The U.S. Army unveiled a $2 billion pilot program to privatize Fort Meade's military housing yesterday that it hopes will be a blueprint to eradicate substandard base housing nationwide.
Nearly 300 developers from as far away as Utah crowded into the Baltimore Renaissance Harborplace Hotel to hear Army officials detail plans for overhauling housing at the Anne Arundel County military base.
The program is the latest in the Army's move to downsize by privatizing services, and is fueled by the disappointment among soldiers who live in rundown base housing.
The Army estimates 85 percent to 90 percent of Fort Meade's nearly 2,900 units are substandard, and about 2,500 will be demolished under the program. It has one of the highest percentages of inadequate housing at any base, said Maj. Gen. Robert R. Ivany, commanding general for Washington's military district, which includes Fort Meade.
Even the substandard homes have waiting lists of up to six months. Many soldiers will accept the units because their monthly housing stipend won't pay the rent off base, a problem particularly acute at Fort Meade because of the rents in the area.
"Housing is our biggest challenge," Ivany said. "We've simply got to solve it."
Fort Meade is one of four pilot sites in the Army's Residential Communities Initiative Program, which Congress approved in 1996. It allows the Army to lease land to a residential developer, who then designs, constructs and manages the housing. The other pilot sites are Fort Hood, Texas; Fort Carson, Colo.; and Fort Lewis, Wash.
More than two-thirds of base housing nationwide is inadequate, officials said yesterday. It would take the Army 30 years and cost $16 billion to fix. A private developer would be able to bring all of Fort Meade's units up to market standards in three years, Ivany said.
The Army estimates the project will bring $200 million to $300 million in construction work to Anne Arundel County over the next eight years. It is looking for developers with a clear track record of public-private partnerships and working with small and disadvantaged businesses.
Some of the developers got that message as the military officials went over the requirements to submit a proposal. The 50-plus-page application seemed daunting to some. Many in attendance said they were hoping to hook on as subcontractors to one of the dozen or so developers equipped to handle the project.
One of them was retired Col. David H. Toops, former garrison commander at Fort Meade and now business development director in the Washington office of Milwaukee-based Johnson Controls Inc., which markets and maintains building control systems.
"It's a question of whether it's a good business for us," he said.
Douglas Bennett, another soldier-turned-developer, said his firm, Hudson River Properties in Washington, was well-positioned to land the contract. Last year, Hudson River Properties developed of a 110,000-square-foot hotel at West Point.
He calls the Army's decision to privatize base housing "a win-win, all the way around." In addition to their building experience, developers can be more creative in their financing. They're accustomed to taking risks, and they have more access to cash in the capital markets.
Bennett is hoping his West Point experience will put him in the running for Fort Meade because it will be a financial boon, with an estimated 15 percent profit margin for the developer.