Air Force selects an offeror to privatize housing at Arnold AFB Published Aug. 30, 2010 By Shawn Jacobs AEDC/PA ARNOLD AIR FORCE BASE, Tenn. -- The U.S. Air Force announces it has selected Forest City Military Communities, LLC (Forest City) as the Highest Ranked Offeror (HRO) in its effort to privatize military family housing at four installations in the continental United States, including Arnold AFB. The other installations include Shaw AFB, S.C., Charleston AFB, S.C., and Keesler AFB, Miss. The Air Force Southern Group Housing Privatization Project, a deal valued at $270 million in development costs, will result in the demolition of all existing military family housing units at Arnold AFB and the construction of 22 new housing units over the next two and a half years. Under the deal, the Air Force will lease 19 acres of land at Arnold AFB as part of a 50-year transaction and convey 40 existing inadequate housing units to Forest City. Forest City will in-turn demolish all 40 existing units that are in poor condition and construct 22 new units that will meet or exceed the current standards for military housing within the first two and a half years of closing the deal. At the four installations combined, the Air Force will lease a total of 846 acres of land and convey 2,387 existing housing units. By the end of the four-year initial development period, Forest City will have demolished 1,189 existing inadequate housing units and constructed 987 new housing units. Forest City will continue to operate and maintain a portfolio of 2,185 housing units across the four bases for a 50-year term. Forest City Military Communities, LLC, a wholly-owned subsidiary of Forest City Enterprises, Inc., has an established record of providing housing development and management services for the military. Forest City's current military privatized housing portfolio consists of approximately 12,000 homes in Hawaii, Colorado, Washington, Illinois and Tennessee managed under the Navy's and Air Force's Housing Privatization programs. The Air Force selected Forest City as the HRO on the Southern Group Housing Privatization Project through a competitive solicitation process led by the Air Force Center for Engineering and the Environment (AFCEE), headquartered at Lackland AFB in San Antonio. "We feel that Forest City offers the most advantageous business case to address quality development, long-term sustainability, competitive financing and the construction timeline for the bases in the Southern Group Project," said Al Fennigkoh, AFCEE project manager. Assuming the Air Force and Forest City reach successful closing, in early 2011 the existing houses at all four installations will become the property of Forest City Military Communities Southern Group, LLC, who will own and operate the rental housing developments for military families. They will finance, plan, design and construct improvements in the development and maintain the housing units the duration of the 50-year lease period. The Air Force's housing privatization effort has been successful at 44 installations in the continental United States with almost 70 percent of family housing being privatized, totaling approximately 38,000 units. Housing privatization has eliminated nearly 35,000 inadequate units Air Force-wide and is providing an average of 500 new and renovated homes per month. In 2009, 4,087 new homes were built and 2,654 were renovated. Beyond the Southern Group Project, the Air Force is looking to privatize approximately 14,000 additional units at 18 installations over the next two years. The Military Housing Privatization Initiative, originally authorized by Congress in the fiscal year 1996 National Defense Authorization Act, has given the Air Force the ability to partner with the private sector development community to provide quality homes for Airmen and their families faster than traditional Military Construction Programs. For general information regarding the Air Force Housing Privatization program, visit: www.afcee.af.mil/resources/housingprivatization/index.asp.