The Army has directed its private housing partners to look for ways to trim the cost of operating their projects as a response to the reduction in basic allowance for housing (BAH) payments Congress has authorized to alleviate the Defense Department’s fiscal constraints.
By slowing the rate of increase in the BAH, out-of-pocket housing costs for service members are slated to rise by one percentage point a year until they reach 5 percent in 2019, under the fiscal 2016 defense authorization bill. This year, personnel living off-base are paying 2 percent of their rental and utility costs out-of-pocket.
But the belt-tightening move is hurting the finances of the owners of privatized family housing as their rents are tied to the BAH payments received by service members. In January, the Army informed its housing partners that it would not issue a “blanket consent” allowing them to charge soldiers rent in excess of their BAH payments in 2016.
Instead, the service is encouraging the companies to cut back on amenities and other optional services to offset the drop in their revenue stream.
“The first thing they’re doing is taking a hard look at the services they provide on our bases, and they’re going to stop doing some of those services,” Katherine Hammack, assistant secretary for installations, energy and environment, said last week during an Association of the U.S. Army conference.
“Maybe they’re not going to mow lawns as frequently, maybe they’re not going to run a water park or a swimming pool or community center in the summer. But we’re asking them to cut optional services without affecting their prime service, which is quality housing for our soldiers,” Hammack said, reported Federal News Radio.
Officials, however, are willing to consider individual requests to increase rents charged by privatized housing operators above the BAH if “necessary to ensure the project’s long-term financial viability,” according to a Jan. 21 memo from Paul Cramer, deputy assistant secretary for installations, housing and partnerships.
“We really don’t want that to happen. But we also can’t afford to force any of our housing partners into bankruptcy because of this situation,” Hammack said.
“We’ve asked them to come back to us and justify where there’s a financial need to charge a service member for on-base housing. We’re reviewing that very carefully to ensure that optional services are cut first before service members pay out-of-pocket,” she said.
To date, the Army has not allowed any of its housing partners to increase rents above soldiers’ BAH, according to the story.
The Army surveyed on-base residents to determine what services provided by housing managers should be considered optional, said Lt. Gen. David Halverson, assistant chief of staff for installation management.
“Part of this is the expectation management that we must do, and it’s a tough issue,” Halverson said. “We’re looking really hard to make sure the soldier and the family is not being impacted and maintaining the fiscal viability of our housing partners at the same time.”