Why did the Department of Defense (DoD) privatize military housing?

In the late 1980’s and early 1990’s, military family housing had significantly deteriorated and two out of every three housing units were deemed substandard and needed to be renovated or replaced. The military had a $20 billion housing maintenance backlog that would take 30 years to resolve. The state of military housing severely impacted readiness and resulted in recruitment and retention challenges. In response to these challenges, Congress passed legislation privatizing certain military housing through the Military Housing Privatization Initiative (MHPI) in 1996, authorizing the DoD to partner with private companies to improve the condition and quality of military housing inventory. The MHPI uses private sector expertise from highly experienced residential real estate developers to build and improve military housing communities.

Why did military housing industry leaders come together to create the Military Housing Association (MHA)?

The MHA was formed to provide a forum for industry participants to work together to ensure the MHPI continues to succeed in achieving its core goal of providing high-quality housing, community amenities and responsive property management services for service members and their families living in privatized military housing communities.

What are Public Private Ventures (PPVs) and how are they critical to the MHPI’s success?

PPVs are business agreements entered into by the Army, Air Force or Navy that are owned by a private partner and governed by a business agreement in which the Department of Defense (DoD) has certain rights and responsibilities. The MHPI allowed real estate developers to bid in an open competition to operate and manage PPV housing communities while the DoD maintained ownership of the land associated with each property. PPVs are responsible for managing construction, renovation, and maintenance services. The success of these partnerships depends on providing service members with safe, quality homes and an enjoyable experience, so they choose to live in installation housing.

How has military housing improved under the MHPI? Has the program saved taxpayers money as promised?

Before the MHPI, the DoD identified 180,000  housing units in need of improvement or replacement. The military faced a $20 billion housing maintenance backlog that would take 30 years to resolve using the traditional methods of contracting and construction. Since 1996, the MHPI has constructed  more than 75,000 new homes and renovated 50,000 additional homes. The program has saved taxpayers billions of dollars by leveraging $4 billion in government funding into more than $32 billion that has been invested in military housing by private real estate developers. Today, the MHPI encompasses more than 80 PPV projects and 200,000 housing units across the country. MHPI partners are also using private capital to improve communities through the construction of new homes, renovation of existing homes, and enhancement of amenities.

Why do most MHPI business partnership contracts include a 50-year ground lease for the land associated with the military housing community? 

Before the Military Housing Privatization Initiative (MHPI), Congress appropriated federal funds to DoD to construct and manage military family housing communities annually, making it difficult for military leaders to plan for long-term development and maintenance needs. Congress created the MHPI in part to leverage private sector capital to make large, up-front investments to improve military family housingBy granting PPVs 50-year ground leases, MHPI business partnerships were able to attract the significant private sector investment needed to finance the large-scale construction and renovation of homes and community amenitiessaving taxpayers billions of dollars. Similar to an individual borrowing money from a lender to purchase a home, privatized housing providers were able to obtain a greater amount of financing to improve military family housing communities by borrowing that money over a longer period of time from lenders. For these reasons, most MHPI business partnership contracts include a 50-year ground lease.  

Does the Military Housing Association support the Tenant Bill of Rights?

Yes. MHA member companies worked closely with their military partners to create new industry-leading services and standards critical to implementing the Tenant Bill of Rights. Service member tenants in MHA member company communities are now eligible to access each right in the Tenant Bill of Rights. These rights include access to the maintenance history of a home before signing a new lease, the right to a standardized formal dispute resolution process, the ability to request rent withholding and access to common forms and documents. MHA member companies are committed to working with military families, the DoD, and Congress to protect tenant rights and continually improve the quality and sustainability of military housing.

Does the Tenant Bill of Rights apply to all MHPI residents? 

Civilian residents have always operated under a different lease agreement than active duty residents. Every resident has rights that are provided under their lease agreement and respective state and local laws. However, the Department of Defense (DoD) Tenant Bill of Rights only applies to active-duty military residents within the MHPI program, as required by Congress. For specific questions regarding individual rights, residents should contact their community housing offices. 

How are MHA member companies strengthening procedures to address environmental challenges like mold?

MHA member companies continue to work diligently to safely manage all environmental issues in military communities, including incidents of mold and other moisture-related challenges. MHA members are working with the Department of Defense to update and promote industry-leading best practices to address environmental challenges like mold to ensure a consistent approach across all military installations. MHA member companies will also continue to follow the guidance of the U.S. Environmental Protection Agency for all management services.

What is the Basic Allowance for Housing (BAH) and how does it fund PPVs?

The Basic Allowance for Housing (BAH) underpins the MHPI program. Almost two-thirds of military families in the U.S. live in local housing and receive the BAH to help pay for the cost of renting or owning a home. The DoD sets the amount of BAH annually, which is calculated by pay grade, dependency status, and geographic duty location. The allowance gives service members fair housing compensation based on rental costs in local markets. Service members have the option of applying their BAH towards the purchase of a new home. The rent paid through the BAH serves as the primary funding source for all future MHPI project sustainment activities.

Why hasn’t BAH always covered all housing costs for service members and their families?

Each year, Congress sets the amount of BAH that can be allotted to service members. In 2000, the DoD set a goal to have the BAH pay for all service member housing costs by 2005. Since then, the rate has fluctuated, with the BAH only covering 95 percent of housing costs in 2019. The MHA believes service members deserve to have BAH 100% funded. Strengthening the purchasing power of military families strengthens military readiness.

Are service members required to live in privatized military housing?

No. Most service members and their families can choose whether they live in on or off-base housing. Approximately 30 percent of service members live in communities managed by PPVs.

What is the Tenant Waterfall Policy and how does it allow military housing communities to maintain occupancy rates and financial stability?

DoD established the Tenant Waterfall Policy to give MHPI member companies the ability to maintain occupancy rates and financial stability within privatized military housing. Specifically, the Waterfall allows select homes to be leased to non-active duty tenants if there is sustained limited interest/occupancy in those homes from active duty families. While active duty families are always prioritized, upon activation of the Waterfall Policy, five tiers become eligible to participate in the MHPI in the following order: unaccompanied military personnel, active National Guard and Reserve, military retirees, federal government civilians, and civilians. The Waterfall Policy allows MHPI members to maintain financial viability in each project, ensuring the program is positioned to benefit military families as the nation’s force structure changes over time.

Do PPVs also manage historic homes on military installations?

PPVs inherited and continue to manage thousands of historic homes on military installations that were built many years before Congress created the MHPI.  While PPVs have successfully built and renovated more than 125,000 military housing units, the MHPI program was not intended to replace every existing home. MHA member companies follow strict guidelines and procedures – developed with each Service Branch – to safely maintain legacy homes, many of which were not built to modern standards.