Little Rock AFB housing project falters

[unhappycamper]

Little Rock AFB housing project falters
The Associated Press
Posted : Monday Oct 29, 2007 17:14:23 EDT

JACKSONVILLE, Ark. — Plans to renovate 1,200 homes for military families of the Little Rock Air Force Base have fallen through, and Air Force officials are looking for a new developer to take on a scaled back project.

American Eagle Communities entered a $106 million agreement three years ago with the U.S. Air Force to renovate homes for the base as part of the Defense Department’s push to privatize military housing. Under the agreement, American Eagle is to manage the housing, collect rent and handle maintenance and upkeep.

But in May, the company halted its work, leaving empty lots and half-built residences, after private investors stopped funding the project. Also, more than $12 million in private bonds issued in 2004 to help fund the project defaulted this month. Another $52.2 million in bonds were repaid to investors last month as American Eagle officially slipped into default on the contract.

Brig. Gen. Rowayne Schatz, the base commander, said the Air Force is working with American Eagle, Little Rock Family Housing, and the bonds holder to try to sell the project to a new developer. Included in the sale negotiations are American Eagle housing projects in default at Hanscom Air Force Base, Mass., Patrick Air Force Base, Fla., and Moody Air Force Base, Ga.

If the sale falls through, the remaining bonds would collapse into default and the Little Rock project would start over again, with a new proposal, a new contractor and all-new funding sources. Schatz said the Air Force and American Eagle would prefer to find a new developer and get the project back on its feet again.

“We want to have the best-quality housing for our airmen and families that we possibly can,” Schatz said. “Privatization is a good tool to do that.”


Rest of article at: http://www.airforcetimes.com/news/2007/10/ap_littlerockafb_071029/

[Monk06]

1. So by the numbers Brig Gen Schatz says that private development

at a loss of $48 million in defaulted bond issues
over four years with the project starting from scratch
with no funding tells him, "Privatization is a good
tool to do that."

This statement, coming on the heals of the collapse of
the mortgage market tells me that it is probably the
wrong time to be saying something so egregiously stupid.

At something like $9.0 million per unit for a renovation
project it should have been obvious three years ago that this
debacle was a skim job.