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New association of privatized housing companies pushing back on some reforms

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In the wake of withering criticism about how they have maintained the military base housing they run, five companies have formed a new coalition to represent their interests. And some have ramped up how much they spend to lobby congress.

One of their first actions of this coalition, called the Military Housing Association, has been to meet with and send a letter to congressional staff members voicing objections to some of the proposals for military housing reform. That’s raised the concern of some advocates, who are already alarmed by the Trump administration’s objections to the changes.

The Trump administration “strongly objects” to significant changes outlined in the Senate bill, according to their Sept. 4 letter to the armed services committees. It specifically notes issues with altering the terms of existing legal agreements with the privatized companies.

Lawmakers heard testimony of military families earlier this year about mold, lead-based paint, water leakage and damage, vermin and host of other problems with their military housing; their frustration in getting their privatized housing company to fix them; and the lack of assistance from the military in getting their problems fixed. In a survey earlier this year conducted by the Military Family Advisory Network, more than half of the 14,558 privatized residents who responded reported having a negative experience with their housing.

The Military Housing Association, formed this year, includes the larger privatized housing companies — Balfour Beatty Communities, Corvias, Hunt Military Communities, Lendlease Communities and Lincoln Military Housing, according to a spokeswoman for the organization, who declined to be named. The companies contacted referred questions to S-3 Public Affairs, which is an arm of S-3 Group, also a lobbying firm.

The new association’s core goal “is to provide high quality housing, community amenities, and responsive property management to improve the quality of life of service members and their families who live in privatized military housing communities,” the spokeswoman said, in response to questions about the association’s purpose and focus, and actions taken.

As the problems with housing came to light, defense and service officials have been working with privatized housing companies to immediately address issues. The housing companies have taken a number of steps to improve services, including hiring more personnel, adding more subcontractors, finding more transparent and efficient ways to process work orders and listening directly to tenants’ concerns with town halls and informal forums, the spokeswoman stated.

Committee staff members contacted by Military Times declined to comment, citing the ongoing negotiations process as House and Senate lawmakers reconcile differences in their proposals.

But Sen. Tim Kaine, D-Va., who has been vocal about his concern regarding military families’ housing problems, said the bottom line is fixing the problem.

Kaine “appreciates feedback from anyone affected by the proposed changes,” said Sarah Peck, a Kaine spokeswoman. “However, his number one priority is ensuring military families no longer have to endure dangerous conditions in their own homes, and that’s what will determine which policies he supports.”

Some of the proposals would be “legally and practically impossible to implement,” stated the Trump administration’s letter, from the Office of Management and Budget. The proposals would also create unfunded requirements; and, to the extent that the measures could even be implemented, would be “overly prescriptive and burdensome,” officials stated.

“The provisions erroneously assume that privatized housing project entities operate as DoD contractors and that legislation can alter the terms and conditions of previously executed legal agreements.”

That statement from the administration is of particular concern, if in fact legislation wouldn’t be able to change legal agreements made with the housing companies, said Eryn Wagnon, director of government relations for the Military Officers Association of America. “As the [Army Inspector General] put it, these deal structures present unique challenges to the Army and all the services, and highly favor the companies.”

Wagnon also expressed concern that the administration’s position may make some lawmakers apprehensive about pushing key and important provisions, and that the housing companies’ positions on key parts of the bills might also present a barrier.

However, Wagnon said, “We’re pretty confident the armed services committees are taking into consideration what they heard from families through the hearings, and through statements for the record, and that they’re looking out for families’ best interests.”

The Military Housing Association supports a number of provisions in the bills, such as those requiring a tenant bill of rights, processes for dispute resolution, and for designation of chief of housing officers. But they cited objections to six provisions, including one that would allow the military services to renegotiate the privatized housing contracts at least every five years.

In a position letter to staff members of the House and Senate armed services committees, the Military Housing Association stated that if the agreements were structured as five-year deals rather than the current 50-year agreements, it could affect companies’ ability to do future renovations or build new homes, and could set a precedent that will make it difficult to get private-sector financing in the future.

The Military Housing Association cited objections to these proposals:

  • Allowing the tenant to request their basic allowance for housing to be withheld from the privatized housing landlord, and requiring the Defense Finance and Accounting Service to hold it in escrow until matters are resolved , if the landlord hasn’t met maintenance guidelines, or if the unit is deemed uninhabitable according to state and local law. “They could request to withhold their BAH at any time for any reason – and DFAS is required to grant their request,” the housing association stated, contending it could harm the financial viability of the project. They instead proposed a different “orderly and fair process” in which the company would withhold the BAH.
  • Requiring the landlord to pay all medical bills for a tenant of a housing unit, if service officials have determined that the company hasn’t maintained the minimum standards of habitability. If the companies have lifetime liability for medical bills, this could result in the housing project’s insolvency, the companies stated, adding that military families have the option of requesting mediation or arbitration as required by state law, and residents have the ability to take the case to court.
  • Requiring a 10-year maintenance history of the home to tenants. Instead, the housing companies propose the prospective tenant receive the results of the move-out inspections, using a proposed hazard assessment tool in the House proposals.
  • Requiring DoD to publish all the financial details of each contract in the Federal Register. The companies aren’t opposed to sharing important financial information with their DoD partners and with the congressional defense committees, they noted. They’re open to further disclosure and financial transparency — assuming such disclosures are reasonable and don’t jeopardize sensitive business information, they stated, noting their contract documents already require “significant disclosure” of financial information.
  • Diverting 3 percent of BAH to pay for DoD housing inspectors. “We are strongly opposed to using BAH as a funding mechanism for other DoD priorities. BAH is the revenue source that drives the [housing privatization] program,” the companies stated, and is not profit for the companies. Rather, it’s used for maintenance, debt payments and long term sustainment of the housing. The proposal would divert millions of dollars of BAH revenue, and DoD would be, in effect, asking service members to subsidize the DoD’s cost of doing business, the companies stated.

A search of the nonprofit Center for Responsive Politics’ website OpenSecrets.org indicates that some of the five members of the Military Housing Association have apparently stepped up their lobbying spending this year. For example, Balfour Beatty Communities had increased spending on home builder lobbying from $20,000 in 2018, to spending $120,000 through July 24 of this year. But of note, Balfour Beatty Communities include more than military housing, such as other multifamily communities and student communities, so it’s unclear whether there were military-specific issues of interest. There were no lobbying expenses cited for 2017.

Lincoln Military Housing has already increased its spending on real estate lobbying by 57 percent in the first seven months of 2019, compared to all of 2018. They’ve spent $220,000 through July 24, compared to $140,000 in 2018. No lobbying expenses were listed for 2017.

Corvias Military Living is on track to spend about what they did in the last two years on “miscellaneous defense” lobbying. They’ve spent $60,000 as of July 24, compared to $120,000 in each of the last two years.

Lendlease Corporation is also on track with last year’s numbers, spending $120,000 in the first seven months of 2019 on general contractors lobbying, compared to $240,000 in all of 2018, and $160,000 in 2017. This company also has a broader portfolio than military housing.

Hunt Companies so far this year is spending less on real estate lobbying: $160,000 in the first seven months, compared to $575,000 in all of 2018. In 2017, the company spent $160,000. The company has been named in lawsuits filed by military families at Keesler Air Force Base, Miss. (Of note: Hunt Military Communities is part of the larger Hunt Companies.)





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