated to an agency’s budget in a given fiscal year. For example, if a project cost of $1 million is scored at 10%, then $100,000 of the agency’s budget authority for that year must be used to cover the assessment. According to OMB scoring guidelines, a project must be fully funded with sufficient budget authority in its first year to cover the government’s long-term financial commitment to the project.
      Each of the authorities created for the MHPI has an associated budget score. Due to variations in applying the authorities (10 U.S.C. Sections 2873-2879), OMB scores privatization projects on a case-by-case basis. The scoring impact is assessed based on a realistic risk of potential long-term liability. For example:

  • For partnership transactions, the credit subsidy represents 100% of the cash equity provided by the government.
  • For government limited guaranteed private sector loans, the credit subsidy represents the net present value of the cost of estimated defaults, net of recoveries.
  • For government direct loans, the credit subsidy represents the net present value of 1) the difference between the interest rate on the loan and the interest rates included in the basket-of-zeros discounting method which utilizes a yield curve of zero coupon Treasury securities that have the same maturity as each cash flow, plus 2) the estimated cost of defaults, net of recoveries.
     The scoring used for the MHPI was drafted to comply with the Credit Reform Act of 1990 and the Budget Enforcement Act of 1990 (both laws were included within the Omnibus Budget Reconciliation Act of 1990 [P.L. 101-508]), as interpreted by Office of Management and Budget (OMB) Circular A-11 and specific MHPI Guidelines issued by the OMB on June 25, 1997. (Return to FAQ List)

How long will the legislative authorities last?
      In 2004, Congress made the MHPI legislative authorities permanent. (Return to FAQ List)

How are small, local, and minority owned businesses addressed in the MHPI authorities?
      Although the Defense Authorization Act does not include any language addressing small, local and minority owned business requirements, developers are using them on their projects. To search for a synopsis of ongoing housing privatization projects, go to the FedBizOps website, enter 'housing privatization' in keyword search, select an Agency and click search. Select the project you want to review. After viewing the synopsis of the project, you may register to be put on email distribution list for that project. (Return to FAQ List)

Is DoD involving the local communities and governments?
      Leaders from surrounding communities are contacted about the projects during the site visits that take place early in the privatization process. Moreover, most military installations already have well-established direct lines of communication with all key stakeholders (e.g., chambers of commerce; boards of realtors; elected and appointed officials; city and county planners; and, school boards). Each Service strives to keep these lines of communication open and work closely with local communities and governments to keep them informed and ensure they have their support. Developers are likewise expected to work very closely with the communities, to conduct a community impact assessment, and to adhere to local building and environmental standards. (Return to FAQ List)

What impact will privatization have on local school districts Impact Aid funding?
      Because each state and locality funds public education differently, any reduction in Impact Aid will have a different impact depending on the location. However, most of DoD’s on-base projects envision long-term leases of government land, which does not affect the level of Impact Aid. (Return to FAQ List)

How does a site get chosen as a housing privatization candidate? Who makes the final decision whether to privatize?
      In October 1998, DoD’s Office of the Secretary of Defense (OSD) devolved execution of housing privatization projects to the individual Military Services while maintaining basic oversight responsibility in OSD. Under this management structure, each Military Service is responsible for assessing current and future housing requirements and for determining the best course of action necessary for revitalizing inadequate housing units and for keeping its housing inventory in good condition. Each Military Service assesses the viability of a privatization project on an installation-by-installation basis, taking into consideration housing needs and available resources, and makes the final decision whether to privatize. (Return to FAQ List)

Does each Military Service have their own privatization program? How does that work?
      Yes, although they do have to follow certain general DoD policy guidelines, each Military Service has its own privatization program. The Navy’s program is referred to as “Public Private Ventures”, the Air Force program is called “Housing Privatization”, and the Army’s program is the “Residential Community Initiative”. Each Service is responsible for: evaluating the housing needs of their servicemen; determining which of their installations should be privatized; establishing their program’s policies and procedures; carrying out the private developer solicitation process; and monitoring their projects. To learn more about each Military Service privatization program visit their websites at: Army RCI, Navy PPV, Air Force HP.

How does a Service select a developer for a MHPI project? What is an RFQ? What is an RFP?
      The Request for Qualifications (RFQ) and the Request for Proposals (RFP) are the documents through which the Military Services communicate to the development community regarding the privatization project’s existing conditions, arrangements, requirements and management (if applicable), the instructions to offeors, the basis for selection, and other general information. Each document is associated with a different solicitation approach applied by the Services.
      The Air Force and the Navy follow a similar approach. After conducting an industry forum to introduce the project to the development community, an RFP is issued which they post on a designated website. Developers then go through a two-step selection process based on first, the developers’ qualifications, and second, their project development and management plan. The process terminates with the selection of one developer for the project. The Air Force has modified its process into a one-step solicitation after which they will negotiate exclusively with the highest ranked offeror to finalize the privatization transaction.
      The Army, on the other hand, first issues an RFQ and then selects one developer based only on its qualifications. After the selection, the Army gives a stipend to the developer and works together with the latter to develop a Community Development and Management Plan (CDMP) tailored to the specific installation selected. If the Army is satisfied with the CDMP and the working relationship with the developer, the Army may choose to issue a notice to proceed to execute the CDMP. (Return to FAQ List)

Why are there so many different approaches to housing privatization? Can’t DoD figure out how best to accomplish the privatization of housing? Isn’t DoD wasting a lot of time recreating deals?
      DoD’s privatization deals are different because they are each designed to address the Military Service-specific housing needs of a particular installation. While using a cookie-cutter approach to privatization may be “easier,” it would not allow DoD to maximize the use of its limited resources in meeting housing needs. In fact, DoD has found the inherent flexibility in the legislative authorities provided to it by Congress (i.e., it can pick and choose which authorities to use at each site) to be ideal for solving its housing problems. (Return to FAQ List)

Who are the Military Services points of contact (POC) for Military Housing Privatization?
      Click here for a list of Military Service POCs

How can I find out about upcoming MHPI projects?
      Specific information about upcoming industry forums and privatization projects (including requests for proposals or requests for qualifications) can be obtained from the housing privatization websites maintained by each of the military services (Army RCI, Navy PPV, Air Force HP).
      Another way to search for business opportunities within the MHPI is through the Federal Government’s FedBizOps website. Through this website, commercial vendors seeking Federal markets for their products and services can search, monitor and retrieve opportunities solicited by the entire Federal contracting community.
      To search for a synopsis of ongoing housing privatization projects, go to the FedBizOps website, enter 'housing privatization' in keyword search, select an Agency and click search. Select the project you want to review. After viewing the synopsis of the project, you may register to be put on email distribution list for that project. (Return to FAQ List)

BUSINESS / DEVELOPER FAQs

Is there a danger of Congress putting a halt to MHPI or modifying it in some significant way?
      The MHPI legislative authorities have been made permanent, so DoD does not foresee any major Congressional modifications or setbacks. (Return to FAQ List)

What types of financial tools are included in the Housing Privatization?
      Under the MHPI authorities, DoD can work with the private sector to revitalize military family housing by employing a variety of financial tools-including direct loans, loan guarantees, equity investments, and conveyance or leasing of property or facilities. For more information on these authorities, Click Here.

How much investment is required in these deals by a developer?
      Each of the Military Services approaches equity in a different manner. For example, the Air Force has determined that project owners must contribute a minimum of 5% cash equity. (Return to FAQ List)

How much can the investors expect to make on their investment?
      Return on investment will vary by project. Housing privatization projects are competitively bid, so the competition of the marketplace will ultimately determine an investor’s rate of return. DoD’s goal is to obtain the best value for its subsidy contribution. (Return to FAQ List)

What is the income stream for these projects based on?
      A project’s income stream is based on the Basic Allowance for Housing (BAH). For more information on BAH click here.

How does DoD develop BAH?
      The purpose of the Basic Allowance for Housing (BAH) program is to provide fair housing allowances to service members. There are several types of BAH to satisfy various housing situations that occur among military members. In general, the amount of BAH a service member receives depends on location, pay grade, and whether he/she has dependents. BAH allowances are based on the market price of rental housing within a reasonable commuting distance. Under most circumstances, a service member will receive BAH for the location where they are assigned.
(Return to FAQ List)

How does the developer receive Service member’s rents at a privatized project?
      For most projectts, service memberhe pay rent directly to the developer in accordance with a tenant lease agreement. (Return to FAQ List)

Will DoD give developers some guarantee that service members will live in privatized housing?
      No. Developers will build/renovate housing communities where the Service members will chose to live. (Return to FAQ List)

How do you factor in the possibility that a military installation being privatized is closed?
      Section 2873 (10 U.S.C.), Direct loans and loan guarantees allows DoD to provide a limited guarantee against base realignment and closure (BRAC). If a base closes, developers will still lease the land and own the improvements and can, therefore, rent to the private market. (Return to FAQ List)

Does the Davis-Bacon Act apply to privatized developers?
      Yes. It is the developer's responsibility to work out the application of the Davis-Bacon Act to the specific MHPI project. (Return to FAQ List)

How is renter’s insurance handled on these projects?
      Based on each Military Service's requirement, the developer has the option of providing a standard renters insurance package (reasonable deductible and policy limit) to its tenants, the service members. (Return to FAQ List)

Are property taxes considered in these deals?
      Although DoD will not negotiate with the local jurisdiction on any tax abatements, the developer is free to negotiate to achieve any tax abatements. (Return to FAQ List)

What building codes are followed in these projects? Are new off-base units being built to be especially strong (or at least stronger than the old units), to resist terrorist attack, for instance?
      No. Both on-base and off-base units are being built to private sector residential standards and follow State and local building codes. Just as private sector housing should be safe, affordable, and quality-built, DoD expects the same of the housing built as part of the housing privatization initiative. (Return to FAQ List)

What is an inadequate unit?
      In 2005, the Office of the Secretary of Defense (OSD) defined an inadequate family housing unit as: Any unit requiring whole-house repair, improvement, or replacement as identified by the Servicesí condition assessments, exceeding a per unit cost of $50,000 adjusted by the area cost factor. Servicesí condition assessments shall utilize private sector housing industry construction codes and sizing standards as a basis for assessing inventory adequacy. (Return to FAQ List)

After a deal is closed who handles tenant complaints?
      Once a deal is closed, property management becomes the responsibility of the developer. Therefore, tenant complaints should be addressed to the developer’s or its subcontractor’s property management office on-site. (Return to FAQ List)

How many military authorities’ will I need to deal with at these projects—what will the structure look like to address tenant issues?
      The structure to address tenant issues differs from Service to Service. The primary point of contact to address an issue is the property manager. Most projects have a structured group consisting of representatives from both the government and the developer that will meet periodically to address project issues. (Return to FAQ List)

How will the DoD ensure that a developer performs?
      DoD wants market forces to drive contractor performance. This means that the primary enforcement mechanism is the ability of the service members to choose whether to live in privatized housing or off-base private housing. In addition, the structure of each deal provides mechanisms to oversee developer performance. Management plans and ground leases provide for performance measurement over time. Depending on the financial structure of the deal, DoD may also have loan documents, loan guarantees, and intercreditor agreements. Each deal will specifically design these mechanisms to work together to provide adequate DoD controls. DoD will also require the developer to include funding in contingency escrow accounts. Finally, DoD has designed a portfolio management and monitoring tool called the Program Evaluation Plan (PEP) that includes detailed information submitted by each of the Military Services to OSD regarding their portfolios of MHPI projects, including information about deal structures, government costs, use of government authorities and on-going program performance. (Return to FAQ List)

How can I bid on a project?
      The solicitation process differs slightly between the Navy, Air Force, and Army. After the Military Services make the decision to privatize, they hold an Industry Forum to introduce the project to private developers. The Navy and the Air Force then draft and issue a detailed Request for Proposals to the construction community. Developers who satisfy the Services that they can successfully complete the project, respond with equally detailed project proposals and selection is made from among them. The Army uses a Request for Qualifications process by which it screens and selects a “development partner” to undertake privatization work for an entire installation. The Army and its private partner then create a development concept for the project. (Return to FAQ List)

How can I know what I’m bidding on?
      When the project concept is approved by OSD and Congress has been notified of the solicitation proposal, the Services may hold an industry forum to introduce the project to the development community, or provide information via their website. Once the solicitation is issued, the Services also hold local pre-proposal conferences so officials may travel to the communities and meet with developers and financiers who may have questions and want to learn more about the process and project specifics. These two events, in addition to the solicitation documents, provide developers all the necessary information on the projects they are bidding on. (Return to FAQ List)

How long does it take for a privatization deal to go from solicitation to award?
      The time from issuing the solicitation to award usually is between 8 to 14 months. (Return to FAQ List)

How many companies have been awarded MHPI deals and what did the deals look like?
      As of December 2008, 25 development entities have been awarded deals individually or in a partnership. Given that project requirements differ depending on the Military Service, privatization program stipulations, and the installations’ conditions, each project deal has been different. For a list of awarded projects websites Click Here.

How can I find out about upcoming MHPI projects?
      Specific information about upcoming industry forums and privatization projects (including requests for proposals or requests for qualifications) can be obtained from the housing privatization websites maintained by each of the military services (Army RCI, Navy PPV, Air Force HP) (Return to FAQ List)

TENANT FAQs

How does the transition from military to private sector work?
       It’s a three-step process. At each installation, the Military Services perform a preliminary feasibility assessment to determine the requirements and screen potential candidates for privatization. During the next phase, draft real estate documents and solicitations are developed. During the final phase, the Military Service issues the solicitation (either a Request for Proposal (RFP) or Request for Quotation (RFQ)), evaluate proposals and plan and execute the transfer of ownership and management to the private sector. (Return to FAQ List)

How are privatized housing rents determined? How does DoD ensure that the privatized housing is affordable for military members?
       DoD’s policy on housing privatization allows rents to be based on the Basic Allowance for Housing (BAH) with the estimated cost of utilities included. (Return to FAQ List)

If these deals last for 50 years, how will DoD ensure they are being managed properly?
       DoD has designed a portfolio management and monitoring tool for this purpose called the Program Evaluation Plan (PEP). The PEP is a semi-annual reporting system that includes detailed information submitted by each of the Military Services to OSD regarding their portfolios of MHPI projects, including information about deal structures, government costs, use of government authorities and on-going program performance. OSD uses this information to monitor the program’s progress, to perform financial and performance oversight, and to implement program improvements. Additionally, each Military Service and installation military personnel are responsible for ensuring that developers are complying with the conditions stipulated in their contracts. (Return to FAQ List)

Does a service member have to live in privatized housing if it is available or risk losing his or her housing allowance?
       No. Like all military family housing, Service members are not required to live in privatized housing. DoD’s goal is to create privatized housing developments that are places where military members will want to live. (Return to FAQ List)

Both my spouse and I are active duty military. If we move into privatized housing, how much will our rent be?
       For military members married to military members, the rental fee is based on the BAH at the "with-dependent" rate for the senior ranking member. (Return to FAQ List)

What does BAH pay for in privatized housing?
       Rent includes refuse collection, water and sewer, common area grounds, and facility care. Depending on the specific provisions of the project documents, electric, gas, and other heating costs may be paid from the member's utility allowance. Also, depending on the specific provisions of the project documents, renter's insurance may be paid by the developer (however, the member is responsible for the payment of any deductible). Rent does not pay for telephone or cable service. (Return to FAQ List)

Why am I going to be asked to pay rent on the first of the month when I do not receive my BAH until the end of the month?
       To be more consistent with private sector practices, and to conform to what the great majority of military families living in town must do, housing privatization tenants may now be required to pay rent on the first of each month. This practice, however, currently does not apply to all Military Services. (Return to FAQ List)

Who is responsible for start / stop allotments for rent?
       The military member (or his / her spouse pursuant to a Power of Attorney) is responsible for starting, stopping, or making any change to the rent allotment. (Return to FAQ List)

I am currently living in a privatized unit that has yet to be revitalized. Why am I paying the same amount of rent as other similar grade service members who are living in newly constructed units?
       Currently the rent for privatized units is solely based on a military member's grade or rank. It is not based on the construction or revitalization status of any particular unit. This was necessary as the program was being developed to better estimate for the developer, and therefore his private sector lender, a monthly cash flow from which to pay the project's mortgage. It is anticipated that, after completion of the privatized project's initial development period and within an acceptable financial range, rents for privatized housing on a single installation may vary depending on the age, location, and condition of a specific housing unit. (Return to FAQ List)

When I get promoted and my BAH goes up, does my rent also go up?
       Yes. At the current time, lease payments for privatized housing are based on a member's BAH or BAH minus a set amount if the member is paying for his own utilities. (Return to FAQ List)

Why am I paying directly for my utilities while those in privatized housing on other installations are not?
       Eventually all service members living in privatized housing will be responsible for paying directly for their utility consumption. Until the units are individually metered this is not possible. Under the direct billing program, conservation of utilities can be a finacial benefit to the individual member as they may save money. Overuse of utilities, on the other hand, could result in the member having to pay some utility costs out of pocket. (Return to FAQ List)

I am moving into a newly constructed privatized house. Can I expect my house to be energy efficient?
       Houses in privatization projects are built in accordance with local codes and building standards. The Military Services, while not requiring LEED (Leadership in Energy and Environmental Design) certification, are requiring the use of efficient design and construction and energy efficient (in most cases Energy Star qualified) appliances. Some developers, particularly on larger privatization projects have, of their own volition, even used such ideas as landscape retention, solar hot water, or photo voltaic energy systems to increase the sustainability of their projects. It is anticipated that new or renovated privatized homes will be as energy efficient or better than private sector housing available in the community. (Return to FAQ List)

Understand that service members are eventually going to be asked to pay directly for utilities; however, many of the older homes are not as energy efficient as the newer units. Will there be any allowances for this situation?
       One of the reasons the utility allowance is caluclated as 110 percent of expected utilities cost is to allow for differences in energy efficiency from unit to unit. Housing occupants should also realize that they may need to become more active in operating their heating and cooling system to further increase efficiency and minimize costs. (Return to FAQ List)

Why have I been asked to pay a pet deposit when I never before had to pay one to live in housing on an installation?
       An analysis revealed that damage caused by pets is having a significant financial impact at some projects. For this reason, some of the Military Services have modified their pet policy to allow a project owner to implement pet deposits at projects where pet damages have been substantial and where such deposits would not put the project at a competitive disadvantage. Whether a project owner has the ability to implement pet deposits is Military Service specific. (Return to FAQ List)

What kind of pets and how many pets am I allowed to keep in my home?
       The answer is both Military Service and project specific. Check with your housing office and read your tenant lease. Specific pet requirements and limitations, as well as potential pet deposits, are detailed in the tenant lease agreement, so reading and understanding the lease is essential. (Return to FAQ List)

I am currently living in privatized housing. There are civilians also living in our subdividion. Having non-military families living on our base concerns me. How can that happen?
       A tenant waterfall policy, enacted by all Military Services for each privatization project, allows a project owner to rent to non-military families under specific circumstances (i.e., the project is below a certain occupancy level for a defined period of time). The policy sequentially defines to whom the owner can rent. Each potential non-military tenant is required to have a background check. This waterfall policy is needed to help ensure the financial viability of the project. Those members living in privatized housing who have non-military tenants living next to them are only joining the 65 to 70 percent of the members who are currently living off-base in the local community also next to non-military members. (Return to FAQ List)

I have heard that some of the additional tenants that come from the watefall policy (i.e., retirees, government employees, civilians, etc) are paying less than the military members. Is this true?
       Tenants that rent units through the waterfall policy are required to pay market rent, which normally is higher than what the military member would pay for the same unit. (Return to FAQ List)

When I have a problem with my privatized family housisng unit, who do I go to?
       You need to bring problems to the attention of the project owner's property manager. If the issue cannot be resolved with the prperty manager, each Military Service has their own unique mediation process. Check with your installation housing office to identify your Military Service's specific policies and process. (Return to FAQ List)

Under what terms can a military member terminate their lease and vacate their unit? PCS orders only? What if the member chooses to purchase a home in the area? Will the lease restrict these decisions?
       Upon moving into privatized housing, a member will be required to sign a specific term (normally one year) tenant lease. Generally, members may not voluntarily terminate the lease and must reside in the unit until the lease has expired. However, early termination is permitted under the "Military Clause" of the tenant lease agreement. A lease agreement may permit early termination for other reasons, specific conditions and procedures will be detailed in the tenant lease agreement, so reading and understanding the lease is essential. (Return to FAQ List)

What would warrant an eviction from a privatized housing unit, and who has the authority to evict?
       In general, the property manager may initiate eviction proceedings for failure to comply with provisions of the tenant lease agreement. (Return to FAQ List)

If the installation commander bars my children from the installation will this enable me to break my lease?
       Generally, no. However, the tenant lease agreement will explain specific procedures for terminating a lease, so reading and understanding the lease is essential. (Return to FAQ List)

Who will pay for the move if I choose to vacate privatized housing?
       Generally, if a member chooses to vacate privatized housing, it is at the member's sole expense. (Return to FAQ List)

There is a large amount of privatized housing construction occurring on my installation. If I decide to move into privatized housing, will I be required to move more than once?
       Although there is a possibility, the government's goal is not to move anyone more than once. Additionally, the project owner is responsible for paying for any relocation beyond the initial move, so the project owner has a financial incentive to develop a renovation/construction plan that minimizes multiple moves. (Return to FAQ List)

If I decide not to live in privatized housing, will the housing office assist me in finding off-base housing?
       Yes, the housisng office is always available to assist in any housing matter. (Return to FAQ List)

When I put my name on a waiting list for privatized housing, am I on a waiting list for all of the privatized housing at the installation?
       Check with your local housing office since procedures may vary from one installation to another (for example, the installation may have waiting lists for each subdivision or for each type of housing, etc.). The housing office an give you the correct information to maximize your chance of obtaining your desired housing. (Return to FAQ List)

If, because of other commitments, I cannot take a particular privatized house that is offered to me, do I lose my priority position on the waiting list?
       Generally, yes. However, check with your local housing office since each installation or situation is unique. (Return to FAQ List)

Will the base still inspect my privatized housing unit?
       The Government will not inspect move-ins or move-outs because the Government no longer owns the unit. The project owner's property manager is now responsible for this function. (Return to FAQ List)

What if I don't like the options provided to me when I am offered privatized housing?
       Except for key or mission essential personnel, if a military member does not like what is being provided to them by the developer, then they may choose to live off-base in other available private sector housing. (Return to FAQ List)

I have 7 children. How many bedrooms am I entitled to in a privatized house?
       The project owners of privatized housing try to follow, as existing inventory permits, family size and children's age bedroom guidelines. However, in general, project owners have not been authorized to build new units with more than five bedrooms. (Return to FAQ List)

Is there a mechanism for me to voice my concerns about our privatization project?
       Residents will be given the opportunity at least annually to complete resident satisfaction surveys. The results of these surveys are monitored through the life of the project by the base staff, the Military Service and the Office of the Secretary of Defense. (Return to FAQ List)