Military Privatized Housing: Status of Legislative Reforms

Military Privatized Housing: Status of Legislative Reforms

December 14, 2022
Military Privatized Housing: Status of Legislative Reforms
Background
has assessed DOD has not been able to implement all of
Congress enacted the Military Housing Privatization
them.
Initiative (MHPI) in 1996 (P.L. 104-106) to improve the
quality of housing for servicemembers and their families.
Tenant Bill of Rights
The MHPI program established new authorities that
DOD has taken steps to enforce the “Tenant Bill of Rights,”
allowed the military services to issue 50-year leases to
mandated under 10 U.S.C. §2890, in order to strengthen
private-sector housing companies, conveying ownership of
protections for servicemembers and their families. Many of
existing housing located on leased parcels of military
the 18 rights are written broadly, such as the right to “reside
installation land to those entities. The housing companies,
in a housing unit...that meets applicable health and
in exchange for building, upgrading, and maintaining
environmental standards” and the right to “prompt and
housing facilities, collect revenue in the form of rent
professional maintenance and repair.” Whether DOD or
payments from the Department of Defense (DOD) on par
individual installations are meeting those requirements may
with the standard Basic Allowance for Housing (BAH) that
be open to interpretation.
servicemembers traditionally receive for living in homes
outside a military base. MHPI companies operate about
Full implementation of more specific requirements in the
99% of military family housing in the United States.
Tenant Bill of Rights arguably has been slowed by DOD’s
lack of authority to make unilateral changes to existing,
Table 1. Military Housing Privatization Initiative
legally binding business agreements with MHPI companies.
Projects as of March 2022
Instead, DOD officials have asked each company to
incorporate the FY2020 NDAA provisions into existing
U.S. Navy and
U.S. Air and
legal agreements voluntarily. Nine of the 14 MHPI
U.S. Army
Marine Corps
Space Force
companies have complied with DOD’s request. At the same
time, five companies, all of which maintain MHPI projects
34
13
31
for the Air Force, have declined to implement all of the
Source: Government Accountability Office, March 2022.
provisions. The elements of the Tenant Bill of Rights that
Notes: 14 private housing companies operate 78 housing projects
some housing companies have declined to implement
across the military services.
include providing tenants with:
In the program’s early years,
 Access to a home’s seven
many military officials and
-year maintenance history
families lauded the program as a success following
prior to signing a lease;
investment in new construction and renovations. As the
 The right to enter into a formal dispute resolution
program entered its third decade, Congress heard
process; and
complaints from some military families about substandard
 The right to have housing rent payments withheld from
housing and other issues such as black mold, rodents, insect
a landlord in an escrow account pending completion of
infestations, lead paint, damaged plumbing, and ineffective
the dispute resolution process.
HVAC units. In 2019, concerns about DOD’s oversight of
the private housing companies prompted Congress to enact
In late 2022, the DOD IG reported that more than 10,000
a series of reforms and new requirements.
military families at five Air Force installations were not
fully protected the by the Tenant Bill of Rights. DOD
Department of Defense Reforms
officials have indicated that they are continuing to seek
Among those reforms was the “Tenant Bill of Rights”
agreement at these five installations. The details of the legal
included in the FY2020 National Defense Authorization
agreements between the DOD and MHPI companies –
Act (NDAA. P.L. 116-92). MHPI reform continued in the
including any voluntary agreements to adhere to new
FY2021 NDAA; between both pieces of legislation
statutes – are not disclosed publicly.
Congress imposed more than 30 new requirements on the
Dispute Resolution Process
MHPI program. DOD has implemented many of them,
including the creation of a new “Chief Housing Officer”
At installations where housing companies have voluntarily
position to lead oversight efforts; a standardized lease for
agreed to comply with the Tenant Bill of Rights and related
all privatized housing landlords; and a requirement for local
requirements under 10 U.S.C. §2894, tenants have the right
military housing office officials to conduct physical
to request a formal dispute resolution process, which will be
inspections of vacant homes when families move in or out.
ultimately adjudicated by an installation or regional
DOD also made changes to the metrics used to determine
commander in charge of overseeing housing units. Tenants
the performance incentive fees it provides to the landlords.
can request to have their rent payments placed in an escrow
DOD has implemented many of the congressionally
account and not paid to the privatized housing company
directed reforms, yet the DOD Inspector General (DOD IG)
pending completion of the dispute resolution process.
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Military Privatized Housing: Status of Legislative Reforms
Commanders’ Authority
work “complete” prior to maintenance work actually being
performed. In January 2022, a second MHPI company,
At most military bases, installation or regional commanders
Hunt Companies, Inc., agreed to a $500,000 settlement with
are empowered to determine the outcome of a formal
the government to resolve allegations of fraud at Dover Air
housing dispute and take actions that may include:
Force Base. Hunt Companies made no admission of fault.

Direct the property manager or owner to take action to
remediate the premises of a home;
Continued Concerns

Congress and DOD have addressed some concerns about

Direct the property manager or owner to fund
relocation of a tenant per existing tenant displacement
privatized military housing on a statutory and policy level.
guidelines;
Yet anecdotal reports about problems persist. The
enforcement of broadly written standards and

Direct the property manager, owner, or tenant to
implementation of the dispute resolution process may vary
reimburse the payment of any fees, charges, or move-out
across the military community, partly because each of the
damage assessments determined to be due; and/or
78 privatized housing projects is a separate and distinct

Direct the distribution of any segregated rent payments
entity governed by its own set of legal agreements.
to the property manager, owner or tenants as
Enforcement also may vary because individual commanders
appropriate.
at each installation have wide discretion in handling
housing matters. The Armed Forces Housing Advocates, a
Certain types of non-disclosure agreements (NDAs) may
nonprofit group, reported in October 2022 that they
limit public information about specific instances of housing
continue to receive 15-20 complaints per week from
problems. While a provision in 10 U.S.C. § 2890(f)
military families about problems that include pervasive
prohibits certain types of NDAs that might limit military
mold, leaks, window safety violations, and disability
families’ ability to speak publicly about their issues in some
accommodation violations. One issue that has drawn
situations, that provision does not preclude NDAs in all
intense public scrutiny is reports about homes contaminated
situations. In some cases, when military families seek
with mold. While some forms of mold are believed to pose
payments from MHPI companies to settle disputes, the
health risks, the scientific research is not definitive and
companies may ask them to sign NDAs.
there are no federal standards or recommendations for
airborne concentrations of mold or mold spores. Disputes
Information Technology (IT)
can hinge on different interpretations of inspection data.
The DOD IG has found that the military services are facing
problems implementing the information technology system
Legislative Issues for Congress
known as the “enterprise Military Housing” system, or
Members of Congress have discussed numerous legislative
eMH, to track oversight activities. The Army and Air Force
and oversight issues or options in recent years, including:
reported that they have not yet fully populated their eMH

systems with the privatized housing inventory at some
Directing DOD to expand the privatized housing
installations. Without accurate data about housing
programs for unaccompanied and/or transient housing
inventory, housing officials cannot execute specific
(that is, housing used by single servicemembers or those
activities required by law–for example, attaching a record
temporarily visiting an installation).
of each inspection performed on individual housing units.
 Creation of a Military Housing Readiness Council
comprised of DOD officials, service members, military
DOD also says it is facing other IT challenges related to
families, and housing experts to ensure ongoing
MHPI oversight. 10 U.S.C. § 2894a requires the DOD to
oversight of privatized military housing.
create a public database of complaints related to military
 Urging the DOD to make changes to the way BAH rates
housing. The statute, enacted as part of the FY2020 NDAA,
are used to calculate payments provided to the MHPI
requires the database to include a record of each complaint,
companies. This could include raising the BAH benefit
along with the landlord responsible for the housing unit, a
to cover 100% of the median rental cost of adequate
description of the complaint, and the landlord’s response.
housing in a local area (the current benefit is calculated
More than two years after the law was enacted, a DOD
to cover about 95% of median rental housing costs). As
spokesman said the database was not operational due to
BAH is the primary source of revenue for MHPI
“budgetary, contract and Privacy Act issues.”
companies, such an increase may provide additional
Investigations
resources for housing services.
 Exploring ways to engage the five MHPI companies that
The Department of Justice has supported DOD in
have shown a reluctance to comply voluntarily with the
enforcement efforts. In December 2021, one of the largest
Tenant Bill of Rights. Congress may consider additional
housing companies, Balfour Beatty Communities LLC
measures, such as oversight hearings or legislation, to
(Balfour), was convicted in federal court of major fraud,
try to ensure that all servicemembers benefit from the
and agreed to pay more than $64 million in criminal fines
reforms enacted into law.
and restitution. Specifically, the company admitted to
manipulating and falsifying military housing work-order
Andrew Tilghman, Analyst in U.S. Defense Infrastructure
data and records so that Balfour could obtain incentive
Policy
management fees (i.e., bonus payments for good
performance) to which it was not entitled. For example,
IF12287
Balfour admitted to closing work orders early or marking
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Military Privatized Housing: Status of Legislative Reforms

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