Military Housing Privatization Initiative: Background and Issues (CRS Report for Congress)
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| Release Date |
July 2, 2001 |
| Report Number |
RL31039 |
| Report Type |
Report |
| Authors |
Daniel H. Else, Foreign Affairs, Defense, and Trade Division |
| Source Agency |
Congressional Research Service |
Summary:
This report describes the Military Housing Privatization Initiative (MHPI), a pilot program
authorized by Congress in 1996 to encourage privately-funded development of housing for use by
members of the U.S. Military Services (including the Army, Navy, Marine Corps, and Air Force).
The quality of housing available to members of the Military Services is considered one of the most
important components (along with pay and quality of workplace) in defining the military's "quality
of life," directly influencing the ability of the Military Services to retain personnel on active duty.
As part of the Department of Defense (DOD) effort to address its housing problems by a self-
imposed deadline of 2010, the MHPI uses private sector alternatives to military housing
construction, "leveraging" appropriated funds by providing federal supports to commercial real estate
developers. Congress temporarily granted DOD 12 of these risk-reducing authorities, including the
ability to convey or lease public property to private enterprise, to guarantee minimum occupancy
rates, or to offer direct loans to real estate developers. While the Office of the Secretary of Defense
retains general oversight and approval authority, the individual Military Services are responsible for
the execution of projects on military installations.
The MHPI was originally authorized for five years, but few contracts were awarded. Despite
its slow start, Congress has expressed confidence in the program and recently reauthorized it through
December 31, 2004. The pace at which privatization contracts are being awarded has accelerated.
While the MHPI has been applied only to family housing, DOD intends to expand it to include
barracks and military dormitories.
Issues for Congress in its oversight of the program include the following. One issue is how to
assess the program and its effectiveness. This is a difficult task, because both the problem of
deteriorating housing and the solution of MHPI are complex. Family Housing Master Plans,
expected to lay out in detail how each Service will resolve its housing deficiencies over the next
decade, will be submitted to Congress soon and are expected to establish the benchmarks necessary
for program assessment. DOD operates 300,000 military family housing units, but the ten MHPI
projects currently under contract include only 6,900 of them, or less than 2.3% of the total. The
MHPI alone cannot be a "silver bullet" remedy to substandard housing. Nevertheless, it can be
assessed for its ability to provide cost-effective, quality housing quickly, and its use could be
expanded. A second issue is: what are the alternative means of providing quarters for military
personnel and their families? Domestic military housing is created through three methods: access
to the civilian housing market, traditional military construction using appropriated funds, and MHPI
development. More than 66% of Service members stationed within the United States use commercial
housing. MHPI housing currently under contract or in solicitation accounts for less than 20% of the
remainder, with military construction supplying the rest. DOD intends to resolve its housing
shortfalls through a combination of those three alternatives.
