PRIVATIZING MILITARY FAMILY HOUSING

A History of the U.S. Army’s Residential

Communities Initiative, 1995–2010

by Matthew C. Godfrey and Paul Sadin 

with Dawn Vogel, Joshua Pollarine, and Nicolai Kryloff

Government Printing Office, Washington, D.C.

2012

Prepared for the Office of the Assistant Secretary of the Army,

Installations, Energy & Environment
iii

Foreword . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . xi

Preface . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . xiii

Acknowledgments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . xix

Timeline . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . xxii

Abbreviations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . xxiv

Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

Chapter One . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7

Setting Up the Context: Military Family Housing Privatization Measures Prior to 1996

Chapter Two . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27

The Passage of the Military Housing Privatization Initiative Legislation, 1995–1996

Chapter Three . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47

Launching the Pilot Program: The Fort Carson CVI Pilot Housing Project, 1994–1999

Chapter Four . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71

A New Direction: The Switch to RCI, 1998–1999

Chapter Five . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 91

Gaining Momentum: The Beginning of the RCI Pilot Projects, 1998–2001

Chapter Six . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 127

Problems and Solutions: Implementing the RCI Pilot Projects, 2001–2005

Chapter Seven . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 183

Solidifying the Process: Consolidating the RCI Program, 2002–2005

Contents

On the cover: Village Green neighborhood at Fort Belvoir, Va.

Courtesy of Clark Realty Capital.
i v Privatizing Military Family Housing

v

Chapter Eight . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 241

Threats and Reorganizations: The Evolution of the RCI Program, 2005–2007

Chapter Nine . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 265

Moving Forward Amid New Challenges, 2008–2010

Conclusion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 293

Selected Bibliography . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 303

Appendix: RCI Project Transaction Histories . . . . . . . . . . . . . . . . . . . . . . 313

Index . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 337

In Focus

Base Realignment and Closure (BRAC) . . . . . . . . . . . . . . . . . . . . . . . . . 49

RFP vs. RFQ . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 78

Equity Residential . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 153

Picerne Military Housing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 166

Integrated Limited Liability Companies . . . . . . . . . . . . . . . . . . . . . . . . . 192

Clark Pinnacle Communities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 199

Lincoln Military Housing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 225

Actus Lend Lease . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 251

Michaels Military Housing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 259

Balfour Beatty Communities/GMH Military Housing . . . . . . . . . . . . . . . . . . 275

Warriors Walk . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 278

Figures Figure P-1. Members of the RCI team gathered at Fort Belvoir, Va

., in 2007. . . . . . xiv

Figure P-2. RCI team members commute to New York City to meet with

Lehman Brothers in 2006 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . xv Figure P-3. RCI team members socializing together . . . . . . . . . . . . . . . . . . xvi Figure I-1. Residents behind family apartments renovated at Fort Hood, Tex . . . . 2 Figure I-2. Map of RCI project sites as of January 11, 2011 . . . . . . . . . . . . . . . . 3 Figure I-3. Two family housing residents at Fort Jackson, S.C. . . . . . . . . . . . . . 4 Figure 1-1. Capehart housing for officers in 1959 . . . . . . . . . . . . . . . . . . . . 6

Figure 1-2. Shuttered family housing at Camp Parks, Calif., pre-RCI . . . . . . . . . 8

Figure 1-3. Senator Kenneth Wherry (R-Neb.), sponsor of the 

Wherry housing legislation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .9

Figure 1-4. Senator Homer Capehart (R-Ind.), sponsor of the Capehart

housing legislation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10 Figure 1-5. Capehart housing at Fort Belvoir, Va. . . . . . . . . . . . . . . . . . . . . 11 Figure 1-6. Pre-RCI duplex at Fort Polk, La. . . . . . . . . . . . . . . . . . . . . . . 13 Figure 1-7. Pre-RCI housing at Fort Polk, La . . . . . . . . . . . . . . . . . . . . . . 15 Figure 1-8. Family housing apartments prior to RCI development at

Fort Bragg, N.C. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17

Figure 1-9. President Bill Clinton and Secretary of Defense William Perry, 

inspecting the troops at Fort Myer, Va., in 1997 . . . . . . . . . . . . . . . . . . . . . 20

Figure 2-1. Historic home renovated at Fort Riley, Kans. . . . . . . . . . . . . . . . 26

Figure 2-2. Ted Lipham, early leader of Army privatization . . . . . . . . . . . . . . 28 Figure 2-3. Army family housing development at Fort Eustis, Va.,

prior to privatization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29 Figure 2-4. Dean Stefanides, Chief of Army Housing in the mid-1990s . . . . . . . . 30 Figure 2-5. Representative Joel Hefley (R-Colo.) . . . . . . . . . . . . . . . . . . . . 31 Figure 2-6. Pre-privatization family housing in the Santa Fe neighborhood

of Schofield Barracks, Hawaii . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33 Figure 2-7. Senator Strom Thurmond (R-S.C.), sponsor of the National Defense 

Authorization Bill for Fiscal Year 1996 . . . . . . . . . . . . . . . . . . . . . . . . . . 35 Figure 2-8. First page of the Title 28 section of Public Law 104-106 . . . . . . . . . . 36 Figure 2-9. Don Spigelmyer, Executive Director of the RCI Program . . . . . . . . . 38 Figure 2-10. Pre-privatization family housing at Fort Belvoir, Va . . . . . . . . . . . 39 Figure 3-1. Blackfoot Hill Village at Fort Carson, Colo. . . . . . . . . . . . . . . . . 46 Figure 3-2. Armored cavalry troops during maneuvers at Fort Carson . . . . . . . . 49 Figure 3-3. General Dennis Reimer, FORSCOM Commander and

U.S. Army Chief of Staff . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50 Figure 3-4. Aerial view of new RCI family housing development at Fort Carson . . . 53 Figure 3-5. Cover of FCAHP 1996 Fort Carson briefing . . . . . . . . . . . . . . . . 58 Figure 3-6. How the selection process worked at Fort Carson . . . . . . . . . . . . . 61 Figure 3-7. The first home completed under Army housing privatization,

Fort Carson . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64 Figure 4-1. Privatized housing, Fort Belvoir, Va. . . . . . . . . . . . . . . . . . . . . 70 Figure 4-2. Pre-RCI housing at Presidio of Monterey, Calif. . . . . . . . . . . . . . . 73
v i Privatizing Military Family Housing vii Figure 4-3. Mahlon “Sandy” Apgar, IV, Assistant Secretary of the

Army for Installations and Environment . . . . . . . . . . . . . . . . . . . . . . . . . 74 Figure 4-4. Pre-RCI housing unit at Camp Parks, Calif. . . . . . . . . . . . . . . . . 75 Figure 4-5. The Columbia Work Group . . . . . . . . . . . . . . . . . . . . . . . . . 76 Figure 4-6. Architect’s rendering of the planned Fort Irwin, Calif., town center . . . 77 Figure 4-7. Representative David Hobson (D-Ohio) . . . . . . . . . . . . . . . . . . 81 Figure 4-8. General Jack Keane, Vice Chief of Staff of the Army . . . . . . . . . . . . 84 Figure 4-9. Lieutenant General Thomas A. Schwartz and Major

General Amos Malka . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 85 Figure 5-1. RCI housing, Presidio of Monterey, Calif. . . . . . . . . . . . . . . . . . 90 Figure 5-2. Older, pre-RCI duplex in the Clarkdale development at Fort Lewis . . . 93 Figure 5-3. U.S. Representative Chet Edwards (D-Tex.) and Colonel

Michael Pratt touring Fort Hood, Tex. . . . . . . . . . . . . . . . . . . . . . . . . . . 95

Figure 5-4. Townhouse-style family housing prior to RCI renovation of the McNair 

neighborhood at Fort Hood . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 97 Figure 5-5. Aerial view of sprawling Fort Lewis . . . . . . . . . . . . . . . . . . . . . 102 Figure 5-6. Design graphic detailing EQR/Lincoln’s design team’s

renovation plans for Fort Lewis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 104 Figure 5-7. Housing at Fort Meade before the implementation of RCI . . . . . . . . 105 Figure 5-8. Housing at Fort Meade before the implementation of RCI . . . . . . . . 106 Figure 5-9. A brochure announcing the Fort Meade RCI Forum . . . . . . . . . . . . 107 Figure 5-10. John Picerne, head of Picerne Military Housing . . . . . . . . . . . . . 108 Figure 5-11. One of Picerne Military Housing’s new family housing

developments at Fort Meade, Md. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 109

Figure 5-12. Participants at the Fort Carson Conference on Lessons

Learned, 2000 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 110 Figure 6-1. RCI family housing, Fort Belvoir, Va. . . . . . . . . . . . . . . . . . . . . 126 Figure 6-2. Geoffrey Prosch, Principal Deputy Assistant Secretary of the Army, 

Installations and Environment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 128

Figure 6-3. William Armbruster, Deputy Assistant Secretary of the Army,

Privatization and Partnerships . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 128 Figure 6-4. New RCI home at Fort Carson . . . . . . . . . . . . . . . . . . . . . . . 130 Figure 6-5. Groundbreaking for Iroquois Village at Fort Carson with Ivan Bolden . . 131 Figure 6-6. New neighborhood center constructed by Fort Carson

Family Housing, LLC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 133 Figure 6-7. Construction of RCI housing at Fort Hood, Tex. . . . . . . . . . . . . . . 135

Figure 6-8. Signing ceremony at Fort Hood that initiated the transfer of

family housing to Actus Lend Lease in 2000 . . . . . . . . . . . . . . . . . . . . . . . 136 Figure 6-9. Lieutenant General Leon Laporte and Mahlon Apgar, IV,

following signing ceremony for the RCI Partnership Declaration at Fort Hood . . . . 138 Figure 6-10. New RCI housing at Kouma Village, Fort Hood, Tex. . . . . . . . . . . . 139 Figure 6-11. A community event sponsored by Fort Hood Family Housing . . . . . . 140 Figure 6-12. Congressman Chet Edwards (D-Tex.) at Fort Hood . . . . . . . . . . . 140 Figure 6-13. Residents outside of RCI housing at Fort Hood, Tex. . . . . . . . . . . . 142 Figure 6-14. An artist’s rendering of RCI housing and neighborhoods

at Fort Lewis, Wash. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 144

Figure 6-15. Proposed design plan for the Beachwood neighborhood

at Fort Lewis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 146 Figure 6-16. New RCI housing at Fort Lewis . . . . . . . . . . . . . . . . . . . . . . 150 Figure 6-17. Lieutenant General Edward Soriano at a ribbon-cutting ceremony

at Fort Lewis, Wash., in 2002 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 151

Figure 6-18. EQR staff at a partner-sponsored event for Fort Lewis families . . . . . 153 Figure 6-19. Ribbon-cutting ceremony for opening of new homes at

Joint Base Lewis-McChord . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 154 Figure 6-20. Architect’s conception of proposed renovation, Fort Lewis . . . . . . . 155 Figure 6-21. Exterior view of new community center at Fort Lewis . . . . . . . . . . 157 Figure 6-22. Interior of new community center at Fort Lewis . . . . . . . . . . . . . 157 Figure 6-23. A duplex at Fort Meade before the implementation of RCI . . . . . . . 160 Figure 6-24. A historic home at Fort Meade . . . . . . . . . . . . . . . . . . . . . . 162 Figure 6-25. A new townhome for junior non-commissioned officers, Fort Meade . . 164 Figure 6-26. Potomac Place Neighborhood Center at Fort Meade, Md. . . . . . . . . 165 Figure 6-27. Young resident at a Picerne-sponsored event . . . . . . . . . . . . . . . 166 Figure 6-28. Picerne Military Housing neighborhood office at Fort Riley . . . . . . . 167 Figure 6-29. Ribbon-cutting ceremony at an opening at Fort Bragg . . . . . . . . . . 167 Figure 6-30. Celebrating the first new home in the Potomac Place

neighborhood, Fort Meade . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 169 Figure 7-1. Campbell Crossing at Fort Campbell, Ky. . . . . . . . . . . . . . . . . . . 182 Figure 7-2. Construction work at a new Army family housing

neighborhood in Hawaii . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 184 Figure 7-3. Rhonda Hayes of RCI and Capital Ventures . . . . . . . . . . . . . . . . 185 Figure 7-4. A summary of the two-step RFQ process . . . . . . . . . . . . . . . . . . 186 Figure 7-5. The cover of the RCI Primer, issued in 2001 . . . . . . . . . . . . . . . . 187
viii Privatizing Military Family Housing i x Figure 7-6. Completing construction of a new home at the Presidio of Monterey . . 189 Figure 7-7. View to the Pacific Ocean from the Presidio of Monterey . . . . . . . . . 194 Figure 7-8. Rendering of a new duplex unit proposed for Fort Irwin, Calif. . . . . . . 195 Figure 7-9. View of new neighborhood under construction at Fort Irwin . . . . . . . 196 Figure 7-10. Site plan for neighborhood development at Moffett Field, Calif. . . . . 197 Figure 7-11. Clark Pinnacle’s 1000th home completed at Fort Belvoir . . . . . . . . . 199 Figure 7-12. New home and residents at Moffett Federal Airfield, Calif. . . . . . . . 199 Figure 7-13. Ribbon-cutting ceremony at Fort Belvoir . . . . . . . . . . . . . . . . . 200 Figure 7-14. Swimming pool in common area at Fort Benning, Ga. . . . . . . . . . . 200 Figure 7-15. Interior of new community center at Fort Irwin . . . . . . . . . . . . . 201 Figure 7-16. Construction of new RCI housing at Camp Parks . . . . . . . . . . . . 202 Figure 7-17. Young residents and renovated homes at the Presidio of Monterey . . . 205 Figure 7-18. “Spooktacklar” event sponsored by Monterey Bay Military Housing . . 206 Figure 7-19. New RCI housing at Presidio of Monterey/Naval

Postgraduate School . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 207 Figure 7-20. Housing at Fort Detrick, Md., before implementation of RCI . . . . . . 208 Figure 7-21. Family housing at Walter Reed Army Medical Center prior to

RCI privatization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 209 Figure 7-22. New RCI homes at Fort Detrick, Md. . . . . . . . . . . . . . . . . . . . 210 Figure 7-23. RCI housing constructed at Walter Reed Army Medical Center . . . . . 211 Figure 7-24. Historic-era duplex family housing at Fort Belvoir prior

to RCI renovation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 213 Figure 7-25. Village Green neighborhood at Fort Belvoir . . . . . . . . . . . . . . . . 216 Figure 7-26. Soldiers in front of Starbucks, Fort Belvoir town center . . . . . . . . . 218 Figure 7-27. Residents walking in front of Herryford Village town

center, Fort Belvoir . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 220 Figure 7-28. New RCI homes in Fort Belvoir’s Park Village . . . . . . . . . . . . . . 221 Figure 7-29. Historic home at Fort Belvoir . . . . . . . . . . . . . . . . . . . . . . . 223 Figure 7-30. Historic home at Fort Sam Houston, Tex. . . . . . . . . . . . . . . . . . 224 Figure 7-31. New RCI home, Fort Sam Houston . . . . . . . . . . . . . . . . . . . . 226 Figure 7-32. Renovated Officer’s Club and grounds, Fort Sam Houston . . . . . . . . 226 Figure 7-33. Design framework for neighborhood developments

at Fort Sam Houston . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 227 Figure 7-34. Renovated home adapted for disabled access . . . . . . . . . . . . . . . 228 Figure 7-35. Historic home with wrap-around porches, Fort Sam Houston . . . . . . 229

Figure 7-36. Family members stroll in a new RCI neighborhood

at Fort Hood, Tex. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 230

Figure 8-1. Photovoltaic film on roofs in the Island Palm Communities, Hawaii . . . 240 Figure 8-2. Homes at Carlisle Barracks, Pa. . . . . . . . . . . . . . . . . . . . . . . . 242 Figure 8-3. Former Deputy Secretary of Defense Paul Wolfowitz with

former Secretary of Defense Donald H. Rumsfeld, June 2010 . . . . . . . . . . . . . . 244

Figure 8-4. Community gardening project at RCI development, Fort Campbell, Ky. . 245 Figure 8-5. View of neighborhood on the Aliamanu Military Reserve,

Hawaii, prior to start of RCI project . . . . . . . . . . . . . . . . . . . . . . . . . . . 246 Figure 8-6. The Hawaii RCI project, island of Oahu . . . . . . . . . . . . . . . . . . 247 Figure 8-7. New home construction in an Army Hawaii project neighborhood . . . . 248 Figure 8-8. Layout and construction at Fort Shafter, Hawaii . . . . . . . . . . . . . . 249 Figure 8-9. RCI housing development, Aliamanu Military Reserve . . . . . . . . . . 250 Figure 8-10. Actus Lend Lease leasing consultant talks with a new resident . . . . . 251 Figure 8-11. Ribbon-cutting ceremony for Actus Lend Lease homes

at Fort Campbell, Ky. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 252 Figure 8-12. Two young Fort Knox, Ky., residents at Actus Lend

Lease sponsored event . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 252 Figure 8-13. Ian “Sandy” Clark speaking at a PHMA training session . . . . . . . . . 254 Figure 8-14. New housing at Fort Eustis, Va. . . . . . . . . . . . . . . . . . . . . . . 256 Figure 8-15. RCI housing at Fort Irwin, Calif. . . . . . . . . . . . . . . . . . . . . . . 257 Figure 8-16. The installation commander’s RCI-built house at Camp Parks, Calif. . . 258 Figure 8-17. Residents of DeAnza Village at Fort Huachuca, Ariz. . . . . . . . . . . . 259 Figure 9-1. New Urbanism influenced the design of the town center at

Fort Belvoir, Va. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 264

Figure 9-2. RCI team receiving Presidential Award for Management

Excellence in 2008 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 266 Figure 9-3. Friends and family members cheer soldiers returning

to Fort Campbell, Ky. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 267 Figure 9-4. Ribbon-cutting ceremony for the opening of new homes at Fort Polk . . 268 Figure 9-5. Soldier reunited with his family, Fort Richardson, Alaska . . . . . . . . . 269 Figure 9-6. New home at Joint Base Lewis-McChord, Wash. . . . . . . . . . . . . . 271 Figure 9-7. New homes and residents in the Presidio of Monterey . . . . . . . . . . 273 Figure 9-8. Family housing residents at Schofield Barracks, Hawaii . . . . . . . . . . 274 Figure 9-9. Staff gathered on front steps of Balfour Beatty Communities office

at Fort Detrick, Md. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 275
x Privatizing Military Family Housing x i

Foreword

Figure 9-10. Balfour Beatty Communities-sponsored Halloween event

at Fort Carson, Colo. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 276

Figure 9-11. RCI family housing at Fort Hamilton, N.Y. . . . . . . . . . . . . . . . . 276

Figure 9-12. New RCI housing at Fort Wainwright, Alaska . . . . . . . . . . . . . . 277

Figure 9-13. New tree plantings along Warriors Walk, Fort Stewart, Ga. . . . . . . . 278

Figure 9-14. Close-up of one soldier’s memorial at Fort Stewart . . . . . . . . . . . 278

Figure 9-15. UPH club house facility at Fort Stewart . . . . . . . . . . . . . . . . . . 280

Figure 9-16. Lodge for UPH apartment residents at Fort Drum, N.Y. . . . . . . . . . 281

Figure 9-17. Kitchen layout in model apartment for The Timbers, Fort Drum . . . . 283

Figure 9-18. Room in new Army lodging at Fort Sill, Okla. . . . . . . . . . . . . . . 285

Figure C-1. New family housing at Fort Bragg, N.C. . . . . . . . . . . . . . . . . . . 292

Figure C-2. Family at new Clark Pinnacle–built home at the Presidio

of Monterey, Calif. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 294

Figure C-3. Todd Hunter, Rhonda Hayes, and Joseph Calcara during

opening ceremonies of a 2011 professional development seminar . . . . . . . . . . . 296

Figure C-4. Army families at a 2009 Spring Carnival at Fort Bragg, N.C. . . . . . . . 297

I

t has been my pleasure over the past 10 years to 

observe the progress of public/private ventures across the U.S. Department of Defense, 

first during my tenure with the U.S. Navy and 

more recently as Deputy Assistant Secretary of 

the Army, Installations, Housing & Partnerships. I 

am pleased to see that the U.S. Army’s Residential 

Communities Initiative (RCI) has dramatically 

transformed housing on Army installations across 

the country.

The Army, with 34 different RCI projects across 

44 installations, was the first Service to meet the 

Office of the Secretary of Defense mandate to 

complete privatization plans by 2010. As with any 

significant accomplishment, there are a number of 

contributors to its success.

A small team of dedicated Army civilians 

shepherded this program forward from the initial 

concept stage. Initially detailed to the Army Secretariat from other offices, this team was challenged 

to work outside the traditional Army paradigm, 

and to learn how to develop private-sector business transactions, develop the necessary transactional documents to execute them, and ensure 

sustainability over the long term.

RCI could not have been implemented without 

the spirit of partnership exhibited by the project 

partners. They entered into first-of-a-kind business arrangements with the Army and worked 

collaboratively to navigate the uncharted waters of 

the early privatization projects. The partners have 

dealt with the impact of deployments, fluctuations of housing allowances, credit crises, Office 

of Management and Budget scoring changes, and 

with the internal learning curve, as they worked to 

recognize the difference between a classic contract 

and a true business partnership.

As I review the challenges faced by early housing privatization detailed here, I marvel at the 

progress the RCI program has achieved in such 

a short period of time, while delivering a quality housing experience for our Soldiers and their 

Families. And with the Army and the Nation facing 

emergent pressures to reduce spending, RCI now 

gives us a plausible business model that can be 

exported to other categories of installations and 

facilities, in terms of both their infrastructure and 

their services.

Joseph F. Calcara

Deputy Assistant Secretary of the Army

Installations, Housing & Partnerships
xiii

Preface

I

t is rare in one’s career to have the opportunity to work on a program for which the stars 

perfectly align. Such an opportunity comes 

when you’re working on the right program, with 

the right people, at the right time. When the work 

is important and you know that you’re making a 

difference for Soldiers and their Families. When 

the entire team is passionate about the work and 

when you learn something new every day. This is 

what the Residential Communities Initiative (RCI) 

program has been for those of us who have worked 

on it over the past 12 years.

RCI was the right program. The Army 

housing inventory had been languishing for some 

time, not due to lack of skill or forward thinking 

by the Army housing managers, but because of 

the unpredictable funding stream and long lead 

time associated with the budget process. Army 

managers knew that if they requested enough 

money to execute a large development or construction project, it would in all likelihood not 

be approved, because the limited construction 

dollars had to be spread across many installations. In order to get a piece of the pie, managers 

would divide projects into phases, hoping to get 

incremental funding over a number of years so 

as to keep a project moving through to completion. Unfortunately this plan rarely worked. One 

phase would be funded, followed by a break of a 

few years, to be followed by funding of another 

phase, built by a totally different contractor. The 

result was disjointed and sporadic construction, 

which never resulted in the whole neighborhood 

development that the Army desired. In spite of 

the Army’s best efforts, the concept of building a 

“community” appeared to be unachievable.

By privatizing housing under the RCI program, 

however, and giving Soldiers the ability to pay rent, 

the Army created a reliable stream of income that 

private-sector developers could use for long-term, 

continuous development. There was continuity of 

concept and design, resulting in the development 
x v

P R E FA CE

xiv Privatizing Military Family Housing

Figure P-1. Some of the members of the RCI team gathered at Fort Belvoir, Va., in 2007. 

From left to right: Tony Tramp, Randy Shed, Clarke Howard, Rhonda Hayes, Barbara Sincere, 

Holly Guzowski, Ian “Sandy” Clark, Sara Streff, Don Spigelmyer, and Tom Kraeer (kneeling). 

Courtesy of RCI Office.

Figure P-2. Several RCI team members making the morning 

train commute to New York City to meet with consultants at 

Lehman Brothers in 2006. 

Courtesy of Randy Shed.

of communities that not only fostered neighborhood interaction, but that gave the Soldiers a sense 

of pride in where they lived.

RCI had the right people. RCI had the 

visionary leadership of Sandy Apgar at the helm as 

Assistant Secretary of the Army for Installations 

and Environment during the initiation of the program. Apgar quickly realized that the Army’s traditional approach to project management would not 

work in this new effort. In the private sector, time 

is money and the Army needed to develop a team 

that could quickly respond to private-sector inquiries and that had direct access to Army leaders 

and decision makers. He moved the RCI program 

from the bureaucratic, multi-layered trenches of 

the Army staff directly to his own office. While 

this move was certainly one of the secrets to RCI’s 

success, it was its out-of-the-box thinking, which 

would be seen repeatedly over the first 12 years of 

the program, that would make the biggest difference. The Secretariat was supposed to provide 

policy guidance and oversight; programs were not 

supposed to be executed directly from the Secretariat. As the RCI program gained more and more 

success, the outcry to move it out of the Secretariat 

became more and more pronounced. To their 

credit, Assistant Secretaries for Installations and 

Environment Apgar, Fiori, Prosch, Eastin, Hansen, 

and Hammack continued to insist on keeping 

the RCI program in the Secretariat. In fact, when 

the issue was presented to LTG Lynch, the Assistant Chief of Staff, Installation Management, and 

Assistant Secretary Hammack for consideration in 

November 2010, LTG Lynch’s response was, “If it 

ain’t broke, don’t fix it.”

While the various Secretaries of the Army for 

Installations and Environment put their stamp on 

the RCI program in different ways, it was the RCI 

team itself that was the lifeblood of the program.

Ted Lipham and Don Spigelmyer, sequentially, 

were the two RCI program directors who fought 

the early battles, followed in 2007 by Rhonda 

Hayes as Director of Capital Ventures in the Army 

Secretariat and Ivan Bolden as Chief of the Public Private Initiatives Division of the Office of the 

Assistant Chief of Staff for Installation Management. Other team members integral to the success 

of the RCI program were Ian “Sandy” Clark, who 

championed RCI’s portfolio and asset management program, and Mark Connor from the Office 

of General Counsel, who provided legal advice and 

oversight for all the RCI projects. These stalwarts of 

the program were supported by a group of hardworking program managers, who were dedicated to 

process improvement and who consistently worked 

above and beyond normal duty hours in support of 

the RCI mission.

A final component of the RCI team was the 

private-sector real estate and financial consulting firm contracted to support the RCI effort, 

Jones Lang LaSalle. Jones Lang LaSalle assisted 

the Army with business concepts, negotiation of 

deal terms, and real estate advisory services in an 

outstanding manner throughout the first 12 years 

of the program. The company was considered an 

integral member of the RCI team, working side by 

side with the government program managers at 

every negotiation and every project closing. They 

were completely invested in ensuring that the 

Army’s interests were represented in every transaction. The Army’s success with the RCI program is 

attributable in no small measure to the dedication 

of the consultants of Jones Lang LaSalle and, while 

it is impossible to name them all, Barry Scribner, 

Dean Stefanides, Tim McGarrity, Francis Stefanski, 

Jennifer Hill-Leineweber, David Hoffman, Shannon Fisher, and David Ross were key contributors 

to that success.

Finally, the developers who participated in the 

RCI program and made it so successful must be 

acknowledged. They all entered into the program 

solicitations as business ventures, but each and 

every one of them approached their projects as 

much more than just another business deal. The 

nature of the work and the sacrifices made by Soldiers struck a chord with them, and the development community ended up providing much more 

than development and property management.

Developers established charities and foundations, 

provided family member scholarships, constructed 

parks and war tributes, and participated in 
xvii

P R E FA CE

xvi Privatizing Military Family Housing

homecoming celebrations and memorial services.

Many of these contributions were made without 

fanfare or recognition. They were made because of 

the true spirit of partnership and patriotism fostered by working for Soldiers and their Families on 

a daily basis. The developers have been our business partners over the past 12 years, but they have 

been true supporters of the Army Quality of Life in 

ways that we never envisioned. We truly appreciate 

their ongoing support.

The RCI program was introduced at the 

right time. The Army housing inventory was 

in dire need of major renovation and replacement. There was a backlog of more than $6.5 

billion in maintenance, repair, and improvement 

requirements, not to mention a significant deficit 

of housing at a number of installations. The timing 

was right not only in terms of the need, but also 

in terms of the private-sector financial markets. 

Between 1999 and 2008, when the majority of RCI 

projects received private-sector funding, interest 

rates were at all-time lows. The underwriting criteria for projects were more favorable than they had 

ever been, a factor that ultimately contributed to 

the demise of the credit markets and a significant 

restriction of credit post-2008, but which allowed 

the projects to borrow significantly more money 

than had been originally envisioned.

Additional funds led to additional development and a better quality of life for Soldiers and 

their Families. And while Soldiers are always 

deserving of a quality of life commensurate with 

those they serve and protect, this is never more 

true than during wartime. We had no idea when 

RCI started that the housing would become critical to Soldiers’ peace of mind as they deployed for 

extended periods of time to Southwest Asia during 

Operation Desert Storm, Operation Iraqi Freedom, 

and Operation Enduring Freedom. Due to the RCI 

program, they could take some comfort in the fact 

that their Families were in well-maintained homes 

under the care of professional property management teams who not only took care of the homes 

but provided support for the Families under their 

roofs. Under the RCI program, the Army was able 

to be a limited member of the ownership entity, 

allowing it to realign the housing inventory to 

meet mission change initiatives such as Army 

Modular Force, Grow the Army, and Base Realignment and Closure.

Notwithstanding all the success of the RCI 

program and the positive impact that it has had on 

the Army mission and the Soldier Quality of Life, 

it would have been negligent of us not to chronicle 

the challenges encountered from inception to completion of the initial development periods. Don 

Spigelmyer recognized that the RCI story was one 

that might never be repeated again and initially 

commissioned the writing of this history. Historical Research Associates, Inc., has done a remarkable job distilling mountains of material and 

conducting numerous interviews over the past few 

years in an effort to be as comprehensive in telling 

the RCI story as possible. With the support of the 

United States Army Corps of Engineers, Historical 

Research Associates has produced a memorable 

and informative book, one that should serve as 

both a history and a learning tool for those seeking 

to implement similar programs in the future.

While the success of the RCI program has been 

unparalleled during the first 12 years of the program, 

the next 40 years will be the true test of its success.

The program is envisioned as self-sustaining; it has 

the ability to take down additional debt, if needed, 

and to draw on accounts funded by continual 

reinvestment of revenues over time in order to fund 

future renovation and construction requirements.

If allowed to continue in the manner envisioned by 

those who pioneered the program, there is no doubt 

that RCI’s success would continue for decades.

Unfortunately, the rules are already beginning to change. Government bureaucrats seek to 

change the rules that are the cornerstones of the 

program. In an effort to protect the government 

from perceived budgetary obligations, rules are 

now implemented that would have precluded 

the very existence of the program had they been 

interpreted in this manner during RCI’s inception.

Policymakers who never totally supported the program are now moving toward an interpretation of 

existing laws and regulations based on misperceptions of government liability in the deal structures.

Rather than move toward interpretations of rules 

that would harm an obviously successful program, 

why not think outside the box? Learn how the 

program is really structured. Use it as a template 

for future success.

In order for this to happen, the stars would have 

to align—we would need the right program and the 

right people at the right time. Can such a combination occur twice? For the sake of the RCI program 

and other future programs like it, let’s hope so.

Rhonda Hayes

Director, Capital Ventures

Office of the Assistant Secretary of the Army,

Installations, Energy & Environment

September 2011

Figure P-3. RCI team members socializing together at a 2009 Professional Housing Management Association 

Hospitality Night. From left to right: Todd Hunter, Rhonda Hayes, Nordin Perez, and Barbara Sincere. 

Courtesy of Rhonda Hayes.
xix

Acknowledgments

J

ust as the Residential Communities Initiative 

(RCI) program was not the product of a single 

individual, the preparation of this history has 

involved hard work and assistance from a number 

of key people. We especially would like to thank 

Bill Mysliwiec in the U.S. Army Corps of Engineers 

(USACE), who coordinated our visits to the Army 

Secretariat and who answered myriad questions for 

us, and Rhonda Hayes in the Office of the Assistant 

Secretary of the Army for Installations, Energy & 

Environment, who took the time to answer many 

queries and to ensure that we had the assistance 

that we needed in preparing this history. Hayes 

also chaired the review committee that painstakingly read through and commented on several 

drafts of the manuscript and helped push the 

project through to completion. Ian “Sandy” Clark 

provided us with much helpful information on the 

Portfolio and Asset Management program, as well 

as the reorganization of the RCI Program Office 

in 2007. Dean Stefanides, former head of Army 

Housing and a current consultant with Jones Lang 

LaSalle, provided us with a wealth of information, 

documents, and photographs. Don Spigelmyer, 

former Executive Director of the RCI Program, has 

been a strong supporter of this history from the 

start and, even in his retirement, has taken time 

to review materials and answer questions. Clark, 

Stefanides, and Spigelmyer served with Hayes on 

the manuscript review committee and contributed valuable corrections, additions, and personal 

perspectives for the final drafts of the manuscript. 

Matthew Parks, USACE, spent time getting us 

access to documents on the RCI Program Office’s 

Share Drive, an invaluable source of material. Ivan 

Bolden helped facilitate communication with 

several installations, while Sandy Apgar, former 

Assistant Secretary of the Army for Installations 

and Environment, provided us with important 

documents and generously gave us time to discuss 

the RCI program with him. William Armbruster, 

former Deputy Assistant Secretary of the Army 
x x Privatizing Military Family Housing

for Privatization and Partnerships, also served as a 

champion of this history and as a source of much 

information.

We thank all of those who took time out of 

their busy schedules to provide their perspective 

on the RCI program through oral history interviews. The list of individuals is too long to mention 

here, but a full list of interviewees is included in 

our bibliography. To all of them we want to say: 

Thank you for taking an interest in this history and 

sharing your time and thoughts with us.

Many individuals at the installations that 

we visited facilitated our research and made our 

stays more pleasant. Unfortunately, it was not 

possible in the course of this history to visit each 

installation. Instead, with the help of the RCI 

Program Office, we targeted several that we felt 

were representative of the RCI experience. Particular appreciation is due to Dean Quaranta at Fort 

Carson, Robert Erwin at Fort Hood, Laura Cole at 

Fort Detrick, Robert Boisvert at Fort Lewis, Aimee 

Stafford at Fort Meade, Vicki Davis at Fort Belvoir, 

Pat Baker at Fort Sam Houston, Pat Kelly and Gay 

Rearick at the Presidio of Monterey, and Ladye 

Blair at Fort Irwin, who helped coordinate our 

trips, including setting up appointments for oral 

history interviews.

Many of the partners at these installations 

took us on tours of the RCI housing and provided 

us with photographs and other graphics. Angela 

French Marcum with Picerne Military Housing at 

Fort Meade; Casey Nolan and Dale Andrews with 

Clark Pinnacle at Fort Belvoir; Kimberlee Schreiber 

with Equity at Fort Lewis, Allyson McKay and Ron 

Bennett with Lincoln Family Housing at Fort Sam 

Houston; Rick Wimer, Gina Slater, and Jodi Winters with Clark Pinnacle at Fort Irwin; Bob Shepko 

with Balfour Beatty Housing at Fort Detrick; and 

Mack Quinney and Jim Switzer with Actus Lend 

Lease at Fort Hood all had a hand in allowing us to 

see the developer’s side of the RCI story. In addition, thanks go to the following individuals with 

RCI partner firms who provided us with the majority of the photographs, maps, and other illustrations that have helped make this a high-quality 

publication: Dianne Borges, Balfour Beatty Communities Group; James Cicchini, Lincoln Property 

Company; Amanda Filipowski, Picerne Military 

Housing; Cindy Gersch, Lend Lease Group; and 

Hallie Groff, Clark Realty Capital.

We also wish to thank William Baldwin, a 

retired historian with the USACE Office of History, and John Lonnquest, Chief, Office of History, 

USACE, who took over as our project consultant 

after Baldwin retired. The foremost historian on 

Army housing, Baldwin provided us with helpful 

comments on initial draft chapters of this history, 

served as a good sounding board for ideas, and 

gave us many useful documents. We are very grateful for all that he did. Lonnquest did much of the 

heavy lifting to see this manuscript through several 

review drafts and coordinated the various tasks for 

the final editing, layout, and publication. Likewise, 

thanks to Carren Kaston, an independent editor 

working under contract for USACE, who edited a 

preliminary draft and the final manuscript. Finally, 

thanks to Doug Wilson, editor at the Office of 

History, who joined the team for the review and 

production phases and coordinated all of the final 

editing and design decisions necessary to carry the 

book to completion.

Paul Sadin and Matthew C. Godfrey

Historical Research Associates, Inc.
xxii Privatizing Military Family Housing xxiii

TIM E LIN E

Evolution of the MHPI Programs (by calendar year through June 1, 2010)

1996

MHPI 

authorized 

in National 

Defense Authorization Act; 

privatization of 

FH and UPH 

authorized for 

all services.

Army leadership decides to 

move forward 

with CVI for 

FH but retains 

UPH as “core 

mission” 

function.

U.S. Army 

Corps of Engineers issues 

a Request for 

Proposal (RFP) 

to privatize 

all FH at 

Fort Carson, 

Colorado—

Army’s first CVI 

project.

1992

Army Housing Division (AHD) commissions 

Engineer Strategic Studies Center (ESSC), U.S. Army 

Corps of Engineers, to develop a strategic plan for 

Family Housing (FH) and Unaccompanied Personnel 

Housing (UPH).

1993

ESSC study completed. As a result, AHD develops 

a three-pronged strategy for housing: (1) Plus- up 

(added) funding; (2) Demolition; and/or (3) Transition of FH and UPH into business-like operations.

1995

First family housing privatization legislation passed, 

authorizing Navy partnership to build/privatize housing off base at Corpus Christi, Texas.

OSD Housing establishes a team to evaluate privatization cases and establish processes.

AHD creates CVI to jumpstart Army’s privatization 

in anticipation of authorizing legislation.

1994

Exchange program launched with Australian 

Defense Housing Authority, drawing on Australian 

experience with housing privatization to prepare 

U.S. Army Housing for future transition to “private” 

business operations.

2004

Fort Irwin UPH 

project closes 

financially.

Fort Polk, 

Louisiana, 

FH project is 

first project 

with both LLC 

funding and a 

loan guarantee to close 

financially.

President’s 

Management Agenda 

upgrades MHPI 

to successful 

“green” status.

UPH Privatization Task Force 

Study finds that 

UPH privatization, in selected 

cases, is financially feasible 

and desirable.

1997

AHD obtains 

Army leadership approval 

to develop an 

initiative to 

privatize FH in 

foreign areas.

CVI is 

approved by 

Commanding Generals 

at Fort Hood, 

Texas, and 

Fort Stewart, 

Georgia.

The Office of 

Management 

and Budget 

(OMB) issues 

“scoring” guidance to OSD on 

MHPI projects 

via the “Raines 

Memo.”

2005

Ceiling caps for 

scoring $ for 

MHPI projects 

eliminated by 

Congress.

Fort Carson 

project converts 

from CVI to 

RCI LLC.

PAL program, 

utilizing 

successful 

RCI model, 

approved by 

Army; RFQ 

issued.

RCI and AAFES 

officially 

agree to work 

together on 

retail in RCI 

projects.

OMB grants 

extension 

through FY 

2010 on use of 

LLCs for FH/

UPH.

Transformation study is 

completed 

outlining 

requirements 

that the Army’s 

restructuring of 

RCI places on 

projects.

1998

CVI develops 

program for 

42 installations; Congress 

views scope as 

too aggressive for “pilot” 

program.

ASA, I&E 

becomes 

champion of 

Army MHPI; 

Residential 

Communities 

Initiative (RCI) 

established; 

Request for 

Qualifications 

(RFQ) solicitation becomes 

preferred 

process.

Secretary of the 

Army decides 

to proceed 

with RFP at 

Fort Carson; all 

other solicitations will be 

RFQ.

Fort Carson 

RFP reissued.

2006

Hawaii RCI 

project receives 

a 2005 “Deal 

of the Year” 

award from 

Project Finance

magazine.

GAO and the 

U.S. Military 

Academy 

independently 

validate effectiveness of RCI 

PAM program.

Congress 

approves Unaccompanied 

Personnel 

Housing (UPH) 

project concept 

at Fort Drum, 

New York.

UPH at Forts 

Bragg, Stewart, 

and Bliss 

approved, 

taking UPH 

program to 

1,804 accommodations.

The first Lodging Development and Management Plan is 

awarded.

1999

Fort Carson, 

Colorado, 

operations/

assets are 

transferred to 

a privatization 

partner.

The Army 

issues an RCI 

RFQ for Fort 

Hood, Texas.

RFQs for Fort 

Lewis, Washington, and 

Fort Meade, 

Maryland, 

follow.

2007

Fort Drum 

UPH project closes 

financially.

RCI/PAL offices 

reorganized.

Asset Management is 

transitioned to 

the Office of 

the Assistant 

Chief of Staff 

for Installation 

Management, 

and the PublicPrivate Initiatives Division is 

established.

ODASA, 

I&H CVD 

team formed 

for Policy, 

Portfolio, and 

Transaction 

Management.

Fort Bragg UPH 

project closes 

financially.

2000/2001

The first 

Community 

Development 

and Management Plan is 

completed at 

Fort Hood, 

Texas.

The Army’s RCI 

program is officially scoped at 

20 installations.

OMB scoring 

report on Fort 

Hood approved 

after considerable discussion.

Fort Hood project transferred 

to limited 

partnership 

consisting of 

Actus Lend 

Lease (privatesector managing member) 

and Army.

2008

Review of 

viability of barracks privatization mandated 

by Congress.

American 

Eagle’s interests 

in Fort Leonard 

Wood, Missouri, project 

sold.

Army RCI is 

awarded the 

Urban Land 

Institute Award 

for Excellence.

Army RCI is 

awarded the 

Presidential 

Award for 

Management 

Excellence.

Sec 2885 of 

NDAA legislates oversight 

for MHPI 

projects.

Fort Stewart 

UPH project closes 

financially.

Fort Bliss does 

not execute due 

to markets. Its 

UPH RCI program shrinks to 

1,394 accommodations.

2002

RCI Portfolio 

and Asset 

Management 

(PAM) program 

initiated.

President’s 

Management 

Agenda published; MHPI 

initially rated 

“yellow.”

Forts Lewis and 

Meade projects 

transferred 

to LLCs; 

pilot projects 

complete; 

RCI expands 

to most U.S.

installations.

RCI headquarters allowed to 

plan for small 

UPH project 

as part of Fort 

Irwin, California, FH project.

2009

GAO publishes 

report recommending that 

the services 

exercise greater 

management of 

and communication on their 

activities on 

capital markets.

I&H team 

reorganized 

into Capital 

Ventures 

Directorate.

PAL Group A 

project closes 

financially 

(4,173 rooms).

Army completes report 

on UPH 

Privatization 

in response to 

congressional 

inquiry.

Aberdeen Proving Ground, 

Maryland, 

closes financially — the 

last planned 

RCI project.

CVD continues 

to restructure 

deals due to 

collapse of 

capital markets.

2003

RCI privatizes 

first multi-service MHPI project, at Presidio 

of Monterey/

Naval Postgraduate School, 

California.

Army launches 

its Privatization of Army 

Lodging (PAL) 

program; 17,000 

rooms at end 

state.

Army Chief 

of Staff states 

RCI is “not only 

more efficient 

... but we’re 

getting a very 

high-quality 

product ... for 

Soldiers and 

Families.”

RCI renegotiates Fort 

Carson deal to 

allow utility 

charges; caps 

the returns to 

the developer.

June 1, 2010

OACSIM 

interested 

in looking at 

additional sites 

where there 

may be a need 

for housing for 

senior single 

soldiers.

Barracks Privatization Initiative (BPI) due 

diligence done 

at six sites.

BPI business 

case analyses 

continue, but 

ACSIM decides 

not to pursue 

BPI where there 

is a net cost to 

the Army.

Congressional 

Report on 

PAL Group A 

submitted—

Army awaits 

go-ahead to 

move forward 

with Group B.

Group A 

receives North 

America Deal 

of the Year 

award from 

Project Finance

magazine.

Total Number of Army MHPI End-state Privatized Accommodations

100,000

10,000

20,000

30,000

40,000

50,000

60,000

70,000

80,000

90,000

91,278

Timeline

1 1 1 3 4 4 4 10 10 FH UPH PAL 1 2 4 10 21 26 35 36 41 44 44

# of Installations Privatized

*We utilize the phrase Army “privatization programs” to refer to all three initiatives: FH, UPH, and PAL. 

References to “RCI” include both FH and UPH.
xxiv Privatizing Military Family Housing xxv

ABBR E VIATIONS

AAFES Army and Air Force Exchange Service

ACSIM Assistant Chief of Staff for Installation Management

ADA Americans with Disabilities Act

AFB Air Force Base

AFC Army Family Covenant 

AFH Army Family Housing

AHA Army Housing Authority

AMF Army Modular Force 

ASA, I&E Assistant Secretary of the Army, Installations and Environment

ASA, IE&E Assistant Secretary of the Army, Installations, Energy & Environment

BAH Basic Allowance for Housing

BAQ Basic Allowance for Quarters

BBC Balfour Beatty Communities

BEQ Bachelor Enlisted Quarters

BOP Business Occupancy Program

BOQ Bachelor Officers Quarters

BPI Barracks Privatization Initiative

BRAC Base Realignment and Closure

CBO Congressional Budget Office

CDMP Community Development and Management Plan

CGO Company Grade Officer

CICA Competition in Contracting Act

CMP Contract Management Procedures

CNU Congress for the New Urbanism

CR&R Capital Repair and Replacement

CVD Capital Ventures Directorate

CVI Capital Venture Initiatives

DASA, E&P Deputy Assistant Secretary of the Army, Energy and Partnerships

DASA, I&H Deputy Assistant Secretary of the Army, Installations and Housing

DASA, IH&P Deputy Assistant Secretary of the Army, Installations, Housing & Partnerships

DASA, P&P Deputy Assistant Secretary of the Army, Privatization and Partnerships

DOD Department of Defense

DVQ Distinguished Visitor Quarters

EA Environmental Assessment

EPA Environmental Protection Agency

EUL Enhanced Use Lease

FAR Federal Acquisition Regulation

FCAHP Fort Carson Affordable Housing Program

FGO Field Grade Officer

FHA Federal Housing Administration

FLCC Fort Lee Commonwealth Communities

FORSCOM U.S. Army Forces Command

FY Fiscal Year

GAO General Accounting Office; Government Accountability Office after 2004

GBE Government Business Enterprise

GFOQ General/Flag Officer Quarters

GIC Guaranteed Investment Contract

GTA Grow the Army

HMA Housing Market Analysis

HPC Historic Properties Component

HQDA Headquarters, Department of the Army

HRSO Housing Revitalization Support Office

HVAC Heating, Ventilation, and Air Conditioning

IDP Initial Development Period

IMA Installations Management Agency; Installation Management Command 

(IMCOM) after 2006

IMS Installation Management Study

Abbreviations
xxvi Privatizing Military Family Housing xxvii

ABBR E VIATIONS

IPT Integrated Process Team

ISR Installation Status Report

ISSA Interservice Support Agreement

JLL Jones Lang LaSalle 

JNCO Junior Non-commissioned Officer

LEED Leadership in Energy and Environmental Design

LLC Limited Liability Company

LMI Logistics Management Institute

LP Limited Partnership

MACOM Major Army Command

MDW Military District of Washington

MER Minimum Experience Requirement

MHPI Military Housing Privatization Initiative

MILCON Military Construction

MoD Ministry of Defense (United Kingdom)

MSP Modified Scope Plan

MWR Morale, Welfare and Recreation

NAF Non-Appropriated Fund

NASA National Aeronautics and Space Administration

NEPA National Environmental Policy Act

NCO Noncommissioned Officer

NHPA National Historic Preservation Act

NOI Net Operating Income 

NORAD North American Aerospace Defense

NPS Naval Postgraduate School

NTC National Training Center

OACSIM Office of the Assistant Chief of Staff for Installation Management

OASA, I&E Office of the Assistant Secretary of the Army, Installations and Environment

OASA, IE&E Assistant Secretary of the Army, Installations, Energy & Environment

ODASA Office of the Deputy Assistant Secretary of the Army

ODP Out-Year Development Period

OGC Office of General Counsel

OMB Office of Management and Budget

OOP Out-of-Pocket

OPM Office of Personnel Management

OSD Office of the Secretary of Defense

OTJAG Office of the Judge Advocate General

PA Programmatic Agreement

PADD Parents Against Disability Discrimination

PAL Privatization of Army Lodging

PAM Portfolio and Asset Management

PFI Private Finance Initiative

PHMA Professional Housing Management Association

PM Program Manager

POM Presidio of Monterey

PVT Private (military rank)

RCI Residential Communities Initiative

RCO Residential Communities Office

RFP Request for Proposals

RFQ Request for Qualifications

RFTA Reserve Force Training Area

RIF Reduction in Force

ROA Right of Access

ROTC Reserve Officers’ Training Corps

SAF/IEI Deputy Assistant Secretary of the Air Force for Installations

SGT Sergeant (military rank)
xxviii Privatizing Military Family Housing 1

SHPO State Historic Preservation Office

SNCO Senior Non-commissioned Officer

SOP Standard Operating Procedures

SPiRiT Sustainable Project Rating Tool

SSA Source Selection Authority

SSAC Source Selection Advisory Council

SSEB Source Selection Evaluation Board

SSEP Source Selection Evaluation Plan

SSG Staff Sergeant (military rank)

SUH Senior Unaccompanied Housing 

TCE Trichloroethylene

TRADOC U.S. Army Training and Doctrine Command

UPH Unaccompanied Personnel Housing

USACE U.S. Army Corps of Engineers

USAMSCoE U.S. Army Maneuver Support Center of Excellence

USMHBC U.S. Military Housing Benefit Corporation

VCSA Vice Chief of Staff of the Army 

VHA Variable Housing Allowance

WRAMC Walter Reed Army Medical Center

Introduction

I

n 2002, U.S. Representative Chet Edwards (D–

Texas) arrived at Fort Hood, Texas, to examine 

new family housing that had been constructed 

at the installation as part of the U.S. Army’s Residential Communities Initiative (RCI). The RCI was 

an effort by the U.S. Army to use the legal authority granted to it by Congress in 1996 to work with 

private developers to construct, operate, maintain, 

and manage military family and unaccompanied 

(that is, single) housing. Also home to a pilot project for the smaller privatization initiative that preceded the launch of the RCI program, Fort Hood 

was one of the first installations to obtain new RCI 

family housing. As Congressman Edwards gazed 

at the pristine three- and four-bedroom homes, he 

noticed one of the families that was about to move 

into the new homes. “How is it?” Edwards asked 

the mother, the wife of a sergeant stationed at Fort 

Hood. “This is so incredible for my family and our 

children,” the woman replied. “It is not only an 

improvement in our quality of life. It says that our 

country respects our family’s sacrifice.”1

The Fort Hood example highlights how far the 

Army had come in just a few years and reveals the 

enormous impact that RCI had—not only on new 

military housing construction, but also on soldiers’ 

sense that the nation recognized their sacrifices 

and wanted to ensure that they and their families 

were provided with comfortable, safe, and affordable homes. From its inception, RCI’s goal was to 

improve soldiers’ quality of life, both in order to 

increase retention and to show soldiers that the 

Army recognized the sacrifice that they and their 

families were making for their country. With these 

noble ideals, RCI went forward, although its development was by no means free of obstacles.

RCI was not the first experiment with privatization for the Army, or even for the Department 

of Defense (DOD). Since the late 1940s, Congress 

had enacted several laws that allowed the military 
3

introdu c tion

2 Privatizing Military Family Housing

to partner with private industry to build housing 

on installations. Even though these endeavors all 

produced some housing, they had varying levels of 

success and most of them floundered after just a 

few years. RCI, however, would succeed where these 

other initiatives had failed. Why? This history seeks 

to answer that question by exploring the leadership 

of the program, other programs that led up to RCI, 

the context in which RCI appeared and evolved, the 

program’s response to challenges along the way, and 

the sheer necessity for it to succeed.

The RCI program was the product of several 

years of debate and brainstorming by the Army, 

other military services, the DOD, and Congress 

about the DOD’s growing and severe family housing problem. As more and more service members 

married and had children, and as expectations of 

housing size and quality changed, the services had 

both a significant need for new construction to 

keep up with rising demand for on-post housing 

and a need for renovation of more than 200,000 

preexisting homes. The DOD estimated that it 

would take 30 to 40 years and approximately $20 

billion to fix these problems, but it had neither 

the money nor the time for the renovations.

2

 Thus, 

Congress passed the Military Housing Privatization 

Initiative (MHPI) as part of the National Defense 

Authorization Act of 1996, providing the DOD 

with the tools to partner with the private sector to 

improve its severely inadequate housing.

Even as Congress still debated the MHPI bill, 

the Army first tried to implement these tools under 

the Capital Venture Initiatives (CVI) program in 

1995, but initial progress was slow. When Mahlon 

“Sandy” Apgar IV became Assistant Secretary of 

the Army for Installations and Environment in 

1998, he brought with him a robust vision of family 

housing and christened his plan the Residential 

Communities Initiative. From that point forward, 

the housing privatization program progressed 

rapidly. By the end of September 2010, the Army 

had launched 34 privatized family housing projects 

encompassing 44 installations. (Some projects 

involved multiple installations.) In the process, the 

Army had leveraged nearly $1.2 billion of appropriated funds into more than $11.5 billion worth of 

new and renovated houses.

3

At every installation, soldiers need housing. In 

accordance with DOD policy, the Army relied on 

the private sector to provide housing outside of the 

gates for roughly two-thirds of its families, while 

attempting to house the remaining one-third on 

base. Overall management of the housing function 

fell to the Army Housing Division within the Office 

of the Assistant Chief of Staff for Installation Management (OACSIM).

4

Figure I-1. Residents behind family apartments renovated during RCI development at Fort Hood, Tex. 

Courtesy of Lend Lease.

Figure I-2. Map of RCI project sites as of January 11, 2011. 

Courtesy of RCI Office.

F

Request for 

Proposal

(RFP)

Ft Lewis

Ft Carson

Ft Bliss / White Sands MR

Ft Hood

Ft Sam Houston

Ft Leavenworth

Ft LeonardWood

Ft Drum

West Point

Ft Hamilton

Carlisle Brks / Picatinny Ars

Aberdeen PG

Ft Meade

Ft Belvoir

Ft Eustis / Story

Ft Lee

Walter Reed / Ft Detrick

Ft Riley

Ft Folk

Ft Benning

Ft Knox

Ft Campbell Ft Bragg

Ft Jackson

Ft Gordon

Redstone Arsenal

Ft Rucker

Ft Stewart / Hunter AAF

Ft Still

Presidio of Monterey / Naval PS

Ft Irwin / Moffet / Parks

Ft Huachuca / Yuma PG

Fts Wainwright / Greely

Ft Shafter / Schofield Brks

On the installations themselves, installation 

commanders—at least before privatization—had 

charge of housing their soldiers, according to the 

policies and procedures set forth by the OACSIM 

and the Office of the Assistant Secretary of the 

Army for Installations and Environment (OASA, 

I&E). Before privatization, each installation had a 

housing office that helped soldiers secure housing, whether on post or off post. The Directorate 

of Public Works on an installation had general 

responsibility for maintaining on-post housing, 

including responding to service requests. When 

any new housing had been necessary, the Army 

had requested funding through Congressional 

RESIDENTIAL COMMUNITIES INITIATIVE

44 Sites (34 Projects), 4 with Senior Soldier UPH

85,424 Houses and 1,394 Single Soldier Accommodations

Northeast

SOUTHEAST

WEST

PACIFIC
5

introdu c tion

4 Privatizing Military Family Housing

Military Construction appropriations and designated responsibility for the planning and construction to the U.S. Army Corps of Engineers, which 

generally contracted with private parties for the 

design and construction of the housing. With the 

advent of the privatization program, many of these 

on-post family housing functions shifted to private 

developers, who partnered with the Army to construct and manage on-post family housing.

Implementing privatization as the solution to 

the Army’s family housing woes was not easy. From 

the beginning of the RCI program in 1996 into the 

twenty-first century, proponents of privatization, 

including the Assistant Secretary of the Army for 

Installations and Environment (ASA, I&E) and the 

RCI Program Office, faced opposition and doubt 

from internal and external stakeholders. These 

included garrison commanders, as well as some 

within the OACSIM, Army headquarters, and 

Congress. This was a new way of doing business 

and change was not easy for Army leaders and congressional members to accept. That the Assistant 

Secretary’s office and the leaders of RCI persevered 

is a testament to their belief in the program, their 

own leadership, and the strength of RCI itself.

The following pages detail the genesis of the 

privatization idea, its predecessors, the implementation of the RCI program, and the program’s successes and setbacks along the way. The homes that 

Congressman Edwards surveyed at Fort Hood in 

2002 did not begin with the floor plan; rather, they 

were the culmination of several years of experimentation, brainstorming, bureaucratic blood, and 

interoffice sweat. It is that story that this history 

seeks to tell.

Endnotes to the Introduction

1. Military Construction Appropriations for 2005 Hearing, 

3 March 2004, Transcript, Folder: Congress (including 

subfolders), Subfolder: FY 05 Congressional Hearings, 

Privatization Hearing Documents - Mar 04, Share Drive 

database, RCI Program Office, Crystal City, Va. Hereafter 

cited as RCI Office. 

2. House Subcommittee on Military Construction Appropriations of the Committee on Appropriations, Military 

Construction Appropriations for 1998: Hearings Before 

a Subcommittee of the Committee on Appropriations, 

House of Representatives, 105th Cong., 1st sess., 1997, 179.

3. U.S. Army, “Military Housing Privatization Initiative (MHPI): Porfolio and Asset Management Quarterly 

Porfolio Report for the Quarter Ended 30 September 2010,” 

document provided by Rhonda Hayes, Capital Ventures 

Directorate, Office of the Assistant Secretary of the Army, 

Installations and Environment (ASA, I&E), 11.

4. “Army Family Housing Master Plan,” n.d., Folder: GSA 

Award Package 2006, Subfolder: Previous RCI ACSIM 

Submission, Share Drive database, RCI Office; U.S. Army 

Training and Doctrine Command, “About TRADOC,” 

http://www.tradoc.army.mil/about.htm; “The Forces 

Command Vision,” www.forscom.army.mil; and Paul 

Wolfowitz, Memorandum for Secretaries of the Military 

Departments, Directors of the Defense Agencies, 8 January 2003, Documentum database, RCI Office.

Figure I-3. Two family housing residents in their neighborhood at Fort Jackson, S.C. 

Courtesy of Balfour Beatty Communities.
7

Figure 1-1. Army housing for officers constructed 

under the Capehart housing program in 1959.

Courtesy of History Office, USAMSCoE.

CHAPTER OnE

Military Family Housing Privatization

Measures Prior to 1996

F

aced with a severely deteriorating and dwindling stock of military housing for members 

of the U.S. armed services, Congress passed 

a law in 1996—known as the Military Housing 

Privatization Initiative (MHPI)—that allowed the 

U.S. Department of Defense (DOD) to go outside 

of the military to remedy the impending crisis. 

The law specified that the armed services could 

use innovative means to engage private developers for the construction and operation of military 

housing. The act provided various means—such 

as direct loans from the government to private 

contractors, the formation of limited partnerships, 

and the conveyance or leasing of DOD property to 

private entities—to entice the private sector into 

partnering with the DOD in the construction, 

renovation, operation, and management of military family and unaccompanied (single) housing. 

The U.S Army used the draft authorities in 

the MHPI bill and the subsequent legal powers 

provided in the MHPI legislation to establish the 

Capital Venture Initiatives (CVI) in 1995 and, subsequently, the Residential Communities Initiative 

(RCI) in 1998. Passage of the MHPI act, however, 

did not occur in a vacuum; instead, the military 

made several attempts to engage the private sector 

in family housing development prior to 1996 and 

conducted several studies in the early 1990s making recommendations as to how military housing 

could be improved. This chapter discusses the history of these different endeavors in order to explain 

the background and context of the MHPI. Tracing 

this background is useful for understanding how 

the MHPI led to the RCI program.

Family Housing Prior to the 1980s

Because the Third Amendment to the U.S. 

Constitution specifically prohibits the quartering of soldiers in private homes without owner 

consent, the Army has had the responsibility of 

housing its soldiers since the founding of the 

United States. For much of the Army’s history, 
8 Privatizing Military Family Housing 9

CHAPT ER o n e

Military Family Housing Privatization Measures Prior to 1996

Figure 1-2. Shuttered family housing at Camp Parks, Calif., pre-RCI.

Courtesy of Clark Realty Capital. 

Figure 1-3. Senator Kenneth Wherry of Nebraska, sponsor of 

the Wherry housing legislation.

Courtesy of U.S. Senate Historical Office.

enlisted personnel were usually single men who 

did not require family housing. Officers, however, 

were more likely to be married, so the Army provided family housing, often on a rudimentary and 

unsystematic basis. Congress funded this housing 

through military appropriations, but such appropriations were spotty at best during the nineteenth 

century, and matters did not improve much in the 

early twentieth century. By the late 1920s, as U.S. 

Army Corps of Engineers (USACE) historian William C. Baldwin points out, national publications 

were decrying the poor conditions of Army housing, calling the situation a “national disgrace.”1

The Army periodically made attempts to 

improve its housing. In 1927, it received authorization from Congress to construct barracks and hospitals, using funds generated by the sale of World 

War I military reservations. It also turned some 

World War I temporary mobilization buildings 

into family housing. Likewise, President Franklin 

D. Roosevelt’s New Deal provided some stimulus 

to the construction of new Army housing. Yet, a 

concerted effort to provide more and better housing for Army personnel did not occur until after 

the end of World War II, when concerns about the 

Soviet Union and the Korean conflict led to a larger 

peacetime force than the Army had ever seen.2

Though faced with a shortage of suitable housing 

for this larger force, the Army committed to ensuring that its troops had proper quarters.

One option that the Army had used historically was providing officers with a Basic Allowance for Quarters (BAQ), money that would allow 

them to procure housing in the private sector. At 

first, only commissioned officers were eligible to 

receive BAQ funds, but the Career Compensation 

Act of 1949 changed the eligibility rules so that 

non-commissioned officers with at least seven 

years in the military could also receive the BAQ. 

The following year, the Dependents Assistance Act 

of 1950 extended the housing allowance to enlisted 

soldiers with dependents.3

 Nonetheless, the Army 

continued to have as its goal, in the words of one 

official in 1948, “to provide quarters on posts for all 

authorized military personnel.”4

Wherry Program

Facing this situation and wary of spending the 

large amounts of money necessary to construct 

new housing through the traditional military 

construction method (whereby USACE would 

use congressional appropriations to build housing), Congress explored other ideas of financing development on military bases. One of the 

first came from U.S. Senator Kenneth S. Wherry 

(R-Nebraska), who in 1949 proposed a bill that 

would allow the Federal Housing Administration 

(FHA) to provide mortgage insurance to private 

developers to construct military housing on installations. Having this insurance, which essentially 

meant that the FHA would pay off the loan if the 

private developer could not, gave the developer 

a measure of security, which was an important 

incentive and facilitated the securing of financing. 

According to Wherry’s program, which President Harry Truman signed into law in 1949 as an 

amendment to the National Housing Act of 1934, 

the Secretary of Defense would have to certify that 

a housing shortage existed before an installation 

could qualify. The Secretary of Defense would also 

have to verify that the DOD was not planning to 

close the installation. When these requirements 

were met, private developers could get loans from 

private lenders. The developer would then construct and maintain houses located on installations 

in accordance with the needs and requirements of 

the participating military service.5

Under the Wherry program, the DOD generally leased land at low rates to the private 

developer (although some Wherry construction 

occurred on private land near installations). 

Soldiers rented the homes from the private 

developer, paying their rent with their BAQ. The 

FHA developed the rent schedules for Wherry 

homes, setting rents at a price that would allow 

developers to fund operation and maintenance 

of the homes, as well as pay off the mortgage and 

gain some profit from their work. The housing 

remained the builders’ property for a period of 50 

to 75 years. The incentives of mortgage insurance 

and low land costs induced private developers to 

construct approximately 84,000 housing units 

(27,000 of which were on Army installations), 

generally 830 square feet in size, on military bases 

between 1950 and 1954.6
10 Privatizing Military Family Housing 11

CHAPT ER o n e

Military Family Housing Privatization Measures Prior to 1996

However, the Wherry program soon faced 

several problems. Congress set the maximum 

mortgage amount for the housing construction at 

$8,100 per unit (later raised by Congress in 1951 for 

high-cost areas), which brought rent within the 

housing allowances of junior soldiers. Problems 

arose when charges were levied that private developers were obtaining the $8,100 mortgages and 

then constructing homes at a lesser cost, thereby 

obtaining windfall profits, while also, presumably, 

providing subpar housing (since they were not 

spending as much to build the homes). Congress 

investigated such charges, which ultimately led to 

the dismissal of the FHA commissioner. Because of 

these issues, the DOD did not utilize the Wherry 

program to any large degree after August 1954, and 

it was discontinued in 1955 when Congress implemented another military housing project known as 

the Capehart Program.7

Capehart Program

Senator Homer Capehart (R-Indiana) sponsored new legislation aimed at correcting the 

Wherry program’s deficiencies. Under the so-called 

Capehart program, the FHA continued to provide 

mortgage insurance to private developers, who 

formed distinct corporations charged with constructing housing on installations. But the developers would only build the housing; they would no 

longer maintain it under a lengthy lease. The corporation contracted with private lenders for a 25-year 

mortgage, 100 percent insured by the FHA, capped 

at $13,500 per unit (which increased to $16,500 per 

unit in 1956 and $19,800 per unit in 1960). Upon the 

completion of construction, the service assumed 

control over the mortgage and the housing became 

government quarters. Service members living in 

the homes forfeited their housing allowance, which 

the services then used as mortgage payments and 

for operation and maintenance of the housing. 

To guard against the Wherry program’s alleged 

windfall profits, Congress subjected the Capehart 

Program to the Renegotiation Act of 1951, whereby 

Congress could recoup any excessive profits generated by developers.8

President Dwight D. Eisenhower signed the 

Capehart Program into law on August 11, 1955. It 

operated from 1955 to 1962, generating approximately 115,000 housing units for the entire DOD, 

36,000 of which went to the Army. Like the Wherry 

Program, the Capehart Program faced increasing 

criticism, especially after 1959. The complaints 

focused mainly on the high cost of Capehart housing for the federal government, critics insisting 

that traditional military construction with appropriated funds was cheaper. The practices of one 

developer, Hal B. Hayes, who did not pay his subcontractors, indicated to some critics that neither 

the FHA nor the DOD had enough oversight of the 

Figure 1-4. Indiana Senator Homer Capehart, proponent of 

the Capehart housing program.

Courtesy of U.S. Senate Historical Office.

process. In 1962, Congress refused to extend the 

Capehart program, stating that the DOD would 

thenceforward construct military housing only 

with appropriated funds.9 The experiment with 

using private developers for military construction 

seemed to be dead.

In the eyes of many members of Congress, 

programs such as Wherry and Capehart tied future 

congresses to large debts that they had not authorized. In modern terms, this was a type of “nondiscretionary funding” that limited the amount of 

money future congresses had available to appropriate. Yet both the Wherry and Capehart programs 

clearly provided more family housing for military 

personnel than the services had seen before, and 

the number of new houses built in the roughly 

15-year period when these two projects were in 

existence would not be approached for many 

years.10 Because of the quantity of new housing 

they provided, both Wherry and Capehart could be 

considered successes, even though they were shortlived programs.

Even with the houses built under Wherry and 

Capehart, the armed services still faced housing 

shortages, forcing many soldiers to look in the 

private sector for homes. Indeed, in the early 1960s, 

Secretary of Defense Robert McNamara declared 

it DOD policy “to rely to the maximum extent 

possible on the civilian economy to provide housing for service families,” and the goal of seeking, 

Figure 1-5. Capehart housing at Fort Belvoir, Va.

Courtesy of U.S. Army Corps of Engineers Office of History.
1 2 Privatizing Military Family Housing 1 3

CHAPT ER o n e

Military Family Housing Privatization Measures Prior to 1996

first and foremost, to house soldiers and their 

families off base in the surrounding communities has remained in place ever since.11 This policy 

seemed farsighted: as the United States became 

more deeply involved in the Vietnam War, it had 

little funding available for construction of family 

housing or barracks. Yet despite the policy favoring 

civilian housing and the lack of funding, the DOD 

still considered it important to provide family 

housing on installations. 

Providing on-base, high-quality living quarters for soldiers became an even larger issue after 

1973, when the federal government eliminated 

the draft and created an all-volunteer force. The 

Army had to improve facilities in order to attract 

new recruits, as well as to entice soldiers already in 

uniform to re-enlist. In addition, the percentage of 

enlisted personnel who were married increased in 

the 1970s. By 1977, approximately 60 percent of all 

military personnel were married. The higher numbers of married personnel, according to one report, 

“strained DOD housing programs and allowance 

systems, both of which were insufficient to yield 

adequate housing (on base or in the community) for many.”12 This was unfortunate, as studies 

showed that the type of housing offered to military 

personnel and their families had an impact on 

whether individuals reenlisted.13

The 1980s

As the economy weakened and military expenditures declined in the post-Vietnam War era, the 

DOD had even less money to spend on either the 

construction of new housing or the maintenance of 

existing homes. Under these conditions, the DOD 

explored other options. One of these was using U.S. 

Department of Housing and Urban Development 

housing programs, one of which—the Section 236 

program—allowed for the use of subsidized interest 

rates in financing the construction of homes designated for low-income residents, specifically including military households. However, federal officials, 

among them the comptroller general, objected to 

military use of subsidized civilian housing, in part 

because there was a stigma associated with designating soldiers “low-income” people.14 The program 

died in the early 1980s.

After the election of President Ronald Reagan 

in 1979 and the Iran hostage crisis of 1979-81, the 

new administration pressured Congress to appropriate more money for the DOD. Quality of life 

issues—perceived as important in recruiting and 

keeping soldiers—became even more significant. 

As increasing numbers of enlisted personnel married, it became more important for the DOD and 

the armed services to be more “family-friendly.” 

In this situation, the Army was able to capitalize on increased defense spending under the 

Reagan administration to construct more family 

housing. Yet even with this construction, housing shortages still persisted, especially for junior 

enlisted soldiers. In some areas, the high cost of 

housing prevented military members from finding 

suitable accommodations. In addition, the definition of “suitable accommodations” was changing. 

Whereas a family in the 1950s might have welcomed a house with only one bathroom, soldiers 

in the 1980s had different expectations, including, 

according to a contemporary newspaper article, 

“more bathrooms ... more living and storage space, 

various appliances, parking for at least two cars 

and other amenities.”15 Aware of these circumstances, the DOD implemented various initiatives, 

including the Variable Housing Allowance (VHA), 

which raised the housing allowance in high-cost 

areas, in order to make housing more affordable. 

As a result of studies conducted by experts such 

as the Rand Corporation, which in 1982 indicated 

that private-sector development and the use of 

housing allowances was the most efficient and economical way of obtaining new housing, the DOD 

investigated once more the option of partnering 

with the private sector on housing construction.16

Section 801 and 802 Programs

This turn towards privatization was not 

surprising, given the fact that President Reagan 

advocated privatizing many government functions 

during his presidency. The Military Construction 

Authorization Act of 1984, for example, contained 

two different family housing programs that relied 

on the private sector for construction. The first, 

delineated in Section 801 of the act, was a buildto-lease program that involved long-term leases. 

Under its provisions, a private developer could 

construct housing either on or off base and the 

government would lease the housing from the 

developer for a period not exceeding 20 years. 

During that time, the developer would be responsible for maintenance (although the government 

would operate and maintain it if it was more costeffective that way) and at the end of the term the 

government would have the right of first refusal 

to purchase the housing. Soldiers assigned to the 

housing forfeited their housing allowances. Under 

Section 801, rental rates were based on the congressional appropriations used for the construction 

and maintenance of each development.17

Section 802 of the Military Construction 

Authorization Act of 1984 called for the use 

of rental guarantees to induce private-sector 

involvement. According to this section, the 

Figure 1-6. Pre-RCI duplex at Fort Polk, La.

Courtesy of Picerne Military Housing.
1 4 Privatizing Military Family Housing 1 5

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Military Family Housing Privatization Measures Prior to 1996

government would guarantee for 15 years a 97 percent occupancy rate for housing constructed by 

private developers on private land near military 

installations. The developer would give military 

personnel priority in renting the homes, and the 

renters would provide the developer with rent 

out of their housing allowances. In contrast to 

the DOD’s method of calculating housing rent in 

Section 801, rental rates for Section 802 homes 

were set according to a soldier’s Basic Allowance 

for Housing (BAH), plus the VHA, plus 15 percent 

as each soldier’s contribution.18 The developer 

would operate and maintain the housing. At the 

end of the 15 years, the DOD would not purchase 

the property; the private developer would be able 

to use it as he or she wished. Under both the 801 

and 802 programs, only those who were at the E-4 

rank or above could live in the housing, and no 

801 or 802 projects could be constructed unless 

the DOD showed that an installation had a shortage of family housing. The two programs were 

originally established as pilots, but both became 

permanent in 1991.19

In both of these programs, it was important 

whether the private housing was treated as government-owned or -leased or privately owned. If 

the housing was government-owned or -leased, the 

DOD could assign soldiers to it and the soldiers 

would forfeit their housing allowance. If the housing was rented, the soldiers had to pay for it out 

of their housing allowance, whether or not that 

allowance actually covered the rental amount. In 

both the programs, Congress specified that the 

DOD had the right to assign service members to 

the housing and that such assignment had to be 

accepted.20 However, the Army launched only one 

Section 802 project, for which it decided to guarantee only rental occupancy, but did not include 

mandatory assignments.21

The DOD had some success with the Section 

801 program, even though the House Armed 

Services Committee and House Appropriations 

Committee had raised objections to the program by 

the late 1980s. They feared that it cost taxpayers too 

much money to lease land from private developers 

and that the DOD was relying too heavily on 

801 leases and too little on military construction 

appropriations. There were also questions about 

having the developers maintain the housing. 

As a result, the DOD assumed operation and 

maintenance of some of the housing in 1987.

Private developers also had some reservations about both of the programs, in part because 

the authorizing legislation stated that Congress 

was not obligated to appropriate money for the 

programs in future fiscal years. The uncertainty 

about future congressional funding made it difficult for developers to obtain financing. But after 

the USACE Office of General Counsel issued a 

letter assuring developers of the government’s 

intention to obtain annual appropriations, some 

of these fears were allayed. Developers also had 

concerns about Section 802 housing, mainly 

because part of the rent (the part that would go 

to the cost of the construction, rather than to the 

maintenance of the building) was fixed over the 

life of the agreement. In 1986 Congress allowed 

rent to be raised to meet inflation. In addition, 

the DOD admitted in 1986 that the rental guarantee program did not work in areas with high 

land and labor costs, as it did not provide enough 

incentive to private developers. Many members 

of Congress especially opposed the 802 program, 

believing that it was unworkable.22

Other problems with both programs arose 

because of scoring issues with the Office of Management and Budget (OMB). As Corps historian 

William Baldwin has explained, “The process of 

‘scoring’ or ‘scorekeeping’ determined whether the 

total cost of a long-term program would be charged 

against the federal budget in the first year or would 

be spread out over the life of the program.” In the 

initial years of the 801 and 802 programs, OMB 

scored them on a yearly basis. In 1990, however, 

the OMB reversed its procedure, declaring that it 

was more appropriate to score the entire cost of the 

programs in their first year, meaning that the DOD 

would have to cover the cost of the entire lease or 

the entire rental guarantee in that first year. This 

decision, in effect, killed the 801 and 802 programs, 

as it negated the DOD’s budgetary advantage. 

Despite these problems, Section 801 generated 

approximately 4,080 homes for the DOD, including 

new housing at Army installations at Fort Drum, 

New York; Fort Hood, Texas; Fort Polk, Louisiana; 

and Fort Bragg, North Carolina. Section 802 was 

less successful, as by 1993 it had produced only a 

small housing project of 276 homes at Kaneohe Bay 

Marine Corps Air Station in Hawaii.23

Section 2667 Program

The DOD explored another privatization 

option in the mid-1980s. Title 10, Section 2667 of 

the U.S. Code (dealing with the Armed Forces) 

authorized the secretary of any military department to lease excess “real or personal property” 

not needed by the department, as long as it was 

in the interest of the nation’s defense.24 When 

the 7th Infantry Division was designated in 1985 

to return from Korea to Fort Ord in Monterey 

County, California (a high-cost area for housing), 

this Section 2667 authority was seen as a quick 

way to provide housing for the incoming soldiers. 

Therefore, the Army leased 50 acres at Fort Ord 

to Ray Roeder and his California company, The 

Rinc Organization, to provide 220 Fleetwood 

single- and double-wide manufactured homes in 

a neighborhood that became known as Brostrom 

Park. The Army leased the homes from The Rinc 

Organization under a 25-year lease, with the 

understanding that the company could rent to 

Figure 1-7. Pre-RCI housing at Fort Polk, La.

Courtesy of Picerne Military Housing.
1 6 Privatizing Military Family Housing 1 7

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Military Family Housing Privatization Measures Prior to 1996

non-military personnel if there was not enough 

military demand.25

Brostrom Park satisfied the immediate need 

for housing at Fort Ord, but long-term solutions 

were necessary as well. Because the 2667 authority 

had worked well, Fort Ord’s housing office, headed 

by Ian “Sandy” Clark, elected to use it again after 

a housing market analysis determined a need for 

more housing at Fort Ord as well as at Fort Hunter 

Liggett. Fort Ord issued a Request for Proposals (RFP), detailing what it needed, and from the 

proposals received chose to partner with Empire 

West Companies. Fort Ord entered into a 50-year 

lease with Empire West, which then constructed, 

operated, and maintained one- and two-bedroom 

apartments that it rented to military personnel. 

The rent for the apartments came from the soldiers’ housing allowance, but was based on the size 

of the apartment and the number of amenities soldiers received. Rent was also indexed for inflation, 

which enabled Empire West to increase their rental 

fees to match the rate of inflation.26

However, in 1995, the Army announced that Fort 

Ord would be closed under the Base Realignment 

and Closure (BRAC) program. Under the terms of 

their leases, the private developers were able to rent 

the housing to government civilian employees and 

then to any potential tenant. Brostrom Park was 

renamed Bay View and became a desirable housing venue for residents of the towns of Seaside and 

Marina, California. Similarly, Empire West rented its 

facilities to civilians and survived the BRAC closure. 

However, in the opinion of Sandy Clark, the 2667 

experience at Fort Ord indicated that the private 

developers had assumed too much of the risk and 

that, in future endeavors, the Army had to offer 

more guarantees to the partner.27

The privatization programs detailed above—

Wherry, Capehart, Sections 801, 802, and 

2667—taught the DOD lessons about how to use 

the private sector to construct and operate family housing. According to Elizabeth L. Fagot, who 

worked in the Army’s real estate division, these 

lessons included recognizing the complexities of 

the long-term relationship between the military 

and the private sector that such programs entailed. 

Because agreements under the 801 and 802 programs required years of cooperation, for example, 

it was important that developers be familiar with 

Army culture and that the Army commit itself to 

partnering principles. Fagot also believed that the 

Army needed to be more realistic about its capacity for executing the property management and 

administrative responsibilities required by such 

agreements.28 To supplement these initial lessons 

learned, B. J. Frankel, the Army’s director of real 

estate, commissioned the USACE Office of History 

to produce a research paper detailing the legislative and policy history of the Section 801 and 802 

programs, as well as the Wherry and Capehart programs. In 1996, Corps historian William Baldwin 

completed that document, “Four Housing Privatization Programs,” which provided important background context as the Army discussed the possible 

solutions to its future housing problems.29

The 1990s

Despite the experiments with the 801, 802, 

2667, and other programs, the DOD entered the 

1990s still facing a lack of adequate housing for its 

members. The situation was exacerbated as the federal government made increasing efforts to balance 

its budget and relieve the massive deficit that had 

accrued during the 1980s. As part of this process, 

Congress and the Clinton administration focused 

on privatizing governmental tasks and reducing 

the size of military forces, especially in Europe, as 

the Cold War came to an end. The greater austerity 

in federal spending and the military downsizing 

meant that less money was available for family 

housing construction and maintenance.

In addition, the military as a whole experienced 

a change of climate in management and administration during the late 1980s and early 1990s. As 

Assistant Secretary of the Army for Installations, 

Logistics and Environment Susan Morrisey Livingstone explained, “The Army was looking at new 

programs, new concepts, and new ways of doing 

business.” One thing on which Livingstone focused 

was integrating installations “in the thought process of Army readiness.” Fearing that the Army had 

relegated installation management to a backseat, 

Livingstone proposed the creation of the Office of 

the Assistant Chief of Staff for Installation Management (OACSIM) within Army Headquarters. She 

hoped that the new agency would provide installation management and training for the Army Staff. 

The Army formally established the OACSIM on 

October 1, 1993.30

With this increased emphasis on the importance of installations and a recognition of the poor 

state of housing on those installations came the 

Army’s realization that “the only certainty confronting tomorrow’s Army is a declining defense budget.” 

This meant that Army housing planners needed 

to “reexamine their fundamental philosophy and 

establish a strategic course for the twenty-first 

century.”31 This was especially important as several 

Figure 1-8. Family housing apartments prior to RCI development at Fort Bragg, N.C.

Courtesy of Picerne Military Housing.
1 8 Privatizing Military Family Housing 1 9

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Military Family Housing Privatization Measures Prior to 1996

studies commissioned in the early 1990s found 

that familial conditions—including housing—were 

important factors influencing soldier reenlistment. 

As one report explained, “The availability and quality of housing ... is critical for the Soldier and his 

Family’s adaptation to the Army.”32

Studies on Military Family Housing

In order to formulate new policies for family 

housing, the DOD commissioned several reports 

and studies in the early 1990s. One of the first, 

commissioned by the Army and conducted by the 

USACE Engineer Strategic Studies Center, was 

published in 1993 as a strategic plan for Army family and unaccompanied housing. The impetus for 

this study was a 1992 inquiry by the Army’s Chief 

of Staff as to whether anyone was completing a 

“think piece” on Army family housing and what the 

military service’s needs were. Based on that question, the Army asked the Corps, which served as 

the traditional contracting and construction arm 

for military housing, to undertake the study. The 

study was to focus on the current state of military 

housing, issues that required leadership attention, 

and the development of “an Army vision” for family 

housing.33 Several individuals who would later be 

involved in RCI were on the team that the Corps put 

together for this study, including Don Spigelmyer, 

who would later become director of the RCI office.34

The Corps team conducted written surveys and 

oral interviews to collect information from senior 

leaders and managers in the Army and the Office 

of the Secretary of Defense (OSD), as well as from 

installation housing offices and residents of family 

housing. It then analyzed the data to identify “the 

more significant social, economic, and political 

trends” relative to family housing and used this 

information to construct a vision of Army housing 

and specific goals. In doing so, the Corps assumed 

that “the ultimate objective of the Army is to attract 

and maintain quality people” and that “attracting 

and maintaining quality people require[s] a quality 

working and living environment.”35

The Corps housing study determined that the 

Army had approximately 117,000 units of family 

housing in the United States, and that approximately 89,000 of these homes were at least 25 years 

old. Because each unit had undergone frequent 

turnover and because standard maintenance had 

not always been performed, it was determined that 

“many of the Army’s houses are in conditions that 

require major investments if they are to continue 

sheltering Army families.”36 Approximately 92,000 

of the 117,000 homes required some form of rehabilitation, ranging from major repairs to complete 

demolition and replacement.37 As Don Spigelmyer 

later put it, “They weren’t exactly Cadillacs when 

they were built ... and we hadn’t put in the proper 

amount of maintenance and repair into them.”38

The Corps study estimated that the rehabilitation 

and reconstruction efforts would cost the Army 

at least $574 million per year for the next 10 years, 

a total of roughly $6 billion to pay for the backlog 

of much-needed renovations. Facing such a large 

housing cost with a trimmed DOD budget—and 

realizing that family housing did not have as high 

a priority as other expenditures in the DOD—

Army leaders, according to the Corps, shifted their 

perspective from relying on military construction 

appropriations to embracing private-sector funding 

of family housing. Even though the DOD had used 

the private sector to provide housing for soldiers off 

post, Army leadership, at least until the 1990s, had 

continued to regard such reliance as only a temporary measure, not as a permanent solution.39

The major problem, according to the Corps, 

was that the Army had traditionally constructed family housing for officers and senior 

non-commissioned officers (NCO), not junior 

enlisted personnel. Yet by the 1990s, more than 

50 percent of all junior enlisted soldiers were 

married.40 With no available housing for them 

on post, these soldiers had to turn to off-post 

options. However, because housing allowances 

were based on grade, junior enlisted soldiers’ 

allowances often could not cover the cost of offpost housing. Clearly, the Army had to do something in order to address this dilemma, especially 

since the overriding theme that the Corps heard 

from its respondents was that “Every Soldier 

should have a home that is affordable, comfortable, and convenient—one that promotes a sense 

of pride and loyalty.”41 In order to achieve this 

vision, the Corps stated, the Army had to develop 

“innovative management techniques based on 

future conditions” and “a more business-oriented 

approach to running the installations.”42

Also in 1993, the Congressional Budget Office 

(CBO) conducted a study of military housing. The 

CBO, which began operating in 1975 to provide 

information to Congress for its budget decisions, 

examined how effectively the traditional way of 

housing military personnel worked—that is, providing housing to individuals on post and providing a housing allowance to those who lived off 

post. It also studied the practicality of the DOD’s 

policy of housing soldiers on base “only when 

the private sector is unable to provide adequate, 

affordable housing or when personnel must be 

housed on base to ensure military readiness.”43

After making its examination, the CBO determined that the DOD’s methods were cost-effective 

but that the DOD did not always follow these 

methods, especially since many families preferred 

to live on base rather than off. There were several 

reasons for this preference, including the fact that 

off-post families typically spent 20 percent more 

than their entire allowance to fund their housing, while on-post residents, who also forfeited 

their entire housing allowance, were paying only 

about 60 percent of the true cost of their housing. 

This “price subsidy,” the CBO concluded, “encourages service members to use DOD housing,” as 

did several other intangible factors, such as the 

sense of community that military members felt on 

base. With many people preferring to live on base 

and with what the CBO found to be an aging and 

dilapidated housing inventory, the DOD needed 

to make some hard choices about military housing. These decisions would be even more difficult 

because of the reality of the DOD’s financial situation. In the CBO’s estimation, it would cost the 

DOD $880 million a year between 1994 and 1999 

to either replace or renovate its military housing inventory. This estimate did not include the 

expense of constructing additional housing.44

In the CBO’s opinion, the DOD had five 

options for solving its problems. First, it could 

just keep the number of on-base housing units 

static, replacing those that needed replacing but 

not expanding its inventory in any significant way. 

Second, it could reduce the number of families 

living on base and rely more on the private sector. 

Third, it could raise housing allowances, thereby 

allowing better access to private-sector homes. 

Fourth, it could “increase the regional differentials 

in housing allowances, lowering allowances in 

low-cost areas and raising them in high-cost ones.” 

Finally, it could give housing allowances to those 

soldiers living on base and have them pay for both 

rent and utilities out of that allowance. Doing so 

would allow the DOD to “operate its housing in a 

manner similar to that of a private-sector provider.” 

Whatever the case, the CBO was convinced that 

the DOD had to entertain different options for 

providing housing to its personnel, given the high 
2 0 Privatizing Military Family Housing 2 1

CHAPT ER o n e

Military Family Housing Privatization Measures Prior to 1996

demand for on-post housing and the poor quality 

of the existing inventory of that housing.45

The Move Towards Privatization

As the military examined creative ways of solving its housing problem, it increasingly looked at 

privatization, in part because of the general trend 

in the federal government towards privatizing 

governmental functions. In 1994, USACE commissioned a study by the Delta Research Corporation 

to develop methods of partnering with the private 

sector for construction of family housing. This 

study noted that the military had already engaged 

private developers in several housing projects 

(including the Wherry, Capehart, and Section 801 

and 802 programs) but found that the instability of 

such programs, coupled with stringent construction and maintenance standards, had created an 

environment in which neither the military nor the 

private sector had much interest in interacting. 

Yet, the study concluded, there was hope. “When 

DOD has successfully completed a large number 

of housing projects under one or two privatization 

authorities, and the process appears stable and less 

risky,” it optimistically stated, “then installations 

and developers will once again become interested 

in using privatization as a means of obtaining military family housing.”46

The Delta report outlined specific barriers 

that stood in the way of private developers and the 

military working together. These included bonding and escrow requirements; strict DOD construction regulations (such as “rigidly defin[ing] 

square footage requirement[s] for different family 

sizes and pay grades”); uncertainty surrounding 

what responsibilities the military would have in 

the post-Cold War world; and military lifestyle. 

To overcome these obstacles, the report recommended that the DOD explore options such as 

limited partnerships, in which it could establish 

an Investment Board to arrange and manage 

partnering opportunities. When the board had 

identified an opportunity, the report suggested, it 

could competitively select a private-sector partner 

and enter into a partnership agreement with that 

entity. As part of the partnership, the DOD would 

relinquish responsibility for day-to-day management of the housing to the developer, thus providing the partner with more freedom. The report also 

explained that an out-leasing authority might be 

a viable option, similar to what the 2667 program 

provided for. In any case, the report concluded, 

Congress would have to provide authorization 

for the DOD to explore new ways of engaging the 

private sector.47

The exploration of different options for dealing 

with military family housing received an additional 

push when William J. Perry became Secretary of 

Defense in 1994. A businessman and aerospace 

engineer who had served as an undersecretary during the Carter administration and as Deputy Secretary of Defense from 1993 to 1994, Perry placed a 

high priority on improving the quality of life of the 

United States’ military forces, and he saw housing as the major quality-of-life issue. “What I want 

to do is equate dealing with the housing problem 

with [military] readiness,” he explained. “I see a 

single, iron logic that drives me from one to the 

other.”48 But he also realized that traditional solutions were no longer viable. “Our housing problem 

has been a tough nut to crack,” he stated. “The 

problem has developed over the past decade—particularly, a shortage of housing for junior enlisted 

and junior officers.”49 Others in the Pentagon 

also saw the housing problems. Comptroller John 

Hamre commented, “If you ever drove up with your 

kids to a college with that kind of housing, you’d 

never leave your kid.” The situation was so severe, 

Secretary Perry related, that poor housing was the 

“number one complaint” that service members 

made in his visits with them. Perry was determined 

to change the situation and considered improvements to housing as one of the “handful of legacies” that he wanted to leave behind.50

Perry proposed an initiative to increase the 

amount of DOD spending on family housing by 

$450 million a year for six years, and to raise offbase housing allowances. But such funding would 

only be a drop in the bucket compared to the 

amount of money needed to address the military’s 

construction and renovation needs.51 Therefore, 

Perry directed the OSD to examine the housing situation, including the question of whether 

privatization was a viable choice. The OSD first 

needed to obtain feedback from housing officers, 

personnel officers, and financial officers to arrive at 

a comprehensive view of the issues. To do this, the 

OSD engaged the Corps Engineer Strategic Studies 

Center team, a group that had already produced 

the 1993 study of Army housing partnerships with 

the private sector. 

The team examined a variety of reports on 

military families and housing issues, as well as 

quality-of-life studies, ultimately compiling all 

of the information into a 1995 OSD task force 

report on military family housing. This report 

Figure 1-9. President Bill Clinton (left) and Secretary of Defense William Perry (right), with 

Colonel David H. Huntoon, U.S. Army, inspecting the troops at Fort Myer, Va., on January 14, 1997.

Photograph by Helene C. Stikkel. Courtesy of U.S. Department of Defense. 
2 2 Privatizing Military Family Housing 2 3

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Military Family Housing Privatization Measures Prior to 1996

first addressed the team’s findings on housing. It 

determined that private construction off base was 

a good alternative to on-post housing because it 

was cost-effective, it gave the DOD greater flexibility in placing troops on installations, and it 

was preferred by some service members. Despite 

this, the report admitted that on-post housing 

was still necessary because the job responsibilities 

of certain positions (e.g., emergency responders) required some military members to live on 

base. In addition, the private sector in some areas 

could not generate sufficient off-post housing. 

This meant that the DOD had to provide on-post 

housing. But, as other various reports had also 

concluded, the cost of renovating and maintaining current inventories across the services would 

be huge, estimated in the report at more than $12 

billion. In addition, the current supply of on-post 

housing was not sufficient. Average waiting times 

to get into such housing exceeded six months and 

on some bases was more than two years.52

The OSD report concluded that there were 

three key points that the DOD’s plan for family housing had to address. First, “Every service 

member deserves quality housing that promotes 

pride, loyalty, and readiness” and the DOD had the 

responsibility to provide that housing in one way 

or another. In doing so, the report continued, the 

DOD needed to maintain a “balanced approach” 

to housing, as “no single strategy can be applied at 

every installation to achieve the vision of providing 

quality ... housing for military members and their 

families.” Second, the DOD should focus on the 

needs of junior enlisted families, who, according to 

the report, required the most attention. “The basic 

issue is that the private sector does not provide 

adequate housing that junior enlisted can afford,” 

the report explained, “and the installations do not 

provide enough homes on base to accommodate 

junior enlisted families.” Third, in order to address 

these issues, the report recommended that the 

military use the private sector more effectively 

to increase its housing supply. Echoing the Delta 

Research Corporation report commissioned by 

USACE, the OSD suggested that the DOD examine 

the option of entering into limited partnerships 

with private developers. The OSD also recommended that the DOD try to obtain out-leasing 

authorization, as well as the ability to sell military 

housing and land to fund housing replacement 

and renovation.53

Interestingly, just as the OSD was compiling 

data for its military family housing report, Congress was already giving the U.S. Navy the necessary authority to enter into limited privatization 

partnerships. As noted previously, many within the 

military services considered Section 801 and 802 

authorities unworkable because of scoring issues. 

But some Navy officials pondered the feasibility 

of entering into limited partnerships with private 

developers. The National Defense Authorization 

Act for Fiscal Year 1995 provided the Navy with the 

authority to enter into those partnerships, funding 

them out of an account called the Navy Housing 

Investment Account (consisting of appropriated 

funds and the proceeds from investment repayments or profits) that was governed by the Navy 

Housing Investment Board (consisting of two 

private-sector individuals and five government 

officials). Under the partnership, the Navy could 

contribute anywhere from 5 to 35 percent of the 

development costs and the developer would contribute the rest.54

Using this authority, the Navy pursued two 

limited partnerships—the first in Corpus Christi, 

Texas, and the second in Everett, Washington. In 

July 1996, the Navy entered into a 10-year partnership agreement with a private developer in 

Corpus Christi to build 404 family housing units in 

Portland, Texas, and Kingsville, Texas (communities close to the Corpus Christi Naval Air Station, 

the Ingleside Naval Station, and the Kingsville 

Naval Air Station). The total cost of the project 

was $32 million, of which the Navy contributed 

$9.5 million, thereby allowing the developer to give 

the Navy occupancy preference. Rents were based 

on the housing allowance of an E-5, although the 

rents of some of the homes exceeded that. At the 

end of 10 years, the developer would sell the homes 

and give the Navy its initial $9.5 million contribution, as well as one-third of the proceeds from 

the sale. The partnership was similar in Everett, 

Washington, where 185 family housing units were 

to be built for service members at the Everett Naval 

Station. In this case, however, 20 percent of the 

homes would be sold each year after the sixth year, 

rather than all at the end of 10 years.55

Along with the limited partnership approach 

there were other proposals for increasing privatesector involvement in military construction. In 

1993, for example, the U.S. Army Community 

and Family Support Center contracted with the 

Logistics Management Institute (LMI) to study 

whether the Army could use its Morale, Welfare 

and Recreation (MWR) Non-Appropriated Fund 

(those moneys generated by the MWR program) 

to construct, operate, and maintain housing units 

owned by a private developer but used by soldiers. 

The LMI also examined the efficiency and costeffectiveness of using a combination of private 

financing and the Non-Appropriated Fund to 

establish public-private ventures. The LMI recommended that the Army conduct some pilot projects 

at Fort Riley, Fort Stewart, and in Hawaii, to see 

which method worked best, although it recognized that the Army would need special legislative 

authority to conduct such experiments.56

Conclusion

By the mid-1990s, then, several issues were 

clear. First, the military had a significant housing 

problem, in terms of both the number of houses 

that needed repair and the overall supply of housing necessary for the military population. Second, 

because the military became an all-volunteer force 

in the 1970s, the need to provide adequate housing was even more pronounced, since it affected 

whether or not personnel reenlisted. In trying to 

deal with these issues, the DOD had some important precedents (although some were unsuccessful), including privatization programs enacted in 

the 1940s, 1950s, 1980s, and 1990s. Any solution, 

however, needed congressional authorization 

before it could be implemented. Against this backdrop, the DOD began focusing its efforts in the 

mid-1990s on new legislation that would provide it 

with the ability to work with private developers in 

constructing military housing.
2 4 Privatizing Military Family Housing 2 5

CHAPT ER o n e

Military Family Housing Privatization Measures Prior to 1996

Endnotes to Chapter 1

1. William C. Baldwin, “A History of Army Peacetime Housing 

to the End of the Cold War,” Society for History in the Federal 

Government, Occasional Papers 4 (2004), 1-7.

2.William C. Baldwin, “Four Housing Privatization Programs: 

A History of the Wherry, Capehart, Section 801, and Section 

802 Family Housing Programs in the Army,” October 1996, 1-2, 

Office of History, U.S. Army Corps of Engineers Headquarters 

(HQUSACE), Alexandria, Va. Hereafter cited as USACE Office 

of History. For more information, see also Baldwin, “A History 

of Peacetime Housing,” 7-11.

3. Baldwin, “A History of Army Peacetime Housing to the End of 

the Cold War,” 9-10.

4. Lieutenant General Henry S. Aurand, “Housing for Army 

Families,” Army Information Digest (October 1948): 4; quoted in 

Baldwin, “Four Housing Privatization Programs,” 2.

5.Baldwin, “Four Housing Privatization Programs,” 3-4.

6.Baldwin, “Four Housing Privatization Programs,” 4-5, 16-17. 

7. Baldwin, “Four Housing Privatization Programs,” 7-10.

8. Baldwin, “Four Housing Privatization Programs,” 10-12.

9. Baldwin, “Four Housing Privatization Programs,” 12-14, 17.

10. Baldwin, “Four Housing Privatization Programs,” 1, 20-21.

11. Baldwin, “A History of Army Peacetime Housing,” 14.

12. Pamela C. Twiss and James A. Martin, Quality of Life and 

Shelter: A History of Military Housing Policy and Initiatives 

(1973-1996) (Scranton, Pa: Military Family Institute, Marywood 

University, 1998), 22-25.

13. For information on these studies, see the Office of the 

Secretary of Defense, Department of Economic Security, “DOD 

Military Family Housing: A Strategic Plan for the Twenty-First 

Century,” 21 October 1994, A-8, Box 3, Uncatalogued Housing 

Materials, Research Collections, USACE Office of History.

14. Twiss and Martin, Quality of Life and Shelter, 26, 32-33.

15. “The New Military Readiness Worry: Old Housing,” 

Washington Post, 7 March 1995.

16. Baldwin, “Four Housing Privatization Programs,” 22-26.

17. Baldwin, “Four Housing Privatization Programs,” 43.

18. Baldwin, “Four Housing Privatization Programs,” 43-44.

19. Baldwin, “Four Housing Privatization Programs,” 25-28, 31-33.

20. Baldwin, “Four Housing Privatization Programs,” 32.

21. Dean Stefanides, written comments to authors, 30 January 

2011.

22. Baldwin, “Four Housing Privatization Programs,” 38-39.

23. Baldwin, “Four Housing Privatization Programs,” 34-36, 

44-47.

24. Act of August 10, 1956, U.S. Code 10 (1956), § 2667.

25. Thomas Peterson, “From Brostrom to Bay View—the 20th 

Anniversary of Fort Ord’s 2667 Project,” Public Works Digest 17 

(September/October 2005): 26.

26. Untitled and undated Q&A document, Folder: Congress 

(incl. subfolders), Share Drive database, RCI Program 

Office, Crystal City, Va. Hereafter cited as RCI Office. For 

more information, see also Delta Research Corporation, 

“Development of Alternative Strategies for Increasing Private 

Sector Involvement in Providing Military Family Housing,” 

21 October 1994, 5, Report submitted to the U.S. Army 

Corps of Engineers, Engineer Strategic Study Center, Box 3, 

Uncatalogued Housing Materials, Research Collections, USACE 

Office of History; and Ian “Sandy” Clark interview by Leigh 

Cutler, 18 July 2007, Washington, D.C., Transcript, 2-3.

27. Clark interview, 3-4; and Petersen, “From Brostrom to Bay 

View,” 27.

28. Elizabeth L. Fagot for B. J. Frankel, Director of Real Estate, 

“Memorandum Thru [sic] Assistant Chief of Engineers for 

Deputy Assistant Secretary of Defense (Installations),” 10 March 

1992, File: Housing Privatization, Uncatalogued Housing 

Materials, Research Collections, USACE Office of History.

29. Baldwin, “Four Housing Privatization Programs,” 

Introduction.

30. U.S. Army Corps of Engineers, Engineer Research 

and Development Center, Interview with Susan Morrisey 

Livingstone, Assistant Secretary of the Army for Installations, 

Logistics and Environment, ERCD/CERL M-07-1 (Washington, 

D.C.: U.S. Army Corps of Engineers, 2007), 29-31. See also L. 

Martin Kaplan, Department of the Army Historical Summary, 

Fiscal Year 1994, ed. Cheryl Morai-Young (Washington, D.C.: 

United States Army Center of Military History, 2000), 9.

31 Engineer Strategic Studies Center, U.S. Army Corps of 

Engineers, “Army Housing Study: A Strategic Plan for the 90s 

and Beyond: Family Housing, Vol. I,” 30 September 1993, 1-2, 

Box 3, Uncatalogued Housing Materials, Research Collections, 

USACE Office of History. See also Twiss and Martin, Quality of 

Life and Shelter, 56.

32. Mady Wechsler Segal and Jesse J. Harris, U.S. Army Research 

Institute for the Behavioral and Social Sciences, “What We 

Know About Army Families,” 47, Box 3, Uncatalogued Housing 

Materials, Research Collections, USACE Office of History. See 

also Office of the Assistant Secretary of Defense (Personnel and 

Readiness), Family Status and Initial Term of Service: Volume 

I – Summary (Washington, D.C.: U.S. Department of Defense, 

1993), 16.

33. Engineer Strategic Studies Center, “Army Housing Study,” 

1; and Gerry J. Gilmore, “Army Housing Officials Move Toward 

Privatization,” Army Link News, 25 July 1997.

34. Interview of Don Spigelmyer, Dean Stefanides, Rhonda 

Hayes, Mike McCarley, Matt Keiser, Barry Scribner, Bill 

Mysliwiec by Matthew Godfrey, 13 February 2007, Crystal 

City, Va., Transcript, 4. Because this interview was scheduled 

with individuals who would later become a part of RCI, it will 

hereafter, for the sake of convenience, be cited as the RCI group 

interview.

35. Engineer Strategic Studies Center, “Army Housing Study,” 

3-4.

36. Engineer Strategic Studies Center, “Army Housing Study,” 5.

37. Engineer Strategic Studies Center, “Army Housing Study,” 11.

38. RCI Group Interview, 4.

39. Engineer Strategic Studies Center, “Army Housing Study,” 6.

40. Engineer Strategic Studies Center, “Army Housing Study,” 19.

41. Engineer Strategic Studies Center, “Army Housing Study,” 12.

42. Engineer Strategic Studies Center, “Army Housing Study,” 

12, 19.

43. U.S. Congress, Congressional Budget Office, Military Family 

Housing in the United States: A CBO Study (Washington, D.C.: 

Congressional Budget Office, 1993), xi.

44. Congressional Budget Office, Military Family Housing, xi-xiii.

45. Congressional Budget Office, Military Family Housing, xiiixix.

46. Delta Research Corporation,. “Development of Alternative 

Strategies for Increasing Private Sector Involvement in 

Providing Military Family Housing,” 21 October 1994, 2-3, Box 3, 

Uncatalogued Housing Materials, Research Collections, USACE 

Office of History.

47. Delta Research Corporation, “Development of Alternative 

Strategies,” 9-10, 13, 18-20.

48. “The New Military Readiness Worry,” Washington Post.

49. Office of the Secretary of Defense, Department of Economic 

Security, “Military Family Housing: Task Force Report,” 24 

January 1995, 1-2, Box 3, Uncatalogued Housing Materials, 

Research Collections, USACE Office of History.

50. “The New Military Readiness Worry,” Washington Post.

51. “The New Military Readiness Worry,” Washington Post.

52. OSD, “Military Family Housing,” 5-9. See also the RCI group 

interview, 4. A 1991 General Accounting Office report stated 

that it would cost the DOD $11 billion to renovate 200,000 of 

its family housing units in need of repair. If the DOD wanted 

to replace its existing inventory of 400,000 units, the GAO 

reported, it would cost more than $39 billion. U.S. General 

Accounting Office, Defense Housing: Difficulties Associated 

With Managing an Aging Family Housing Inventory, Report 

No. GAO/NSIAD-92-09FS (Washington, D.C.: U.S. General 

Accounting Office, 1991), 1.

53. OSD, “Military Family Housing,” 13, 16.

54. National Defense Authorization Act for Fiscal Year 1995, 

U.S. Statutes at Large 108 (1995): 2663, 3050-3051; Bernard 

Rostker and Charles Nemfakos interview by Matthew Godfrey, 

17 July 2007, Arlington, Va., Transcript, 13-14; and “Statement of 

Honorable Robert R. Pirie, Jr., Assistant Secretary of the Navy 

(Installations and Environment) Before the Subcommittee 

on Military Construction of the House Appropriations 

Committee on Military Construction, Family Housing, and 

Base Closure Implementation, March 2, 1995,” www.lexis-nexis.

com. Unfortunately, the legislative history of this act does not 

indicate which DOD or Navy officials were responsible for 

developing the limited partnership idea.

55. U.S. General Accounting Office, Military Housing: 

Privatization Off to a Slow Start and Continued Management 

Needed, Report No. GAO/NSIAD-98-178 (Washington, D.C.: 

U.S. General Accounting Office, 1998), 45-49.

56. Martina Carroll-Garrison, Information Paper, 8 April 1993, 

Uncatalogued Housing Materials, Research Collections, USACE 

Office of History.
2 7

CHAPTER TWO

The Passage of the Military Housing

Privatization Initiative Legislation, 1995–1996

signed the Military Housing Privatization Initiative into law in February 1996, the Army was well 

down the road to privatization.

Early Proposals for the Military 

Housing Privatization Initiative

By the mid-1990s, numerous studies had been 

completed addressing the military family housing 

situation in the United States. Several of these had 

concluded that privatizing at least some portion 

of the family housing function was essential, in 

part because it would cost the federal government 

billions of dollars to fix the problem on its own. 

In an era of deficit and defense spending reductions, that kind of money was not available. As 

part of the move towards privatization, Congress 

had included a provision in the National Defense 

Authorization Act for Fiscal Year 1995 that allowed 

the U.S. Navy to enter into limited partnerships 

with private developers for housing construction. 

Congress would further explore these kinds of 

I

n order to solve its housing problems, the U.S. 

Department of Defense (DOD) was willing 

in 1994 and 1995 to explore new and creative 

solutions, but it lacked congressional authorization to do so. The DOD called for new legislation 

that would allow it to access a variety of ways to 

engage the private sector, believing that that was 

the best direction in which to move. At the same 

time that officials worked with Congress toward 

new legislation, the U.S. Army itself, anticipating 

the passage of such a law, examined various ideas 

of privatization, including the establishment of a 

nonprofit corporation that would act as a sort of 

housing authority. It finally settled on the Capital Venture Initiatives (CVI), a pre-Residential 

Communities Initiative (RCI) program by which 

the Army and private developers would work 

together to develop new housing and to operate 

and manage existing housing. It began making 

plans to initiate a pilot CVI project at Fort Carson, 

Colorado. By the time that President Bill Clinton 

Figure 2-1. Historic home that was 

renovated as part of privatization of Army 

housing at Fort Riley, Kans.

Courtesy of Picerne Military Housing.
2 8 Privatizing Military Family Housing 2 9

CHAPTER two

The Passage of the Military Housing Privatization Initiative Legislation, 1995–1996

options as it debated the National Defense Authorization Act for Fiscal Year 1996.

In the early 1990s, under the Engineering 

Strategic Studies Center of the U.S. Army Corps of 

Engineers (USACE), the Army had begun several 

initiatives to improve its understanding of how 

privatization might work. These efforts resulted in 

a four-volume report on the status of Army housing 

and recommendations for future actions. Acting 

on the request of Dean Stefanides, chief of Army 

Housing, Ted Lipham began investigating privatization measures. Lipham was the head of Army 

Family Housing’s Business Occupancy Program 

(BOP), which tried to put into place more businessoriented procedures for family housing, including allocating funding to installations based on 

actual occupancy. According to Lipham, the initial 

investigations were intended to help the Army “to 

get housing management ‘ready’ for future privatization.”1

 For the next two to three years, Lipham 

remembered, “My whole time was consumed with 

trying to come up with a mechanism to privatize all 

the Army housing that we had.”2 As part of a larger 

DOD team, for example, Lipham went to examine 

the Australian Defense Housing Authority, which 

Australia had developed to solve its own military 

housing dilemma. Lipham’s visit occurred as part 

of an Army Housing-sponsored exchange program, 

in which Army personnel went to Australia for six 

months while Australians came to the United States, 

to provide more information on the model. After 

studying the program, some within the Army (and 

within DOD, following briefings from Army officials) decided that it could be a viable option.3

Two recommendations came to the surface 

when Secretary of Defense William J. Perry in 1994 

appointed a Defense Science Board Task Force on 

Quality of Life to examine, specifically, military 

housing, personnel deployments, and community 

and family services. Chaired by former Secretary 

of the Army John Marsh, the task force examined 

military housing, interviewing numerous soldiers 

and their families. In its final report, published 

in October 1995, the task force noted military 

members’ perceptions that the quality of military 

life had deteriorated in comparison with past 

years, in part because of poor housing conditions. 

Therefore, the report recommended that the DOD 

undertake a “comprehensive restructuring of military housing” through several initiatives, including 

partnering with the private sector. Another suggestion called for the DOD to establish a Military 

Housing Authority along the lines of the Australian authority. That housing authority would serve 

as a nonprofit organization, managing all housing 

aspects through a governing Board of Directors, 

which was to consist of both military and civilian 

personnel. Under this program, members’ housing 

allowances would be placed in a Military Housing 

Authority account (supplemented by congressional appropriations and contributions from private 

developers), which would then fund new construction, renovations, maintenance, and operations.4

Bernard Rostker, who was then serving as 

Assistant Secretary of the Navy for Personnel 

and who would later become Undersecretary of 

the Army, enthusiastically embraced the idea of 

a housing authority. Rostker actually pushed the 

Quality of Life Task Force to include the housing 

authority proposal, believing that entities such as 

the New York State Dormitory Authority and the 

Australian Defense Housing Authority held the 

answer to the U.S. military’s housing problems. 

Such entities, he believed, allowed organizations 

to construct housing funded “on the basis of the 

future income stream that will be created by students living in those dormitories.” The New York 

State Dormitory Authority, for example, owned, 

operated, and maintained its housing, much as 

the proposed Military Housing Authority would. If 

something such as the Dormitory Authority “could 

get ahead of the power curve, unload the burden 

from the universities [which] never had much 

money, and make money,” Rostker wondered, 

why couldn’t the U.S. military?5

 Others within the 

Office of the Secretary of Defense (OSD) were not 

so sure. They expressed outright opposition to the 

housing authority proposal because it would be 

a new way of doing business, drastically different 

from the usual Military Construction (MILCON) 

process. In the words of Dean Stefanides, then 

chief of Army housing, the Army “kept on getting beat up by everybody” because of its support 

for the proposal, even though the task force had 

recommended it.6

Along with the housing authority proposal, 

other initiatives were put forward to solve the 

Figure 2-2. Ted Lipham, one of the early leaders of Army 

privatization.

Courtesy of Ted Lipham.

Figure 2-3. Army family housing development at Fort Eustis, Va., prior to Army housing privatization.

Courtesy of Balfour Beatty Communities.
3 0 Privatizing Military Family Housing 3 1

CHAPTER two

The Passage of the Military Housing Privatization Initiative Legislation, 1995–1996

family housing problem. For example, Major 

General John H. Little, Assistant Chief of Staff for 

Installation Management (ACSIM), established 

an Army Science Board Independent Assessment 

panel toward the end of 1994 to evaluate housing privatization possibilities.7

 The panel met 

throughout 1995 to discuss privatization. In one 

meeting in March of that year, Brigadier General 

Robert Herndon, director of facilities and housing, presented the ACSIM’s family housing vision. 

According to the minutes of the meeting, Herndon stated that the Army’s policy was “to develop 

innovative ideas to leverage limited resources.”8

In order to leverage the resources, the assessment 

panel met with entrepreneurs and developers to 

discuss housing alternatives.9

On another front, in January 1995, the DOD 

put together a workshop on military housing 

sponsored by the Urban Land Institute. At the 

workshop, participants from both the military 

and the private sector discussed various aspects 

of privatization, including which solutions were 

feasible and what obstacles could prevent privatization from succeeding. Potential problems 

included budget scoring (the process by which the 

federal government accounts for future spending) 

and the applicability of the Davis-Bacon Act, which 

mandated the wage rates that workers on government projects could be paid, as well as complex 

government procurement requirements. After 

addressing these topics, participants, according to 

one observer, expressed “optimism that solutions 

could be found.”10

In the meantime, Congress too was exploring 

the idea of privatization. After becoming chair of 

the House Military Construction Committee in 

1995, U.S. Representative Joel Hefley (R-Colorado) 

decided that another source of funding for family 

housing construction, renovation, and maintenance had to be found. He had one of his staffers, 

Philip Grone, begin looking into the privatization 

issue. When Grone and Hefley met with Secretary 

of Defense Perry, they became convinced that 

privatization was the route to take.11

In March 1995, the House Subcommittee on 

Military Installations and Facilities of the Committee on National Security held hearings on H.R. 1529, 

a bill authorizing construction at military installations for Fiscal Year (FY) 1996. The bill included a 

provision (Section 2402) stating that “The Secretary 

of Defense may enter into agreements to construct, 

acquire, and improve family housing (including 

land acquisition) at or near military installations 

for the purpose of encouraging private investments, 

in the amount of $22,000,000.” Likewise, Section 

2403 of the bill extended the limited partnership 

authority that the Navy had received in 1994 to the 

Army, Air Force, and Marine Corps, and it proposed 

the creation of the Defense Housing Investment 

Account and the Military Housing Investment 

Boards (one for each military department) to fund 

the limited partnerships.12

In the hearings on this bill, Hefley noted that 

the provisions were included because Secretary 

Perry was “struggling to do more with less.” Perry’s 

submitted budget for FY 1996, Hefley continued, 

reflected “the importance of quality of life programs particularly for improvements in military 

family housing.” According to Congressman Hefley, 

the DOD had generated “much discussion about 

possible pilot programs and privatization initiatives in the area of military family housing,” largely 

because “this is of great importance to Secretary 

Perry.” Other members of the subcommittee also 

favored new solutions. U.S. Representative Solomon Ortiz (D-Texas), who was instrumental in 

getting the limited partnership provision for the 

Navy in the 1995 National Defense Authorization 

Act, for example, explained that he wanted to 

“see new initiatives from the [DOD] that will seek 

innovative ideas and ways to fund living space for 

development.”13

Testimony presented by DOD witnesses at 

the hearing indicated that the DOD was exploring 

various initiatives, not just the housing authority, in 

part because, as Deputy Assistant Secretary of the 

Army (Installations and Housing) Paul W. Johnson 

explained, “Maintaining quality housing for its 

soldiers and families is one of the Army’s continuing 

Figure 2-4. Dean Stefanides, Chief of Army Housing in the 

mid-1990s.

Courtesy of Dean Stefanides.

Figure 2-5. Representative Joel Hefley of Colorado, pictured here during a 2003 

visit to Incirlik Air Base in Turkey.

Courtesy of U.S. Air Force.
3 2 Privatizing Military Family Housing 3 3

CHAPTER two

The Passage of the Military Housing Privatization Initiative Legislation, 1995–1996

challenges.” According to Air Force Civil Engineer 

Major General James McCarthy, whatever new 

methods the DOD developed would have to deal 

with the scoring issue, which had killed the Section 

801 and 802 programs since “scor[ing] the whole 

mortgage period in the first year ... in effect defeats 

the economics of it in terms of budget authority.” 

Deputy Assistant Secretary of Defense (Installations) Robert E. Bayer noted that the DOD was 

reviewing the Section 801 program, while also conversing with the private sector about the best tools 

to use. By the first of April 1995, Bayer declared, the 

DOD would be in a better position to explain exactly 

what direction it wanted to go.14

Yet when the subcommittee reconvened in 

April 1995, Congressman Ortiz noted that the 

DOD had not yet developed a firm proposal, 

although it was considering several possibilities. 

According to Assistant Secretary of Defense (Economic Security) Joshua Gotbaum, these included 

modifying Section 801 so that the DOD could 

sell on-base housing to a private entity; having 

the private entity renovate the housing, and then 

renting the housing back to DOD over time; and 

modifying Section 802 so that the private sector 

had some kind of insurance, such as having the 

DOD “put up a limited amount of cash up front,” 

to guard against base closures. Gotbaum noted 

that the DOD had created a “Housing Finance 

Tiger Team” (a tiger team is a group tasked with 

specifically examining an issue to discover all of 

the solutions and potential problems), including 

representatives from all of the military services, 

to identify possible tools, ensure that the tools 

would work, develop legislative initiatives, and 

simplify procurement. According to Gotbaum, the 

team had studied issues at four bases—San Diego, 

Keesler, Fort Hood, and Camp Lejeune—and met 

with “base personnel, base commanders, base 

engineers, et cetera, to say what kind of housing 

do you need; and private developers to say, what 

kind of projects are you willing to build?” Based on 

the recommendations that the tiger team made, 

Gotbaum concluded that the DOD would provide 

a specific plan to Congress within a month.15

According to Don Spigelmyer, who served on 

the tiger team and helped draft the privatization 

legislation, the team “talk[ed] to financers, developers, and property managers to find out what type 

of incentives they needed to become involved in 

privatizing the housing.”16 The team also examined 

the history prepared by William Baldwin of the 

U.S. Army Corps of Engineers’ Office of History 

of how private capital had been used to stimulate 

development under the Wherry, Capehart, Section 801, and Section 802 programs.17 This study, 

together with other pieces Baldwin wrote surveying the history of peacetime housing in the Army, 

provided valuable lessons to the tiger team on the 

problems encountered in the past when private 

developers were called upon to build family housing. After studying these topics, the team decided 

that the DOD, in the words of Gotbaum, should 

“essentially polish up mostly authorities that we 

already had in law and get the ability to use them 

in conjunction with each other.” The DOD also 

needed to ensure that it had the capabilities to 

allow private developers to own and manage its 

housing inventory.18

The Military Family Housing 

Revitalization Act

The DOD transmitted draft legislation implementing the tiger team’s recommendations to 

the Senate and the House on May 8, 1995. Judith 

A. Miller of the DOD’s Office of General Counsel 

notified Congress that the DOD’s proposal would 

give it “authority to obtain new and improved 

family housing and supporting facilities for the 

armed forces using private capital and expertise.” 

The DOD considered the legislation “of great 

importance,” indicating as well that it was “in 

accord with the program of the President.”19

The proposal, officially entitled “The Military Family Housing Revitalization Act of 1995,” 

contained several provisions. It provided the DOD 

with the authority to out-lease or sell land under 

its control, something that the DOD estimated 

would result in significant reductions in project 

costs. The legislation also established the Family 

Housing Improvement Fund, which would be used 

by the DOD as the funding mechanism for the 

privatization partnerships envisioned by the legislation. This fund would consist of money transferred by the Secretary of Defense out of DODappropriated housing funds (after reprogramming 

approval from the Congress), as well as any income 

obtained from the leasing or conveyance of property under the terms of the act. Congress could 

also appropriate money specifically to the fund. 

The proposed legislation included authorization for the Secretary to use “direct loans, guarantees, insurance, or other contingent payments 

to owners or mortgagors or assignees of family 

housing.”20 The Secretary also had the authority 

to enter into home leases and to make payments 

to developers when the housing allowance did 

not cover the cost of housing. The guarantees 

would be used to cover contingencies such as base 

closures or major deployments or realignments 

of troops, not for general market conditions, 

construction mistakes, or poor management. 

The draft legislation also allowed the Secretary 

to enter into investments with “nongovernmental entities,” such as “limited partnership interests, stock, debt instruments, or a combination 

Figure 2-6. Pre-privatization family housing in the Santa Fe neighborhood of 

Schofield Barracks, Hawaii.

Courtesy of Lend Lease.
3 4 Privatizing Military Family Housing 3 5

CHAPTER two

The Passage of the Military Housing Privatization Initiative Legislation, 1995–1996

thereof,” as long as such investments did not 

exceed 35 percent (later 33 percent) of “the capital 

costs of an acquisition or construction project.”21

This provision basically extended to the other 

military services an authority that the Navy 

already had but had not yet used.

In its explanation of the proposal, the DOD 

noted that the legislation “would authorize a 

return to the successful policies that built so much 

of the current inventory,” namely the “privatesector financing and commercial construction 

processes” of the Wherry and Capehart programs.22 

In the words of Secretary Perry, the legislation 

would give the DOD “the flexibility to provide for 

our forces,” while also allowing it, “with the help of 

Congress and the private sector, to solve a 30-year 

problem in 10 years.”23

On May 15, 1995, Assistant Secretary Gotbaum 

formally presented the proposed legislation to 

the Senate Subcommittee on Readiness and the 

Subcommittee on Personnel, both part of the 

Committee on Armed Services. However, Gotbaum 

talked about the legislation only in generalities, 

explaining that the “approach” was to partner with 

the private sector to “encourage housing development” and maintenance; to build these homes 

according to commercial standards; to contribute 

land or cash as the government’s investment in 

the projects; and to “commit to future payments 

in exchange for development today.”24 He did not 

discuss the specific guarantee, investment, or leasing authority in the legislation, although he did 

explain that the DOD would test its privatization 

program through pilot projects in order to investigate which approaches worked and where.

U.S. Senator John McCain (R-Arizona), who 

sat on the Committee on Armed Services, questioned the need to approve new authorities. 

Could the DOD not use the old Section 801, 802, 

and 2667 authorities, for example? Gotbaum 

answered that many of these authorities “had 

constraints within them which, although they 

were consistent with commercial practice then, 

are not consistent with commercial practice 

today.” Budgeting procedures in the government 

had changed as well, as had housing markets and 

the sophistication of developers. Specifically, Section 801 and 802 authorities were not applicable 

because: they could not be used in combination; 

the authorities contained limitations that were 

inconsistent with private-sector practices and 

requirements; and in some cases, Section 801 and 

802 authorities failed to take into account that, 

“because on-base housing is fully subsidized, 

private replacements might require subsidies as 

well.” Accordingly, as Gotbaum pointed out, the 

DOD wanted to “modify existing authorities to 

correct these shortcomings, and thereby permit a 

real test of private-sector capabilities.”25

Passage of the National Defense 

Authorization Act for Fiscal

Year 1996

Based on the provisions spelled out in the 

DOD’s proposal, the House Committee on 

National Security reconfigured H.R. 1530 (the 

national defense authorization bill for FY 1996). 

These recommended provisions were incorporated 

as Title XXVIII—General Provisions, Subtitle A—

Military Construction Program and Military Family Housing Changes. Several sections of the bill 

amended U.S. Code Title 10, Chapter 169, to allow 

the Secretary of Defense to utilize the authorities 

in the legislation to improve housing on military 

installations. In addition, the bill revised some of 

the authorities to allow for “phased occupancy of 

completed family housing units.” It also gave the 

Secretary authority to “lease or sell land, housing, 

and ancillary supporting facilities” under his or 

her control in order to obtain additional and renovated housing.26

The new bill also proposed the creation 

of the Family Housing Improvement Fund 

and provided the Secretary of Defense with 

the authorization to enter into guarantees, 

investments, and leases with private developers. 

According to the proposal, the authority to use 

limited partnerships would expire “five years 

after the date of the enactment of the National 

Defense Authorization Act for Fiscal Year 1996,’’ 

and the Secretary was instructed to provide a 

report to Congress by March 1, 2000, regarding 

the effectiveness of the legislation in providing 

housing to members of the armed forces and 

their dependents.27

In the meantime, the Senate was developing its own national defense authorization bill, 

introduced as S. 1026 by U.S. Senator Strom Thurmond (R-South Carolina) on July 12, 1995. The bill 

contained provisions similar to those in H.R. 1530, 

as it proposed the use of a combination of authorities to entice private developers to partner with the 

military. The limited partnership authority would 

be expanded to all of the military services, and the 

Secretary of Defense would be able to enter into 

contracts for leasing, including investing up to 35 

percent of the capital cost in nongovernmental 

organizations, in order for acquisition, construction, improvement, or rehabilitation to take place. 

In addition, the law would establish the Department of Defense Housing Improvement Fund, 

which would operate in a similar way to H.R. 1530’s 

Family Housing Improvement Fund.28

The National Defense Authorization Act, of 

which the Military Family Housing Revitalization 

Act of 1995 was just one component, had a host 

of provisions dealing with funding for the DOD, 

including establishment of a ballistic missile 

defense system. Because of this, the bill was controversial and various other pieces of partisan legislation were introduced. 29 After three months of 

work, the conference committee issued its report, 

which essentially reorganized and consolidated the 

sections on military family housing in S. 1026. All 

of the items pertaining to housing privatization 

were grouped under Subtitle A—Military Housing 

Privatization Initiative of Title XXVIII—General 

Provisions. Aside from adding a few definitions, 

however, the subtitle contained essentially the 

same provisions as S. 1026. Yet instead of merely 

establishing the Department of Defense Housing 

Improvement Fund (which the new bill renamed 

the Department of Defense Family Housing 

Improvement Fund), the new bill also set up the 

Figure 2-7. U.S. Senator Strom Thurmond, who sponsored 

the Senate’s National Defense Authorization Bill for Fiscal 

Year 1996.

Courtesy of U.S. Senate Historical Office.
3 6 Privatizing Military Family Housing 3 7

CHAPTER two

The Passage of the Military Housing Privatization Initiative Legislation, 1995–1996

Department of Defense Military Unaccompanied 

Housing Improvement Fund, to be administered 

separately from the Family Housing fund.30

Despite the name change, the composition 

of the Family Housing Improvement Fund was 

the same as it had been in S. 1026, although the 

new bill specifically stated that the fund would 

be used “to carry out activities in this subchapter 

with respect to military family housing, including 

activities required in connection with the planning, execution, and administration of contracts 

entered into under the authority of this subchapter.” Secretaries of individual services would be 

required to transmit to Congress project reports 

of every contract that the services entered into 

for the construction of family and unaccompanied housing, as well as “each conveyance or lease 

proposed” under the law. Annual reports would be 

required, just as they had been in S. 1026, as would 

a final report after the authorities had expired.31

The bill also established a cap on spending at $850 

million, and a cap on the Unaccompanied Housing Improvement Fund of $150 million, totaling $1 

billion. The cap was, in essence, the legal limit on 

the amount of money the military could spend on 

privatization of housing under the MHPI authorities. Congress included the cap in the legislation 

as a way to limit federal spending in case the 

privatization program failed, private developers 

started accruing unreasonable profit margins, or 

the money was being used inappropriately. Several 

years later, the funding caps almost brought the 

entire housing privatization program to a halt 

when the services edged close to exceeding them. 

(For additional details on the spending cap and 

congressional scoring, see Chapter 8.)

After considering the conference committee’s 

report, the House of Representatives agreed to the 

changes and passed H.R. 1530 on December 15, 

1995, and the Senate followed suit on December 

19, 1995.32 President Bill Clinton, however, vetoed 

the bill on December 28, 1995. He cited a variety 

of reasons for his decision, including the bill’s 

requirement to build a ballistic missile defense 

system by 2003 that, in his mind, violated the 

Anti-Ballistic Missile Treaty of 1972. Even with this 

veto, he noted that H.R. 1530 included “a number 

of important authorities for the Department of 

Defense,” such as “the improvement of housing 

facilities for our military personnel and their families.”33 Perhaps predictably, Republicans opposing 

the veto focused on the quality of life initiatives 

that the bill contained, asserting that Clinton’s veto 

meant that the President did not value the military 

or its personnel. In the words of U.S. Representative Floyd Spence (R-South Carolina), the legislation was “about improving the quality of life of the 

All Volunteer Force,” and Clinton’s decision to “risk 

these quality of life provisions [was] incomprehensible.” Despite Republican objections to the veto, 

the party could not generate enough support in the 

House to override it. That meant that a new bill 

had to be passed.34

As the House began its deliberations on 

another bill (S. 1124 ), Congressman Hefley 

expressed his hope that the committee would not 

revisit the sections pertaining to military family 

housing, as neither side had objected to those provisions. Congressman Spence assured Hefley that 

the deliberations “would not get down to housing, 

I am sure, because the President in his message to 

us did not say anything to us about the housing 

[provisions] that we passed.”35 Indeed, the housing 

privatization measures in the proposed bill had 

bipartisan support. Individuals such as U.S. Senator Jesse Bingaman (D-New Mexico), who castigated much of the bill, stated that its only good 

provisions were those dealing with military pay 

and family housing. Likewise, Senator Bob Dole 

(R-Kansas), who staunchly supported the entire 

bill, lauded its housing privatization component, 

which he believed would enable the DOD to use 

innovative solutions to solve the family housing 

problem.36 As Hefley remembered it later, “There 

was no partisanship in this at all”; privatization was 

“a very bipartisan effort.”37

When the conference committee issued a 

report on S. 1124, the language pertaining to the 

military housing privatization initiative in the 

new bill was exactly the same as it had been in the 

earlier, vetoed bill. The House agreed to the conference report and passed S. 1124 on January 24, 1996, 

and the Senate followed suit on January 26, 1996. 

On February 10, 1996, President Bill Clinton signed 

the legislation into law, and it became the National 

Defense Authorization Act for Fiscal Year 1996.

38

Early Initiatives under the MHPI

Legislation

To coordinate privatization efforts across the 

services, Secretary Perry established the Housing 

Revitalization Support Office (HRSO) in October 

1995. This office consisted of representatives from 

each of the military services, as well as from OSD, 

all of whom were knowledgeable about housing 

and real estate matters. Envisioning the HRSO, in 

the words of Deputy Assistant Secretary of Defense 

(Installations) Robert Bayer, as the “focal point of 

knowledge and expertise necessary to implement” 

the privatization program, Perry gave the HRSO 

the major task of discovering, through a system of 

pilot projects, which authorities would work and 

where.39 According to Joseph Sikes, who became 

director of the HRSO in November 1996, the OSD 

had merely “[thrown] everything up against the 

wall that would stick” and had Congress pass a 

“big bag full of authorities.” It was up to HRSO and 

the services to determine how to use the authorities to improve housing.40 HRSO and the services 

also assumed responsibility for training housing 

personnel in real estate and financial issues and 

acted as the main developer of privatization policies, including those involving legal, financial, and 

operational questions.41

HRSO thus began, working with each military 

service to determine valid pilot projects for the 

authorities. The DOD envisioned several steps in 

the privatization process. First, each individual service would develop a list of installations with housing deficits or renovation needs and provide it to 

the HRSO. The HRSO, in tandem with the service’s 

officials, would then visit the posts and decide, 

Figure 2-8. First page of the Title 28 section of Public Law 

104-106, which created the Military Housing Privatization 

Initiative. U.S. Statutes at Large.
3 8 Privatizing Military Family Housing 3 9

CHAPTER two

The Passage of the Military Housing Privatization Initiative Legislation, 1995–1996

first, whether privatization was feasible and, second, which of the tools from the MHPI legislation 

would work best. If privatization was feasible and 

the OSD approved the project, HRSO would hold 

an industry forum at the installation to engage 

private developers. The DOD would then develop 

a Request for Proposal (RFP), notify Congress of 

its intent to issue the RFP, and then publish it after 

receiving congressional approval.42 After evaluating responses to the RFP, the service would select 

a development company that would then assume 

responsibility for the housing. In addition to 

whatever MHPI tools were used, funding for the 

endeavor would come from service members using 

their Basic Allowance for Housing (BAH) to pay 

rent to the developer. Deputy Assistant Secretary 

Bayer realized that the whole privatization process 

was a significant “cultural change” for the DOD 

because the military services had not worked with 

these types of authorities or the private sector in 

this way before, and he admitted in March 1996 

that the DOD was still “working diligently to find 

our way in this new culture.” It was imperative that 

it do so, as, according to Bayer, the DOD would 

have to spend $20 to $30 billion over 30 to 40 years 

to solve its housing problem—money that the 

Department did not have and could not hope to 

attain in the future. Therefore, the DOD had to 

take an innovative approach.43

By March 1996, just a month after President 

Clinton signed the National Defense Authorization 

Act, the DOD had already begun heading down 

the privatization road. Bayer reported to Congress 

that the HRSO had identified 14 potential pilot 

sites across the services to test the authorities.44

Fortunately, the Army had a leg up on privatization because it had established the Capital 

Venture Initiatives (CVI) office a year ahead of 

the HRSO. As Don Spigelmyer, future executive 

director of the RCI Program, explained, “The early 

involvement of the CVI Team enabled the Army 

to take and maintain the lead in privatization over 

the other services.”45

As has already been discussed, in 1995, at 

the request of Dean Stefanides, Chief of Army 

Housing (a division within the Army’s Office 

of the Assistant Chief of Staff for Installation 

Management), the Army tasked Don Spigelmyer, 

who had worked on the OSD tiger team and on 

other privatization studies, to establish what 

Spigelmyer called a “Capital Venture Initiatives” 

team to implement privatization. The name of the 

program, according to Spigelmyer, was meant to 

emphasize the Army’s intent to use private capital 

to rehabilitate its housing. Initially, the team was 

just, in Spigelmyer’s words, “a lean, mean, 3-person, temporary cell.”46 Eventually, it evolved into a 

more established presence, consisting of representatives from the Army, the U.S. Army Corps 

of Engineers, and private financial, business, and 

real estate consultants. It worked to develop the 

Army’s privatization policy and procedures and, 

in coordination with the HRSO, to test the various 

authorities at pilot sites.47

To select the pilot sites, Deputy Assistant 

Secretary of the Army (Installations and Housing) 

Paul Johnson explained, the CVI team requested 

that the Army Major Commands suggest installations where the CVI program could work. The 

Army especially sought those installations that 

had both housing deficits and good working 

relationships with the surrounding community.48

According to Congressman Hefley, officials were 

also looking for bases where housing could be 

built to community standards “on the fringe” of 

the installation. That way, Hefley explained, “You 

could carve it out and it could be just another 

housing development within that community if 

the base ever closed.”49

Potential pilot sites included Fort Carson, 

Colorado; Fort Hood, Texas; Fort Bragg, North 

Carolina; Fort Campbell, Kentucky; Fort Huachuca, Arizona; Fort Eustis, Virginia; and Fort 

Sill, Oklahoma. As the Army evaluated these 

sites, it used the same procedures that the 

HRSO had recommended, especially focusing on meeting with community members and 

private developers at each site. “Our experience 

to date,” Johnson stated, “has shown that the 

private sector is very interested in participating 

in a partnership with the Government to acquire 

or renovate housing.”50 However, major problems 

existed. For one, as Lipham explained, Army 

installations were reluctant to jump on the CVI 

bandwagon. Installation staffs were concerned 

about losing their jobs and installation commanders were concerned about losing control of 

Figure 2-9. Don Spigelmyer, one of the main forces behind 

the Capital Venture Initiatives program and future executive 

director of the RCI Program, June 2003.

Courtesy of RCI Office.

Figure 2-10. Pre-privatization family housing at Fort Belvoir, Va.

Courtesy of Clark Realty Capital.
4 0 Privatizing Military Family Housing 4 1

CHAPTER two

The Passage of the Military Housing Privatization Initiative Legislation, 1995–1996

their family housing assets. In essence, Lipham 

related, “Nobody wanted to be involved.”51

Given these concerns, the CVI program ended 

up selecting as its initial housing privatization 

effort a pilot project at Fort Carson, Colorado. At 

Fort Carson, the CVI team found an installation 

in desperate need of new housing, a highly supportive community outside the base, and a commanding officer, Major General Thomas Schwarz, 

who was receptive to family housing privatization. 

In his desire to obtain better quality housing for 

his soldiers, Schwarz pushed for privatization even 

though a partnership with an outside developer 

meant that he would be giving up some of the control a commanding officer traditionally held on an 

Army installation. In September 1995, the CVI staff 

began working directly with Schwartz and his staff 

on an RFP for the selection of a private developer 

to partner with the Army at Fort Carson. During 

that time, the CVI-Fort Carson work group determined that certain aspects of any privatization 

plan were essential to making Army housing privatization a reality. For example, the CVI-Fort Carson 

planners identified two important prerequisites 

to the development of privatized Army housing at 

Fort Carson: first, the necessity for a privatization 

project to encompass all of the family housing on 

the base, and, second, the financial importance of 

tying rent to a soldier’s BAH. These principles were 

enshrined in the eventual Fort Carson RFP and 

subsequently became common elements of almost 

all CVI and RCI projects.

Budget Scoring

Another early stumbling block to DOD housing 

privatization was the Office of Management and 

Budget’s (OMB) budget scoring of the program. 

Budget scoring or, in the words of one publication, 

“the percentage of dollar value, from 0% to 100%, of 

a project’s cost that must be allocated to an agency’s 

budget in a given fiscal year,” was a difficult issue in 

the first years after passage of the Military Housing 

Privatization Initiative.52 Because the authorities 

in the 1996 legislation all committed government 

resources in one form or another, the OMB had to 

budget, or score, those monetary commitments. 

Scoring could be explained in this way:

Similar to the credit scoring performed by 

private sector lenders such as mortgage and 

credit card companies, OMB scoring attempts 

to quantify the risk exposure faced by the 

Federal Government associated with utilizing 

the MHPI authorities. This is primarily an 

effort to quantify a future contingent liability to 

the Federal Government.53

The DOD and Congress were both aware that 

the Section 801 and 802 programs were no longer 

viable, in part because OMB scored all of the project 

costs in the first year. Doing so negated any kind 

of economic benefit in doing the project over time. 

If the OMB had maintained that stance in relation 

to privatization projects, the DOD would have had 

a tough road. In the months following the passage 

of the legislation, it appeared that the OMB would 

not soften its stance. As Deputy Assistant Secretary 

Johnson related, all the considerations that had 

caused the costs of MILCON projects to escalate—

such as the Federal Acquisition Regulation and the 

OMB’s scoring rules—were still in effect.54

Throughout 1996 and the first part of 1997, 

the DOD wrestled with the OMB over the scoring issue. According to Joseph Sikes, director of 

the HRSO, who dealt with the OMB on many of 

these issues, there were several OMB officials who 

believed that any privatization proposal needed 

to be scored at 100 percent in the first year of 

the program. If that happened, Sikes and others 

believed, “the program would die,” much as the 

801 and 802 authorities had perished. Finally, the 

debate on the issue rose to the director of OMB, 

Franklin Raines, and the Secretary of Defense 

(Secretary Perry until January 1997, when William Cohen replaced him). As Sikes remembered, 

“we were exchanging memos back and forth, first 

between the Deputy Secretary [of Defense] and the 

Deputy Director [of the OMB] and [then between] 

the Director and the Secretary of Defense.”55 OMB’s 

Deputy Director refused to budge on the issue, but 

Raines, who was a former Fannie Mae chief executive officer, finally stepped in, according to one 

observer, after Vice President Al Gore requested 

that the OMB “make it happen.”56

On June 25, 1997, Raines sent a memorandum to Secretary of Defense Cohen, transmitting 

scoring guidelines for projects using the MHPI 

authorities.57 This memorandum, and others 

exchanged between Raines and Cohen, became 

the basis of the scoring guidelines used in housing privatization. The guidelines dealt with the 

four different privatization tools outlined in the 

MHPI legislation: investments, differential lease 

payments, loan guarantees, and direct loans. The 

guidelines established a distinct set of scoring 

criteria for each of the tools.58 According to Sikes, 

these new scoring guidelines enabled the privatization program to proceed.59

Military Housing Authority

As the DOD and OMB worked out the scoring 

issues, and as the HRSO and the Army’s CVI team 

tested options, the OSD considered implementing 

the Quality of Life Task Force’s recommendation 

that the DOD establish a Military Housing Authority. Deputy Assistant Secretary Bayer told Congress 

in March 1996 that the DOD wondered whether a 

Military Housing Corporation in each service could 

“improve our housing situation even more rapidly.”60 In fact, the OSD had established a Defense 

Housing Authority Working Group in 1995 to 

investigate this possibility, while within the Army 

the OACSIM had already developed a proposal to 

create an Army Housing Authority.61

The Army had several ideas about the form 

that the housing authority would take, but all of 

the ideas stemmed from the service’s desire to 

privatize housing in a way that still allowed installation commanders to maintain some control. One 

proposal was to establish an Army Housing Corporation, patterned after the Australian Defense 

Housing Authority. According to this proposal, the 

corporation would work in this way:

Army family housing would become a 

Government Business Enterprise (GBE) 

under the Secretary of the Army to: improve 

the quality of housing for families; meet the 

operational needs of Department of the Army; 

and operate as a business and “break even.” 

Assets would be transferred to AHA, and 

occupants would forfeit housing allowances as 

they do now.... Army would be authorized to 

sell, buy and lease housing assets, and enter 

into joint-ventures to develop housing areas. 

A Board of Directors would be established and 

be responsible for AHA activities. The Board 

would include senior officers from appropriate 

Army agencies and the private sector. Housing 

management would be decentralized, i.e., 

maximum authority delegated to installation 

managers. Commanders will still set 

requirements and priorities of assignment.62

The Army saw this as a viable way to engage 

the private sector, as it would be “very attractive” 
4 2 Privatizing Military Family Housing 4 3

CHAPTER two

The Passage of the Military Housing Privatization Initiative Legislation, 1995–1996

to the financial community. It would also allow 

commanders at individual installations to continue 

to manage housing. However, the Army estimated 

that using the corporation to fix the family housing 

problem would cost the Army 15 percent more than 

the BAH of the soldiers occupying the housing, 

making it more costly than the traditional method 

of military construction. The Army also did not 

know how the OMB would score the ventures of 

such a corporation.63

After receiving feedback from the Army 

Secretariat in 1996, Army Family Housing leaders 

molded the Army Housing Corporation idea into 

a proposal to create a nonprofit entity to govern 

Army housing, such as a Non-Appropriated Fund 

Instrumentality. As foreseen by the Army, the 

nonprofit organization would receive funding from 

the proceeds of military housing and land sales. It 

could also “borrow against the property” in order 

to fund renovations, and it could receive subsidies 

from either the Army or the DOD. “The entity 

would be able to buy and sell housing units to 

meet changing military housing requirements,” the 

proposal continued, and it would rent and operate 

the housing, “using commercial property management and procurement practices.”64 The nonprofit 

route would go beyond the CVI program to “full 

privatization” (whereby the Army would divest all 

of its housing functions to private entities), and it 

appeared to be a good compromise between the 

Secretary of the Army, who wanted the Army to 

divest itself of housing responsibilities, and Army 

commanders, who strongly advocated that installation commanders continue to control housing on 

their bases.65 Ultimately, however, the OMB ruled 

in 1996 that a housing authority was to be considered a governmental entity. As a result, its actions 

had to be scored up front. That led Congress to 

quash the idea.66

Conclusion

When the Military Housing Privatization Initiative became law on February 10, 1996, the Army 

was “ahead of the curve” compared to the other 

services in the DOD housing privatization effort 

because the service had already produced several 

initiatives that mapped out how best to use the 

authorities. But the real test would come when the 

Army attempted to fully privatize housing on an 

installation by way of a pilot project. Although the 

Army had identified seven potential pilot sites for 

its CVI program, it encountered some opposition 

from installation leadership to actually implementing privatization. Yet one installation—Fort Carson—was ready to take the privatization journey, 

which would test whether or not the concept could 

actually work.

Endnotes to Chapter 2

1. Ted Lipham, “Information Paper, SAIE-RCI, January 

6, 2001, Subject: Army Family Housing (AFH)/Barracks 

Privatization,” Documentum database, Office of History, 

U.S. Army Corps of Engineers Headquarters (HQUSACE), 

Alexandria, Va. Hereafter cited as USACE Office of 

History.

2. Ted Lipham telephone interview by Paul Sadin, 13 

October 2008, Transcript, 2.

3. Quoted in Lipham interview, 1. See also interview of 

Don Spigelmyer, Dean Stefanides, Rhonda Hayes, Mike 

McCarley, Matt Keiser, Barry Scribner, Bill Mysliwiec by 

Matthew Godfrey, 13 February 2007, Crystal City, Va., 

Transcript, 4-5. Because this interview by the Corps was 

conducted with individuals who would later become a part 

of RCI, it will hereafter, for the sake of convenience, be 

cited as the RCI group interview. See also Bernard Rostker 

and Charles Nemfakos interview by Matthew Godfrey, 17 

July 2007, Arlington, Va., Transcript, 17-18. 

4. Office of the Under Secretary of Defense for Acquisition 

and Technology, Report of the Defense Science Board 

Task Force on Quality of Life (Washington, D.C.: Office 

of the Under Secretary of Defense for Acquisition and 

Technology, 1995), 6-7. See also “Military Housing 

Privatization Initiative: Statements of Robert E. Bayer, et 

al., Before the Subcommittee on Military Installations and 

Facilities of the House Committee on National Security,” 

7 March 1996, 2, Loose papers, Uncatalogued Housing 

Materials, Research Collections, USACE Office of History.

5. Rostker and Nemfakos interview, 2, 11-12, 16-17.

6. Quoted in RCI group interview, 4-5. See also Rostker 

and Nemfakos interview, 17-18.

7. Major General John H. Little, Assistant Chief of Staff 

for Installation Management, to Dr. Walter B. LaBerge, 

Chair, Army Science Board, 10 April 1995, File: BG General 

Herndon’s Briefing for 9 March 1995, Army Science 

Board, Box 4, Uncatalogued Housing Materials, Research 

Collections, USACE Office of History.

8. Army Science Board Independent Assessment Panel 

on Army Family Housing, Meeting Minutes, 9 March 

1995, File: BG General Herndon’s Briefing for 9 March 

1995, Army Science Board, Box 4, Uncatalogued Housing 

Materials, Research Collections, USACE Office of History.

9. “Army Family Housing (AFH) Independent Assessment 

Revised Terms of Reference (TORs),” 4 April 1995, File: 

BG General Herndon’s Briefing for 9 March 1995, Army 

Science Board, Box 4, Uncatalogued Housing Materials, 

Research Collections, USACE Office of History.

10. John H. Crabb, Information Paper, Urban Land 

Institute (ULI) Workshop–Military Family Housing, 9 

to 10 January 1995, Loose papers, Uncatalogued Housing 

Materials, Research Collections, USACE Office of History.

11. Joel Hefley telephone interview by Paul Sadin, 22 

September 2008, Transcript, 3-4.

12. U.S. House Subcommittee on Military Installations and 

Facilities of the Committee on National Security, Hearings 

on National Defense Authorization Act For Fiscal Year 

1996 (H.R. 1530) and Oversight of Previously Authorized 

Programs Before the Committee on National Security, 

House of Representatives, Military Installations and 

Facilities Subcommittee Hearings on Division B—Military 

Construction Authorizations (H.R. 1529), 104th Cong., 

1st sess., 1995, xvii, xxi-xxii. Hereafter cited as FY 1996 

MILCON Authorization Hearings. 

13. FY 1996 MILCON Authorization Hearings, 1-2.

14. FY 1996 MILCON Authorization Hearings, 9, 20, 23-24, 

63, 191-92.

15. FY 1996 MILCON Authorization Hearings, 350-53.

16. RCI group interview, 6.

17. William C. Baldwin, “Four Housing Privatization 

Programs: A History of the Wherry, Capehart, Section 801, 

and Section 802 Family Housing Programs in the Army,” 

October 1996, USACE Office of History.

18. U.S. Senate Committee on Armed Services, 

Department of Defense Authorization for Appropriations 

for Fiscal Year 1996 and the Future Years Defense Program: 

Hearings Before the Committee on Armed Services, 

United States Senate, One Hundred Fourth Congress, First 

Session, on S. 1026, Part 3, Readiness, 104th Cong., 1st sess., 

1995, 486-87. Hereafter cited as FY 1996 Department of 

Defense Hearings. 

19. Judith A. Miller, General Counsel of the Department 

of Defense, to Honorable Newt Gingrich, Speaker of the 

House of Representatives, 8 May 1995, Loose papers, 

Uncatalogued Housing Materials, Research Collections, 

USACE Office of History.

20. “The Military Family Housing Revitalization Act of 

1995,” draft legislation, 8 May 1995 (transmittal date), 6, 

Loose papers, Uncatalogued Housing Materials, Research 

Collections, USACE Office of History.

21. “The Military Family Housing Revitalization Act of 

1995,” draft legistlation, 7.

22. “The Military Family Housing Revitalization Act of 

1995,” draft legislation, 6.

23. “DOD Proposes Private Capital to Improve Military 

Housing,” Office of Assistant Secretary of Defense 

(Public Affairs) News Release, 8 May 1995, Loose papers, 

Uncatalogued Housing Materials, Research Collections, 

USACE Office of History.

24. FY 1996 Department of Defense Hearings, 484-85, 

488-89.

25. FY 1996 Department of Defense Hearings, 509, 532.
4 4 Privatizing Military Family Housing 4 5

CHAPTER two

The Passage of the Military Housing Privatization Initiative Legislation, 1995–1996

26. U.S. House, A Bill to Authorize Appropriations for 

Fiscal Year 1996 for Military Activities of the Department 

of Defense, to Prescribe Military Personnel Strengths for 

Fiscal Year 1996, and for Other Purposes, HR 1530, 104th 

Cong., 1st sess., version 2, 369-74, www.lexis-nexis.com. 

27. U.S. House, A Bill to Authorize Appropriations for 

Fiscal Year 1996 for Military Activities of the Department 

of Defense, to Prescribe Military Personnel Strengths for 

Fiscal Year 1996, and for Other Purposes, version 2, 375.

28. U.S. Senate, A Bill to Authorize Appropriations for 

Fiscal Year 1996 for Military Activities of the Department 

of Defense, for Military Construction, and for Defense 

Activities of the Department of Energy, to Prescribe 

Personnel Strengths for Such Fiscal Year for the Armed 

Forces, and for Other Purposes, S 1026, 104th Cong., 1st 

sess., www.lexis-nexis.com.

29. U.S. Senate, A Bill to Authorize Appropriations for 

Fiscal Year 1996 for Military Activities of the Department 

of Defense, to Prescribe Personnel Strengths for Such Fiscal 

Year for the Armed Forces, and for Other Purposes, S. 1124, 

104th Cong., 1st sess., version 1, www.lexis-nexis.com.

30. U.S. House, National Defense Authorization Act for 

Fiscal Year 1996: Conference Report to Accompany H.R.. 

1530, 104th Cong., 1st sess., 1995, H. Rept. 104-406, 376-85.

31. U.S. House, National Defense Authorization Act for 

Fiscal Year 1996: Conference Report to Accompany H.R. 

1530, 376-85. 

32. Congressional Record, 104th Cong., 1st sess., 141: H 

14938-H 14946, www.lexis-nexis.com.

33. U.S. House, Message from the President Transmitting 

His Veto of H.R. 1530, The National Defense Authorization 

Act for Fiscal Year 1996 (Part 1 of 2), 104th Cong., 2d sess., 

1996, H. Doc. 104-155, www.lexis-nexis.com. 

34. Congressional Record, 104th Cong., 1st sess., 142: H 

12-H 13, www.lexis-nexis.com.

35. Congressional Record, 104th Cong., 1st sess., 142: H 241, 

www.lexis-nexis.com. 

36. Congressional Record, 104th Cong., 2d sess., 142: S 459, 

www.lexis-nexis.com. 

37. Hefley interview, 4.

38. U.S. House, National Defense Authorization Act for 

Fiscal Year 1996: Conference Report to Accompany S. 1124, 

104th Cong., 2d sess., 1996, H. Rept. 104-450, 370-85; 

Congressional Record, 104th Cong., 2d sess., 142: H 782-

H 800, S 446-S461, www.lexis-nexis.com; and National 

Defense Authorization Act for Fiscal Year 1996, Public Law 

104-106, U.S. Statutes at Large 110 (1996): 186.

39. Statements by Robert E. Bayer, et al., 7 March 1996, 5, 

Loose papers, Uncatalogued Housing Materials, Research 

Collections, USACE Office of History.

40. Joseph Sikes interview by Matthew Godfrey, 20 July 

2007, Crystal City, Va., Transcript, 3.

41. U.S. House Subcommittee on Military Construction 

Appropriations of the Committee on Appropriations, 

Military Construction Appropriations for 1998: 

Hearings Before a Subcommittee of the Committee on 

Appropriations, House of Representatives, 105th Cong., 

1st sess., 1997, 176. Hereafter cited as 1998 MILCON 

Appropriations Hearings.

42. 1998 MILCON Appropriations Hearings, 181.

43. “Statement of Robert E. Bayer,” 7 March 1996, 3, 5-6. 

In 1997, the Defense Department combined service 

members’ Basic Allowance for Quarters (BAQ) and 

the Variable Housing Allowance (VHA) into the Basic 

Allowance for Housing (BAH), described as a “price-based 

system ... indexed to local housing costs,” 1998 MILCON 

Appropriations Hearings, 194.

44. “Statement of Robert E. Bayer,” 7 March 1996, 5.

45. Don Spigelmyer, written comments to authors, 31 

January 2011.

46. Don Spigelmyer, untitled document, Folder: 

Marketing–Articles–RCI Video–Commo, Share Drive 

database, RCI Program Office, Crystal City, Va. Hereafter 

cited as RCI Office. See also RCI group interview, 6; Jack 

Crabb, Army Housing Management Branch, “Housing 

Capital Venture Initiatives,” File: 20-21, April 1995, Army 

Science Board with Capt. Venturists, Box 4, Uncatalogued 

Housing Materials, Research Collections, USACE Office 

of History; Donald Spigelmyer biography, Folder: AdminPers-Org-SigDel-Rosters, Subfolder: Bios, Share Drive 

database, RCI Office; and Thomas Kraeer interview by 

Matthew Godfrey, 18 October 2007, Crystal City, Va., 

Transcript, 1.

47. “Statement by Mr. Paul W. Johnson, Deputy Assistant 

Secretary of the Army (Installations and Housing), OASA, 

IL&E, Before the Subcommittee on Military Installations 

& Facilities, Committee on National Security, House 

of Representatives, Second Session, 104th Congress, 

Regarding Housing Revitalization Oversight,” 7 March 

1996, 4, Loose papers, Uncatalogued Housing Materials, 

Research Collections, USACE Office of History. See also 

Lipham interview, 3-4.

48. “Statement by Mr. Paul W. Johnson,” 7 March 1996, 

4-5.

49. Hefley interview, 5.

50. “Statement by Mr. Paul W. Johnson,” 7 March 1996, 

4-5.

51. Lipham interview, 4. See also “Statement by Mr. Paul 

W. Johnson,” 7 March 1996, 4-5.

52.Daniel H. Else, Military Housing Privatization 

Initiative: Background and Issues (Washington, D.C.: 

Congressional Research Service, Library of Congress, 

2001), CRS-9.

53. “OMB Scoring and the Residential Communities 

Initiative (RCI),” memorandum, Folder: RCI Site Visit 

2002, Box 2 of 2, RCI Housing Manager’s Office Files, 

Community Support Building, Fort Detrick, Md.

54. “Statement by Mr. Paul W. Johnson,” 7 March 1996, 7.

55. Sikes interview, 9.

56. RCI group interview, 19.

57. Franklin D. Raines, Director, to The Honorable 

William S. Cohen, Secretary of Defense, June 25, 

1997 (with attachment), document provided by Dean 

Stefanides. See also “Military Housing Privatization 

Initiative (MHPI) – 101,” September 2006, http://www.acq.

osd.mil/housing/mhpi.htm. 

58. “OMB Scoring and the Residential Communities 

Initiative (RCI).”

59. Sikes interview, 9.

60. “Statement of Robert E. Bayer,” 7 March 1996, 7.

61. Information Paper, “Family Housing Privatization 

Efforts Currently Underway,” 13 October 1995, Loose 

papers, Uncatalogued Housing Materials, Research 

Collections, USACE Office of History.

62. U.S. Army, “Proposed Army Housing Authority 

(AHA),” unpaginated, Loose papers, Uncatalogued 

Housing Materials, Research Collections, USACE Office of 

History. 

63. U.S. Army, “Proposed Army Housing Authority 

(AHA),” unpaginated.

64. U.S. Army, “Non Profit Entity,” Loose papers, 

Uncatalogued Housing Materials, Research Collections, 

USACE Office of History. See also Ted Lipham, 

Information Paper, SAIE-RCI, January 6, 2001.

65. Information Paper, “Army Family Housing (AFH) 

Privatization Update,” 28 February 1996, 1, Loose papers, 

Uncatalogued Housing Materials, Research Collections, 

USACE Office of History. See also Major General Frank 

L. Miller, Jr., Assistant Chief of Staff for Installation 

Management, Memorandum, 24 January 1996, Loose 

papers, Uncatalogued Housing Materials, Research 

Collections, USACE Office of History; and “Army Family 

Housing Privatization: Decision Briefing to Obtain VCSA 

Approval to Take the Army Housing Corporation Proposal 

to the CSA,” 21 September 1995, File: Data for Ft. Carson 

(Col. Koran), Box 4, Uncatalogued Housing Materials, 

Research Collections, USACE Office of History.

66. Lipham interview, 1; Sikes interview, 2-3; and Lipham, 

Information Paper, SAIE-RCI, January 6, 2001.
4 7

CHAPTER T hree

The Fort Carson CVI Pilot Housing

Project, 1994–1999

As Congress began debating the Military 

Housing Privatization Initiative (MHPI) 

legislation and the U.S. Army started 

developing the Capital Venture Initiatives (CVI) 

program in 1994, plans for privatizing housing 

at Fort Carson in Colorado Springs, Colorado, 

were already underway. In fact, the genesis 

of the housing privatization program at Fort 

Carson predated both CVI and the introduction 

of the MHPI legislation. In 1994 and early 1995, 

Fort Carson staff and Colorado Springs community and business leaders began formulating a mechanism they hoped could utilize local 

private-sector construction and management 

resources to tackle the poor condition and maintenance backlog of the garrison’s family housing. 

These early steps in the direction of housing 

privatization helped Fort Carson become the 

first pilot project for the Army’s CVI program. 

In these initial efforts in Colorado Springs and 

in the eventual implementation of CVI at the 

installation, several important success factors 

emerged, including strong individual leadership from Fort Carson officials, a high degree of 

local community involvement, and the impact of 

fluctuations of the regional economy.

In the early 1990s, Fort Carson was a 10,000-

troop garrison in Colorado Springs, a metropolitan area of almost 400,000 residents at the foot 

of Colorado’s spectacular Front Range. In 1942, 

the Army had opened a training base named 

Camp Carson on the site just one month after 

the Japanese attack on Pearl Harbor. It became a 

permanent installation in 1954 and was renamed 

Fort Carson. Partly because of the long life of the 

installation, the local Colorado Springs community strongly supported the military, a support 

reinforced by the fact that the city was also home 

to the U.S. Air Force Academy, Peterson Air Force 

Base, and the North American Aerospace Defense 

(NORAD) facility inside Cheyenne Mountain. 

Cooperation of the area’s civic, business, and 

Figure 3-1. Blackfoot Hill Village, 

a new RCI development at Fort 

Carson, Colo., ca. 2001.

Courtesy of RCI Office.
4 9

CHAPTER THREE

The Fort Carson CVI Pilot Housing Project, 1994–1999

4 8 Privatizing Military Family Housing

political leaders with the Army proved to be one 

of the keys to the success of the pilot effort.

Within the Army, Fort Carson was known for 

its stunning views, mountain air, and decrepit 

housing facilities. In 1994, when the first privatization discussions at Fort Carson began, there were 

1,823 family housing units on the base, 1,599 of 

them dedicated to the families of enlisted soldiers. 

The existing family housing structures dated from 

three separate periods of building financed by 

Army military construction funds: 1957-1958, 1965, 

and 1971-1974. 

When the final rounds of the Army’s Base 

Realignment and Closure (BRAC) program—a 

cost-cutting measure that aimed to close or shrink 

a number of bases throughout the United States 

and Europe—targeted Fort Carson for possible 

shutdown, the area’s business and civic leaders 

and their representatives in Congress coalesced 

into a powerful political force in an attempt to 

prevent base closure. As former U.S. Representative Joel Hefley (R-Colorado) said, “In a town like 

Colorado Springs, you naturally are going to be 

concerned about your biggest employer and your 

biggest base, and that’s what it was.”1

 Fort Carson 

was, at the time, one of the top two employers 

in the state of Colorado. Colorado Springs leaders, Fort Carson staff, and Congressman Hefley 

brought members of Congress and high-level Army 

officials to Fort Carson to see the specific training 

resources—particularly the Pinon Canyon Maneuver Site south of Colorado Springs—that the base 

had to offer. Although it is difficult to isolate the 

role of the community’s “Keep Carson” campaign 

in preventing BRAC closure, the campaign successfully brought the leadership, brain power, and 

financial resources of the Colorado Springs area 

together in a common effort to assist Fort Carson. 

As a result, when a new opportunity to support 

the base—namely family housing privatization—

arrived, many of the same people were poised to 

collaborate once again.

By the spring of 1995, Fort Carson’s long-term 

status was very different from what it had been 

in the early 1990s. Instead of threatening to close 

the installation, the Army’s force realignment plan 

moved troops from other bases to Carson, including the Third Armored Calvary Regiment from 

Fort Bliss, Texas. Jerry Stafford, at the time a first 

sergeant with that outfit, described the restructuring as “a whole regiment of about 5,500 soldiers 

plus families doing a move lock, stock, and barrel.”2

Although the realignment helped ensure the future 

stability of the installation, it strained an already 

inadequate housing situation. According to Stafford, the regiment was told that housing would be 

available when it arrived at Fort Carson. Yet when 

the regiment arrived, the Army Housing Office had 

little, if anything, to offer, either on the base or off.3

Two Army officials became especially concerned about the family housing situation: thenMajor General Thomas Schwartz, Fort Carson’s 

Installation Commander, and General Dennis Reimer, Commander of Forces Command 

(FORSCOM) from 1993 to 1995 and Army Chief 

of Staff from 1995 to 1999. According to several 

individuals, General Reimer was the instigator of 

the privatization idea at Fort Carson, while others believed that Schwartz and his chief of staff, 

Colonel Tony Koren, were equally important 

catalysts. Reimer was intimately familiar with the 

housing situation at Fort Carson because he had 

worked there as a major in the 1970s and served 

as the base commander from 1988 to 1990. In the 

mid-1990s, Reimer consulted with Schwartz about 

housing improvements and wondered whether 

the Army could collaborate with the private sector, 

particularly local developers, property managers, 

 Base Realignment and Closure (BRAC) 

Figure 3-2. Armored cavalry troops during maneuvers at 

Fort Carson, 1999.

Courtesy of U.S. Department of Defense.

In October 1988, Congress enacted the Base Closure 

and Realignment Act. According to the Department 

of Defense (DOD), this law was intended to allow 

the DOD “to more readily close unneeded bases and 

realign others to meet its national security requirements.” The act stemmed from the ending of the Cold 

War in the late 1980s, which left the United States 

with a smaller force and excess facilities in both the 

United States and in Europe. Under BRAC, the DOD 

determined whether to close, realign (which often 

meant downsizing), or expand installations, based 

on a process that “evaluates its current stationing plan against multiple variables: the changes in 

threat, force structure, technologies, doctrine, organization, business practices, and plant inventory.” 

The law created BRAC commissions to “recommend 

specific base realignments and closures to the President, who in turn sent the commissions’ recommendations with his approval to the Congress.” 

Five separate rounds of BRAC installation closures and reductions took place over the course of 18 

years: 1988-89, 1991, 1993, 1995, and 2005. The 1995 

BRAC decisions impacted Fort Carson, Colorado, and 

the plans the Army had launched for privatizing family 

housing on the installation. Fort Carson appeared on 

the tentative list of 1995 BRAC closures, but in early 

1995 Secretary of Defense William J. Perry announced 

that the original list of base closures would be scaled 

back because the military services argued that following through on all of the scheduled cuts, “would be 

too difficult and too costly in the near term.” In particular, the Army contended that it could not afford to 

lose Fort Carson and Fort Riley, Kansas, two installations that were home to the Army’s largest training 

grounds. Both installations were eventually removed 

from the closure list. In fact, instead of closing Fort 

Carson, the final BRAC decision enlarged the installation. A Green Beret unit of close to 1,000 soldiers was 

relocated from Fort Devens, Massachusetts, to Fort 

Carson when the final BRAC assignments closed the 

New England base.

During the final round of BRAC closures scheduled for 2005, the RCI Program Office worked closely 

with the U.S. Army Corps of Engineers (USACE) Norfolk District and its real estate team to mitigate the 

effects that BRAC might have on Army family housing privatization. In November 2005, Fort Carson conducted a new Housing Market Analysis in response 

to the restationing being implemented as part of 

BRAC 2005. The study revealed that, because of troop 

additions to Fort Carson, the project needed another 

1,023 new housing units. However, the private-public 

partnership could not arrange financing for more 

than 650 additional homes. So in coordination with 

the RCI Program Office in Washington, D.C., the Army 

decided that Phase II of privatization at Fort Carson 

would consist of building 404 new units by February 

2010 to fill that need.
5 0 Privatizing Military Family Housing 5 1

CHAPTER THREE

The Fort Carson CVI Pilot Housing Project, 1994–1999

and construction firms, to tackle the housing and 

maintenance shortfall at Fort Carson.6 According 

to Tom Kraeer, who was a member of the inaugural 

CVI team that worked on the Carson project, the 

show of support from Reimer and Schwartz was 

unusual, as the CVI staff generally experienced 

resistance from installation commanders, who did 

not want to “give up control” of housing. Reimer 

and Schwartz “somehow got past all that,” Kraeer 

remembered, “and became excited about doing it.”7

Regardless of who started the housing privatization ball rolling at Fort Carson, all of those 

involved at the outset agreed on one thing: the 

existing housing procurement system that kept 

soldiers and their families in miserable living 

conditions was in dire need of change. Colonel 

Koren characterized the housing at Fort Carson as 

“probably as bad as any post that I had seen in the 

U.S.... [and] there weren’t any real possibilities of 

the government fixing it.”8 General Schwartz said 

the condition of Fort Carson’s housing was so bad 

“it was almost criminal.”9

Three factors lay behind Fort Carson’s development of a privatization model ahead of other bases 

with similarly poor housing conditions. The first 

was the location of the base in a growing urban 

center amid a changing regional economy, a situation that especially had an impact on the area’s 

real estate market. The second was the long-term 

involvement of the local civic and business communities in looking out for the welfare of Fort Carson. The third was the strong support of Army staff 

members who were willing to take the initiative to 

make unconventional changes.

Colorado Springs’ real estate market had a 

significant impact on the development of privatization. By 1995, more than 3,700 families sat on the 

waiting list for family housing units at Fort Carson, 

with an average wait time of more than 32 months. 

As with most installations, the majority of soldiers 

under these conditions had to obtain housing off 

post. Finding affordable housing was not a problem 

during the late 1980s and early 1990s, when a recession in Colorado Springs meant that “the vacancy 

rate was in double digits ... and landlords offered 

many incentives such as free utilities in order to fill 

apartments.”10 But as the regional economy began 

to grow and then flourish in the mid-1990s, off-post 

vacancy rates plummeted to approximately two percent while the average monthly rental rate jumped 

by 50 percent. The scarcity of rental units put 

private rental rates for two- and three-bedrooms 

apartments, the size most desired by Army families, 

well beyond the reach of most enlisted soldiers’ 

Basic Allowance for Quarters (BAQ) and Variable 

Housing Allowance (VHA).11

Confronted with these problems, General 

Reimer called for a start to housing privatization 

Figure 3-3. General Dennis Reimer, FORSCOM Commander 

and U.S. Army Chief of Staff, championed the privatization of 

family housing.

Courtesy of U.S. Department of Defense.

in his January 10, 1995, address to the Colorado 

Springs Chamber of Commerce:

I have challenged Fort Carson to be the model 

for the Army and charged them with the 

responsibility of developing privatization 

initiatives to their full potential. I have no 

idea where this will lead, but I believe it can 

be a win-win situation.... Is there a program 

whereby we could enter into an agreement 

with realtors off post to turn over our on-post 

housing and let our civilian partners run it, 

as well as build additional housing? I would 

like to explore this a little to see what kinds of 

options are available to us. We need some fresh 

thinking on this issue because it is an area we 

have to solve quickly.12

The Chamber of Commerce audience listening to Reimer’s address included some of the same 

people who had organized the effort to keep Fort 

Carson open during the period of BRAC closures. 

By this time in early 1995, they were ready to turn 

their attention to solving the family housing 

dilemma at Fort Carson.

Shortly after Reimer’s presentation, General 

Schwartz moved into action. He assigned his chief 

of staff, Colonel Koren, to gather information 

and lay out some preliminary paths to advancing 

the privatized housing concept. Colonel Koren 

researched possible strategies and investigated 

the legal issues, Department of Defense (DOD) 

policies, and military privatization precedents. He 

also examined the U.S. Navy’s recent privatization 

efforts and the 2667 program. These programs, 

however, generally were either off base or conducted on a much smaller scale, so that they were 

not applicable to Fort Carson, where the evolving 

privatization plan called for incorporation of all 

housing on the installation, including both new 

units and existing structures. Koren said that he 

realized that the Army needed to face building a 

privatization program “from the ground up and 

we figured that a blank sheet of paper and pen was 

probably as powerful a tool as we could get.”13

With General Schwartz’s approval, Koren put 

together a work group that became the Fort Carson 

Affordable Housing Program (FCAHP) team. This 

team consisted of Army representatives, as well 

as prominent members of the outlying Colorado 

Springs community, representatives of El Paso 

County, and private developers. According to General Schwartz, these were “people who believed [in] 

and loved the military and understood the plight of 

the soldiers.”14 In early 1995, the workgroup formulated a skeletal outline of a privatization plan and 

began preparing a proposal for Army officials.

While this work was occurring, George Georgalis, FORSCOM Housing representative, led a 

group of DOD officials visiting Colorado Springs 

in March 1995 for meetings to “coordinate capital 

venture and privatization initiatives with [the] Fort 

Carson command group” and with members of the 

Colorado Springs business community. Colonel 

Koren, Garrison Commander Colonel Mike Hess, 

and other Fort Carson officials were present for the 

meetings, as were Jim Palmer (representing the 

Colorado Springs Chamber of Commerce), Tom 

Schmidt (representing the city’s Economic Development Council), and Dick Sullivan of the El Paso 

County Housing Authority. Georgalis reported that 

the participants “developed concept, process, and 

milestones for the Fort Carson housing initiative.”15

The meeting participants developed a conceptual framework for privatization that included 

creating a partnership among Fort Carson, Colorado Springs, and El Paso County to oversee the 

process and explore how private developers could 
5 2 Privatizing Military Family Housing 5 3

CHAPTER THREE

The Fort Carson CVI Pilot Housing Project, 1994–1999

best become involved.16 The partnership was 

envisioned as a vehicle that could work through 

the local government to find funding and contract 

with a developer to do the construction work. Ideally, the developer would be a local entity that had 

previously worked with the Army.17 The meeting 

participants also discussed other key programmatic elements required to entice private companies to partner in the venture, such as obtaining 

DOD “seed money,” long-term land out-grants, 

and government mortgage guarantees.18 As initially envisioned, the partner entity could begin 

work under the authorities found in Section 2877 

(Limited Partnership with local government) or 

Section 2879 (Co-insurance) of Title 10 in the U.S. 

Code, to contract with a developer to construct 800 

new family units and renovate 654 existing units. 

The partner would also provide financing, maintenance, and management of the housing units for a 

period of up to 50 years.19

The DOD team followed up the Fort Carson 

consultation with specific strategy recommendations, which included adding Fort Carson to the 

Army Joint Venture Legislative Proposal for fiscal 

year (FY) 1995 and determining the issues most 

pertinent to the privatization effort at Fort Carson.20 These recommendations show that although 

the Fort Carson Affordable Housing Project had 

its origins independent of the Army’s privatization efforts, its subsequent development occurred 

under the direction of the Army’s CVI program.

In April 1995, the FCAHP presented its housing privatization proposal to FORSCOM. The 

proposal provided the details for privatizing the 

family housing stock at Carson and also gave the 

Army and DOD a model it could follow at other 

installations.21 Knowing that Secretary of Defense 

William Perry would be in attendance, Koren and 

others worked diligently to pull together a brief 

PowerPoint presentation for the meeting.22 The 

proposal to FORSCOM included a review of the 

existing housing and maintenance shortfalls, the 

poor living conditions, and the long waiting list 

for Fort Carson housing. It explained that the offbase housing situation had exacerbated the prior 

problems, because rental occupancy in Colorado 

Springs was almost at 99 percent, and the rents for 

family-sized apartments were soaring out of the 

reach of enlisted soldiers. 

To remedy the situation, Fort Carson officials 

wanted “to have a private developer build new 

units, revitalize existing units, manage all of the 

units and provide these units to our soldiers at a 

monthly rate affordable to all ranks.” The success of 

the Fort Carson model rested upon “retaining local 

control to the maximum extent possible” through 

a corporate oversight entity composed of representatives from Fort Carson, the City of Colorado 

Springs, and local civic and business organizations. Fort Carson staff would seek the support 

of the U.S. Army Corps of Engineers (USACE) for 

the solicitation, selection, and project management tasks. The proposal encouraged FORSCOM 

staff to “support this bold effort to provide quality, 

affordable housing for our soldiers while providing a model for a partnership between DOD and 

the private sector.”23 After presenting this proposal, 

Koren recalled, General Schwartz “basically got a 

verbal go-ahead” from FORSCOM and the DOD 

“to go ahead and start to develop it.”24

In order to proceed, however, two other factors 

had to be resolved. First, in order to be eligible for 

good financial options, the project required some 

type of guarantee from the Army that occupancy 

would not be an issue. Second, Fort Carson needed 

legislative changes to be adopted, authorizing 

the partnership between the government and the 

private sector.25

Very early in the planning process, Colonel 

Koren recognized that changes in existing legislation and DOD policy would be necessary to make 

the nascent privatization concept possible. From 

then on, he invested most of his time and effort in 

a lobbying and education program aimed at Congress and the Pentagon to create the legal authority 

and DOD policies necessary to make the affordable 

housing project a reality. He worked closely with 

Congressman Joel Hefley from Colorado’s Fifth 

Congressional District, who also served as chair 

of the House Subcommittee on Installations and 

Facilities, and with Hefley’s senior staffer, Philip 

Grone. Hefley and Grone, according to Koren, supported the privatization model early, enabling the 

necessary legislation to pass Congress.26

In the meantime, Koren added John Keefe, 

an engineer detailed to Fort Carson, to his staff to 

tackle the on-the-ground technical aspects of the 

proposed program.27 By June 1995, Koren could 

Figure 3-4. Aerial view of new RCI family housing 

development (center) amid older military housing at Fort 

Carson, Colo. ca. 2001.

Courtesy of RCI Office.

see that they would have to overcome a number of 

substantial hurdles before any kind of partnering 

with an outside entity could occur. These hurdles 

included possible resistance to the program from 

established Army culture, applicability of Federal 

Acquisition Regulation (FAR) requirements, questions about how privatization of housing would 

affect the local school districts, and questions 

about what jurisdiction the installation commander would have over the privatized housing. 

These issues would persist throughout the privatization process at Fort Carson.28

Official Proposal to FORSCOM

General Schwartz’s FCAHP team followed up 

its April proposal with an official, substantially 

fleshed-out privatization plan, which it submitted to FORSCOM in June 1995. In introducing this 

second proposal, the general wrote that it was time 

to “turn to the private sector” to provide quality, 

affordable housing for his soldiers because “we can 

no longer rely on traditional military construction 

that is both unaffordable and too lengthy” (meaning 

that it was too costly and took too long to complete, 

compared to the private sector). General Schwartz 

again emphasized that “local involvement is key to 

the success of our program,” and explained that the 

proposal had the support of the Colorado Springs 

community, which had provided invaluable help in 

preparing the recommendations. According to the 

general, this cooperation between diverse organizations was “nothing less than superb in every 

respect.”29 General Schwartz asked the Army to designate Fort Carson as a pilot program for the entire 

Defense Department, observing that “Fort Carson 

and Colorado Springs are at the right place at the 

right time to make this work.”30

To solve the family housing problem at Fort 

Carson, the proposal called for renovating 1,823 
5 4 Privatizing Military Family Housing 5 5

CHAPTER THREE

The Fort Carson CVI Pilot Housing Project, 1994–1999

existing homes and building up to 1,000 new 

homes on the installation. The FCAHP team 

presented the optimistic projection that construction could begin as early as the first quarter of 

FY 1996, provided that the DOD designated Fort 

Carson as a pilot program in July 1995.31 Both the 

new construction and the renovations would be 

accomplished through a unique contractual structure that required a nonprofit foundation to be set 

up to serve as the selection and contracting entity 

for Fort Carson’s family housing. Such a proposal 

would require a legal arrangement in which the 

Army would provide the foundation with real 

estate, either through transfer or through executing an assumption agreement. The creation of the 

foundation promised significant tax savings and 

would also allow the participation of local governments in the joint venture. In the meantime, the 

Army would retain a degree of control and quality assurance by having a representative sit on the 

board of directors of the nonprofit foundation.32

While this particular proposal was but one of 

many on the path to privatization, it was noteworthy because it prompted FORSCOM to use Fort 

Carson as a pilot project for privatizing Army housing. In fact, that July, Major General Arthur Dean, 

Deputy Chief of Staff for Personnel and Installation Management, wrote that he deemed four 

bases—Carson, Bragg, Campbell, and Hood—to 

be in “suitable locations for capital venture housing projects.”33 Representatives of Fort Sill and Fort 

Eustis suggested that they, too, were ready to serve 

as pilots for privatization. But Fort Carson was the 

only one of these bases that already had a welldeveloped privatization plan that could be implemented immediately.34

Although FORSCOM had indicated that Fort 

Carson was the best candidate for the initial pilot 

project, the staff’s review of the June 1995 proposal 

revealed that Army officials had several significant 

issues with the FCAHP plans. Foremost was the fact 

that the legal authority for a grant of government 

property to a nonprofit did not yet exist and was 

dependent upon the passage of the MHPI legislation then moving through Congress. FORSCOM 

also identified more tangible problems, including the fact that both the size and the number of 

planned homes did not meet the current needs at 

the base. The proposal to build 800 to 1,000 new 

homes did not meet the newest econometric data, 

which projected an eventual, post-BRAC deficit of 

1,327 family housing units at Fort Carson.35 (Some 

of the discrepancy, however, appeared to be due to 

differences between private-sector and government 

methodologies used to make the projections.)

When the CVI team hired financial consultant 

Conrad Hertzler to perform the first outside review 

of the proposal, the resulting study raised similar 

questions and concerns. Hertzler found the nonprofit foundation concept “problematic.” He also 

suggested that the projected costs of the project—

including the estimated loan rate, legal fees, overhead, direct expenses, and operating expenses—

were much too low. He cited a recent Army report 

that presented the 1994 family housing maintenance and repair costs at four other bases in the 

lower 48 states. 36 Colonel Koren later responded 

to the critique by explaining that Hertzler’s use 

of bases in other geographic areas as points of 

comparison could not account for the economic 

situation then existing in Colorado Springs, upon 

which the FCAHP team had calculated the housing 

privatization cost estimates.37

Site Visits and Initial Request for

Proposals Development

Following the initial proposals in April and 

June 1995, the Army’s CVI team visited Fort Carson 

in September 1995. This CVI group consisted of 

Tom Kraeer, a retired Army officer working as a 

consultant; Don Spigelmyer, then the deputy director of CVI; and Lana Swearingen from the Army 

Housing Division.38 Also attending the meetings 

were financial consultants Hertzler and Tom Sanders of the Delta Research Group; George Georgalis 

from FORSCOM; Peggy Patterson of the Office 

of the Judge Advocate General (OTJAG); and Bob 

Swieconek, representing the USACE Real Estate 

Division. These meetings gave clearer shape to 

the privatization models that the Carson and CVI 

teams had developed in the previous months.

One of the topics discussed at the meetings 

was the use of a Request for Proposals (RFP) to 

select a potential private partner. The FCAHP team 

pulled together a rough draft RFP, wanting to use 

it as a point of departure for fleshing out a more 

substantial document.39 This initial RFP stated that 

the Army would make the award to the contractor “most fully qualified financially by experience, 

character, and otherwise, and who ... has offered to 

furnish the most satisfactory facilities and services 

or best accomplish the purposes and objectives.” 

Despite Hertzler’s concerns that the cost estimates 

for contracting with a nonprofit partner were 

much too low, the RFP maintained that a nonprofit 

corporation would serve “as the focal point for the 

construction and revitalization of housing on Fort 

Carson.” The corporation would provide the means 

to “competitively bid contracts for revitalization, 

new construction, and the management of both” 

and to enforce the contracts and “serve as the 

forum for government input.”40

At the close of the site visit, the CVI team 

developed a list of 26 major issues that it would 

have to address before privatization could move 

forward. The most significant points of uncertainty concerned the structure of the nonprofit 

foundation, the bid and selection mechanism, the 

applicability of federal procurement requirements, 

Office of Management and Budget (OMB) scoring, 

utilities billings, escrow accounts to insure funds 

for long-term maintenance, and the government 

mortgage guarantee.41

In mid-December 1995, staff members from 

the OSD Housing Revitalization Support Office 

(HRSO) made their first site visit to Fort Carson. By 

this time, the FCAHP and CVI teams had already 

developed the framework for making the Colorado 

installation the first CVI pilot project and were 

moving toward completing a draft RFP for solicitation of a private partner. Although HRSO Director 

Bob Meyer said that he “had only recently become 

aware” of the CVI team’s work with Fort Carson 

officials and was “very concerned that the HRSO 

and the CVI team were duplicating efforts,”42 the 

December meetings and the investigations that 

followed led HRSO to conclude, in June 1996, that 

Fort Carson was “a good candidate for privatization.”43 Thus, Fort Carson’s place was secured as the 

first Army privatization pilot project.

By the end of 1995, the privatization concept 

taking shape at Fort Carson already resembled the 

installation’s eventual CVI project. For example, 

the planning team decided early in the process 

that the privatization scheme should incorporate 

all of the family housing on the base, both newly 

constructed and renovated homes. Furthermore, 

the earliest Carson proposals emphasized the 

importance of government grants of property to 

the partner, a rental rate structure tied to the BAQ 

and the VHA, and a very long-term partnership 

arrangement. However, initial housing privatization planning for Fort Carson also included certain 

elements that the Army later deemed inadequate 

for the kind of development program the service 

needed. The most striking of these involved the 
5 6 Privatizing Military Family Housing 5 7

CHAPTER THREE

The Fort Carson CVI Pilot Housing Project, 1994–1999

plan to utilize a nonprofit foundation as the prime 

contractor for the project.

Nonprofit Foundation Proposal

Fort Carson personnel had entertained the 

idea of using a nonprofit entity as the prime 

contractor for privatization as early as March 1995 

and kept it at the heart of the privatization model 

through the preparation of the final RFP in September 1996. Supporters of the FCAHP favored the 

utilization of a nonprofit 501(c)(3) or 501(c)(4) type 

of structure. As certified nonprofits, they would 

be free from most tax obligations. Such certification would provide several important benefits 

that could enhance the chances that privatization 

would succeed. These included avoiding local 

property taxes, fostering innovative financing, and 

circumventing the Federal Acquisition Regulation 

(FAR) and certain other government procurement requirements. In addition, use of a nonprofit 

meant that the Army would have to go through the 

contracting process only once for each project—

just to establish the partnership. After that, the 

foundation would handle all of the subcontracts. 

Furthermore, a nonprofit corporation provided 

the means, under the authority of Colorado state 

law, for local government to participate in a “joint 

venture/limited partnership” with the Army.44

Those within the FCAHP expected that the 

nonprofit entity would consist of members of the 

local business and civic community who were 

already very familiar with the Army’s needs at Fort 

Carson and thus more likely to make a long-term 

commitment to the project. Despite these benefits, 

it was not long before DOD and Army officials 

discovered several flaws in the nonprofit plan. In 

his outside review of the June FCAHP proposal to 

FORSCOM, for example, Conrad Hertzler emphasized that the foundation proposal was not only 

“problematic” but also seemed “naïve.” He pointed 

out that the nonprofit scheme looked to be “a fairly 

transparent front for Fort Carson,” since it would 

insert Carson officials into a much more active role 

in ongoing management of the project than would 

be acceptable in most conceptions of privatization. 

This appearance was likely to scare off potential 

private partners and make OMB suspicious when 

it came to scoring the Carson project. Hertzler 

summed up his concerns in colloquial terms: “The 

more the project waddles, swims, and quacks as 

though the Army ‘owns’ the units, the more likely 

this project and other housing initiatives will be 

scored unfavorably.” Although he was in the minority at that point, Hertzler thought that deleting the 

nonprofit mechanism would actually improve the 

project’s chances for approval.45

There were also legal pitfalls in the plans for 

establishing a foundation as the prime contractor. 

Chief among them was having the base commander sit on the board of directors. During the 

September meetings with the CVI team, OTJAG 

attorney Peggy Patterson had told participants that 

“the problem is that the government is contracting 

with a nonprofit organization of which it is a member of the Board of Directors,” a situation which 

raised significant legal and ethical questions.46 In 

December 1995, Colonel Marshall Kaplan, Chief 

of the Army Standards of Conduct Office, wrote 

that the Joint Ethics Regulation prohibited DOD 

employees from “participating in the management 

of a non-federal entity during the course of official 

duties.”47 Moreover, he also determined that the 

presence of a Fort Carson staff member on the 

nonprofit’s board would be prohibited under the 

conflict of interest clause in 18 U.S.C. 208 and the 

no communication clause in 18 U.S.C. 205.48 But 

Kaplan did not completely rule out Fort Carson 

involvement with the foundation, stating that the 

base commander might still be able to participate 

with a nonprofit entity as a “representative of the 

Army’s interest in the matter, rather than as a manager or director of the non-federal organization.”49

Kevin O’Brien, Chief of the Contract Law Division, pointed out another potential legal pitfall of 

the nonprofit structure. He questioned whether 

Fort Carson could meet adequate competitive criteria for selection of a nonprofit because the Army 

had discussed the development of a nonprofit with 

various elements of the local community.50 In fact, 

as it was then visualized, the nonprofit corporation 

would replace the “group of governmental officials, 

community leaders, and technical experts ... who 

have already been working with us for months to 

put Fort Carson in position to be designated as a 

test site for the new legislation.” Moreover, O’Brien 

was not sure that the Army could avoid federal 

contracting regulations even with the creation of a 

nonprofit as the prime contractor. As Colonel Alan 

Johnson stated, “the key issue” was whether the 

Army might not still have to go through a competitive bid procedure and the corresponding FAR 

even if it used a nonprofit organization.51

Despite the potential problems with the 

nonprofit mechanism, the FCAHP and CVI teams 

kept it in their working models. In fact, an outside 

review group suggested in October 1995 that the 

Fort Carson nonprofit proposal held promise 

for the Army as a whole: Fort Carson “may be a 

helpful vehicle in the development of policies 

with regard to scoring direct and contingent 

DOD commitments.”52 After holding discussions 

with the FCAHP team, Internal Revenue Service 

officials, and other parties, the outside reviewers 

determined that a foundation with the exclusive 

purpose of providing military housing for Fort 

Carson could be structured as a 501(c)(3) charitable enterprise.53

But some of the steam propelling the nonprofit 

idea forward dissipated when the Judge Advocate 

General ruled in March 1996 that Fort Carson could 

not sole-source the contract to a selected entity, 

which the FCAHP team had envisioned to be the 

Colorado Springs workgroup that had helped give 

birth to and had strongly supported the privatization plan. The FCAHP team also learned that it 

could not structure the RFP to accept bids solely 

from nonprofit organizations.54 Nonetheless, Fort 

Carson officials continued to explore using a nonprofit entity at the installation.55

The Evolution of the Privatization 

Program at Fort Carson

The Corps’ Omaha District oversaw the entire 

contracting process for the Fort Carson project, 

from RFP development to selection of the developer to implementation of the project contract. 

The CVI and the FCAHP teams envisioned that 

the Corps would assist with the solicitation and 

award process and the contractual arrangements, as well as provide design and technical 

advice, environmental assessments, and quality 

assurance. After some debate about which Corps 

district to utilize, Colonel Koren enlisted the help 

of a team from the Omaha District, which brought 

its considerable experience with military construction, design specifications and standards, outsourcing, and contracting.

Besides the addition of the Corps’ Omaha 

District team, several other changes occurred in 

early 1996 that shaped the work of the Carson 

privatization team. For example, General Schwartz 

moved to Fort Hood and Major General John 

Pickler stepped in to replace him as commanding 

general of Fort Carson. Fortunately, according to 

Russ Hamilton, then the Fort Carson staff judge 

advocate, Major General Pickler “hopped on board 
5 8 Privatizing Military Family Housing 5 9

CHAPTER THREE

The Fort Carson CVI Pilot Housing Project, 1994–1999

very enthusiastically” with privatization planning.56

Meanwhile, in January and February 1996, Congress 

passed and President Clinton signed into law the 

National Defense Authorization Act of 1996, which 

contained the MHPI legislation. This legislation 

provided the Army with the authorities it needed to 

implement the pilot project at Fort Carson.

From January through August 1996, both the 

Fort Carson and Omaha District teams gave numerous project briefings to Department of the Army 

and DOD staff to garner support for the Fort Carson 

plan. These briefings usually began with preparatory 

meetings at Fort Belvoir with the CVI team, followed 

by an appearance at the Pentagon to make the full 

presentations. The FCAHP plan that was presented 

to the Army in 1996 was quite similar to the proposals developed during the previous year, except that 

the Carson privatization model no longer rested 

solely on establishment of a nonprofit entity as the 

housing partner (although that remained one of the 

possible options). The new Fort Carson proposal 

provided for a private developer to contract with the 

Army for the operation, renovation, and modernization of 1,823 existing homes and the construction 

of 840 new housing units, thus encompassing all 

of the family housing at the installation. The Army 

would turn over the property and structures to 

the private partner under a 50-year ground lease, 

during which time the partner was responsible for 

managing, repairing, and maintaining the property. 

A number of other key elements also remained in 

place, such as directly allocating soldiers’ housing 

allowance to the partner for rental payments, tying 

unit costs to housing allowance rates, and providing 

a government mortgage debt guarantee against base 

closure or contraction.57

Initial presentations to the Pentagon, according to Keefe, generated “lots of skepticism,” but 

the Fort Carson team gradually built up support as 

it explained the privatization plans. For example, 

in February 1996, the FCAHP conducted a wellreceived briefing with the Army Housing Office 

that made individuals in that office aware of what 

the FCAHP wanted to do. At the end of the briefing, the Army determined that the FCAHP needed 

to submit a Project Business Plan, developed in 

concert with Delta Research, to the Secretary of 

the Army. Once approved, the Secretary would 

notify Congress that the Army intended to proceed 

with the plan after 30 days.58

This same briefing presented an opportunity for the Army to discuss scoring issues with 

the OMB. At this juncture, Keefe did not think 

that scoring would become a major problem. He 

believed that using a loan guarantee in the proposal, whereby the government would guarantee 

that it would not close or downsize Carson (and 

would pay 80 percent of the nonprofit organization’s loan if it did), was the only potential scoring 

issue. Keefe reported that the OMB wanted the 

Army to guarantee only between 8 and 15 percent 

of the loan total, rather than 80 percent.59

In March 1996, important working group 

sessions of FCAHP team members and Omaha 

District staff took place at Fort Carson. The meetings were aimed at developing a more specific 

plan for implementing the Affordable Housing 

Initiative, addressing issues that still needed to be 

resolved, and drawing up a statement of work for 

inclusion in a full RFP.60 Two new important pieces 

of information were brought to light during the 

workgroup sessions. First, it was learned that the 

Judge Advocate General had given Fort Carson an 

unfavorable ruling on its request for relief from the 

FAR. Instead, it seemed that all of the elements of 

the FAR and the Competition in Contracting Act 

(CICA) were going to be applied to the Fort Carson 

pilot project. The ruling meant that the Army 

could not sole-source the contract to a nonprofit 

foundation consisting of Colorado Springs business and community leaders. Second, the Army 

could not restrict the solicitation solely to nonprofit organizations; the bidding process would 

have to be “fully competitive.”61 Although the Army 

sought a waiver from this ruling, for all intents and 

purposes the Fort Carson team could no longer 

focus on a privatization process that had a nonprofit foundation as the lynchpin in a militaryprivate partnership.

In preparation for the March meetings with the 

Omaha District, Keefe’s team had compiled a list 

of issues that needed to be addressed in order to 

implement the Carson privatization plan. By the 

end of the three-day series of meetings, the participants had generated a new list of “open issues,” 

with an action plan for exploring or solving each of 

them.62 Two of these issues—Army staff’s acceptance of the program and the relationship with the 

local school district—were to become significant 

roadblocks to privatization at Fort Carson.

The Army Housing Office at Fort Carson, 

part of the installation’s Directorate of Public 

Works, opposed the privatization plan because it 

meant that most of the office’s functions would be 

assumed by a private developer. Housing office staff 

understandably felt threatened by the privatization 

proposal, as many stood to lose their jobs when the 

project reached the implementation stage.63

Another pertinent example of Army culture 

running counter to privatization involved an initial 

plan for Fort Carson family housing occupants to 

pay for their utilities (as they would when living off 

base). This proposal met so much resistance from 

Army leadership that the FCAHP team eventually 

removed it from the privatization proposal.64

Further resistance came from School District 

No. 8, which included Fort Carson. Because more 

families would be living on the base, the district 

worried that the program would strain its educational facilities to the breaking point. Therefore, 

as the FCAHP made its plans for privatization, 

the school district insisted that the Army (or the 

private housing partner) build a brand-new school 

to support the predicted rise in the school-age population. The district maintained that it could not 

afford to build the school and that, even if it could, 

it would require roughly seven to nine years to 

budget for the construction costs.65 The district felt 

so strongly about this issue that it took its concerns 

to Colorado’s congressional delegation. The delegation told Fort Carson that it had to satisfy the 

school district before privatization could proceed.66

According to CVI leaders, the MHPI legislation did 

not authorize the construction of school buildings 

as part of the privatization process.67 In addition, 

Army officials insisted that they were not in the 

business of building schools and worked to quash 

any plans for school construction within the CVI 

project framework. They were especially concerned 

that any agreement to build schools might establish an unwanted precedent with regard to family 

housing privatization at other installations.68

Figure 3-5. Cover of one of the FCAHP’s 1996 Fort Carson 

briefings to the Pentagon.

Courtesy of U.S. Army Corps of Engineers.
6 0 Privatizing Military Family Housing 6 1

CHAPTER THREE

The Fort Carson CVI Pilot Housing Project, 1994–1999

Eventually, Fort Carson leadership reached an 

agreement with the school district that it “would 

make best efforts to minimize the harm” that 

privatization might cause.69 Fort Carson would 

make the legally mandated impact payments to 

the district (although this was still problematic 

because the district would not get this money until 

the end of each school year), and the CVI team 

would work with HRSO to establish the amount 

of impact aid that would go to the district. A bigger step was taken on August 14, 1996, when Fort 

Carson Commanding General Pickler signed an 

agreement with the local school superintendent to 

convert a child care facility on the installation to an 

elementary school, a compromise that was finally 

implemented in 2003.70 Congressman Hefley 

believed that this resolution taught the Army and 

other officials an important lesson: those in the 

community who would be affected by privatization needed to be involved early in the process to 

mitigate any issues that might arise.71

In their responses to the school district’s 

demand, the DOD, the Army, the CVI team, and 

the Corps’ Omaha District made their decisions 

with one eye to the success of the pilot project at 

Fort Carson and the other to the impact that their 

decisions would have on future CVI/RCI projects 

across the country. Although the privatization 

movement began as a grassroots effort in Colorado, 

by 1996 Army and CVI staff from Washington, 

D.C., were closely involved with all that transpired 

there, especially since Fort Carson had become the 

first CVI pilot.

First RFP and Initial Selection

Despite the problems, the Fort Carson privatization team continued to make progress on the 

path to privatization. In the fall of 1996, the team 

held an industry forum to give interested parties 

information about the family housing project and 

the RFP, which was the Army’s primary means 

of procuring work from outside contractors. In 

the RFP solicitation process, companies compete 

with one another by submitting bids (also called 

“offers”) and detailed work plans, as well as documenting their prior experience and expertise in the 

field. In the case of the Army housing privatization 

RFP for Fort Carson, the responding companies 

also submitted financial pro formas.72 Approximately 300 potential contractors and consultants 

attended the Fort Carson forum. The tremendous 

turnout testified to the potentially lucrative nature 

of the long-term contract and signaled the heavy 

competition the RFP would generate.73

General Pickler opened the forum, then Don 

Spigelmyer gave an overview of the Army CVI 

program, Keefe described the specific FCAHP, and 

Omaha District Contracting Officer Kirk Williams 

explained the Army’s solicitation and evaluation process. Sergeant Major Perry Williams led a 

bus tour of the Fort Carson housing area. During 

the morning presentation, several key points in 

the RFP were covered, most notably the general 

housing requirements and the government’s offer 

of incentives to promote private interest in the 

project. Three of the enhancements had frequently 

been mentioned during the previous two years of 

FCAHP planning: a government mortgage guarantee that would cover 80 percent of the debt in 

the case of base closure or downsizing, outright 

conveyance of all structures on the government 

property to the contractor under the terms of a 

ground lease, and the use of a soldier’s BAH as 

rental payments for the housing.74

RFP Release

On December 24, 1996, the Omaha District 

issued the RFP for privatization of family housing 

at Fort Carson. It called for the winning contractor to build 840 new family housing units and to 

renovate or replace Fort Carson’s existing 1,823 

homes.75 The contractor would own, maintain, and 

manage all of the homes for a period of 50 years, 

after which time the government could offer the 

partner a contract extension of an additional 25 

years. Because the proposal was such a deviation 

from the norm of Army contracting, the Corps’ 

contracting team produced several amendments 

to the original RFP, some of them dealing with 

bonding requirements and others addressing conflict of interest.76

By the close of the RFP deadline on April 29, 

1997, 15 companies had submitted proposals to the 

Corps’ Omaha District in response to the solicitation. The complicated proposal evaluation and 

selection process began the following week. The 

process was similar to the procedures that Omaha 

District personnel used for selecting other military 

construction (MILCON) contractors: two evaluation entities, the Source Selection Evaluation 

Board (SSEB) and the Source Selection Advisory 

Council (SSAC), selected the top bidder under the 

authority of the Source Selection Authority (SSA), 

usually a high official in the Army.77 The SSEB’s 

job was to evaluate all 15 offers and forward its top 

recommendations to the SSAC.

The Corps’ Omaha District provided special 

training to prepare the SSEB members for their 

evaluation task. The large dollar amounts involved 

and the need to project the costs and expenses 

over a period of 50 to 75 years necessitated the use 

of financial expertise that Army personnel on the 

SSEB did not have.78 Therefore, the Army contracted with the accounting firm Ernst & Young for 

consulting advice and the firm sent two financial 

specialists to help the team review each bidder’s 

F

Request for 

Proposals

(RFP)

F

E

D

C

B

A

Source Selection 

Evaluation Board 

(SSEB)

Source Selection 

Advisory Council

(SSAC)

Source Selection 

Authority (SSA)

Figure 3-6. How the selection process worked at Fort Carson. 
6 2 Privatizing Military Family Housing 6 3

CHAPTER THREE

The Fort Carson CVI Pilot Housing Project, 1994–1999

pro forma and financial spreadsheets to discern 

any areas of weakness, discrepancy, or non-transparency. Fort Carson Housing Program Analyst 

Dean Quaranta emphasized that the financial 

consultants played a very important role because 

a bidder could present a plan that looked good on 

paper but was infeasible in reality. Harrison Cole, 

Fort Carson contracting officer, added that “money 

[was] the bottom line” in determining the best 

potential partner.79

In addition to financial details, the proposals had to show how the bidder would finance 

the project through loans, as well as the structure 

of reinvestment accounts that would provide the 

contractor with the money necessary for future 

construction and maintenance. At the end of the 

evaluation, the SSEB selected what it determined 

to be the top six proposals and also made an informal recommendation of what it considered to be 

the best proposal.80

After the SSEB completed its evaluation, 

the recommendations went to the SSAC, which 

convened on June 23, 1997. The SSAC needed just 

two days to come up with its recommendation 

that the preliminary award be made to the partnership of Keller/Catellus, forgoing the “Best and 

Final Offers” phase.81 On June 25, 1997, the SSA—

Brigadier General Robert H. Griffin, Commander 

of the U.S. Army Corps of Engineers Northwest 

Division—approved the selection and on July 15 

the Corps’ Omaha District notified Keller/Catellus that it had won the contract award, contingent 

upon completion of a final round of negotiations. 

The district, however, erred in failing to inform the 

other top bidders of the selection until October 

24, more than four months after the award. Keller/

Catellus, meanwhile, entered into contract negotiations with the Omaha District that included 

development of the housing management plan, 

preparation of contract management procedures, 

and the finalization of the loan guaranty. On October 24, the Army informed Keller/Catellus that the 

contract award was final.82

Several protests of the award, however, delayed 

the privatization process. During the course of 

proposal reviews, the Hunt Building Corporation 

of El Paso, Texas, filed a protest with the Omaha 

District, contending there was a lack of clarity in 

the bonding requirements delineated in the RFP, 

which led to another amendment of the RFP. Hunt 

was not finished, however, and on October 23, 

1997, it filed a suit in the U.S. District Court for 

the Eastern District of Virginia, claiming that “the 

Government conducted negotiations only with 

Keller/Catellus and ... improperly excluded Hunt 

from the competitive range.” The District Court 

and, subsequently, the Fourth Circuit Court of 

Appeals dismissed the claim because “Hunt had 

failed to show that it had a substantial chance of 

being awarded a contract.”83

In addition to Hunt, another competitor for 

the contract, Pikes Peak Family Housing, filed a 

suit against the Army and the U.S. government 

on March 3, 1998, in the Court of Federal Claims, 

contending that the Army had conducted negotiations solely with Keller/Catellus in violation of the 

FAR and the terms of the RFP. As the litigation 

continued, the Army conducted its own internal 

investigation of the situation, discovering that an 

SSEB team member had disclosed to a manager 

of Insignia Residential Group, then serving as 

an agent for Keller/Catellus, pertinent information found in competitors’ proposals. Because the 

DOD Procurement Integrity Act prohibited such 

unauthorized disclosures during a competitive 

bidding process, the Army’s Major Procurement 

Fraud Unit investigated the event. The Army found 

no criminal intent on the part of either party and 

determined that the disclosure occurred after the 

selection authority had informed Keller/Catellus of 

its standing as the single finalist. Nonetheless, the 

Pikes Peak suit and the finding of unauthorized 

disclosure indicated that the Omaha team needed 

to take a number of “corrective actions” before it 

released a new solicitation.84

Despite the disclosure problems, the judge in 

the Pikes Peak lawsuit filed an opinion on April 

7, 1998. This opinion did not uphold the Pikes 

Peak claim, but it did specify that there were three 

technical inconsistencies in the way the selection 

process had been conducted that deviated from 

the federal requirements. Two of these simply 

involved the timing of the notifications to Keller/

Catellus and to the other offerors. The third technical inconsistency was the SSAC’s failure to provide 

the categorization and ranking of the unsuccessful offerors in the selection report, which was 

required by the Source Selection Evaluation Plan 

(SSEP). On April 24, the United States and Pikes 

Peak agreed to settle the case. The conditions of 

the settlement called for the Corps to cancel the 

previous award and either continue the original 

solicitation process from the first RFP, with Pikes 

Peak and Hunt included in a new competitive 

range, or issue a new RFP and start a new selection 

process. As a result of these findings, the Omaha 

District contracting office decided to cancel the 

original solicitation and selection in order to create 

“a clean slate,” and issued a second RFP to determine the contract award. The legal protests and 

settlement talks had put the privatization project 

on hold for nearly six months. It was ultimately to 

be 18 months before the Omaha District awarded 

the contract.85

In preparing to release the second solicitation, 

the Omaha District team wanted to ensure that the 

new RFP process “restore[d] offerors to the equal 

footing they enjoyed during the evaluation process,” primarily by eliminating any real or perceived 

advantage gained by the Keller/Catellus or Pikes 

Peak teams during the initial post-selection dialogue or during the court proceedings and settlement talks. To level the playing field, the Corps’ 

Omaha District contracting office provided the 

other original offerors the pertinent “inside” information that Keller/Catellus or Pikes Peak may have 

garnered from their involvement in the first selection process and the legal proceedings.86 Then, on 

September 9, 1998, the Omaha District released 

the second RFP. It mirrored the first one in calling 

for the winning contractor to construct 840 new 

homes and renovate or replace 1,823 already-existing homes.87 Contractors had to respond with their 

proposals by January 28, 1999.

The Omaha District received a total of six 

proposals in response to the second RFP. But 

Keller/Catellus’ was not among them. Although 

the company had prepared the winning proposal 

for the first RFP, the two principals, Keller and 

Catellus, had dissolved their joint venture by 

the time of the second RFP. The Omaha District 

eliminated one of the proposals submitted—that 

of the U.S. Military Housing Benefit Corporation 

(USMHBC)—because of a conflict of interest. 

Specifically, a member of the USMHBC Board of 

Directors previously had been a member of the 

SSEB for the original Fort Carson housing solicitation.88 This led USMHBC to file a protest on March 

26, 1999, further delaying the privatization process, 

although the SSEB evaluation of the five remaining 

proposals continued during this time.89

Once the SSEB submitted its report, the SSAC 

reviewed the process to determine whether the 

SSEB’s evaluation procedures were consistent with 

the guidelines laid out in the RFP and the FAR. 

The SSAC also reviewed the proposal ratings in the 
6 4 Privatizing Military Family Housing 6 5

CHAPTER THREE

The Fort Carson CVI Pilot Housing Project, 1994–1999

SSEB report and found that all five of the remaining offers fell within the competitive range for 

the project. (By this time, the USMHBC proposal 

had been disqualified: on May 5, 1999, the Corps’ 

Northwestern Division Council had rejected the 

USMHBC protest and upheld the Omaha District’s decision to eliminate that proposal.) Brigadier General Griffin, the SSA, concurred, and the 

offerors were notified that they had passed the first 

hurdle. They were then given the opportunity to 

respond to questions or correct weaknesses in their 

proposals, as well as ask their own questions, and 

were told to submit their “best and final” offers no 

later than July 8, 1999.90

After reviewing these revised proposals, the 

Corps’ Omaha District awarded the privatization 

contract to Fort Carson Family Housing, LLC, a 

subsidiary of J.A. Jones, on September 30, 1999. 

At the contract signing on November 23, 1999, the 

Army made the official lease and transfer of property to J.A. Jones, and Fort Carson became “the 

first military installation in the U.S. to privatize its 

entire inventory of on-post housing units.”91 J.A. 

Jones completed the first home at Fort Carson, and 

the first house of the entire Army housing privatization program, on October 31, 2000.

Conclusion

By the time that Fort Carson Family Housing, LLC, began work at the installation in late 

1999, most of the FCAHP and Omaha District 

participants in the privatization process to that 

point considered the project a success and foresaw 

a favorable long-term future for the project. But it 

had been a long road to get there. From the early 

public discussions of a privatization plan in January 

1995 to the signing of the contract with J.A. Jones 

in late 1999, Fort Carson had taken nearly five years 

to go from planning to partnering, and the actual 

bricks and mortar work was still to come. Despite 

the lengthy planning period and the legal and policy 

tangles that burdened the RFP selection process, 

members of the Fort Carson and Omaha District 

teams believed that the pilot project had established 

an effective model for privatization of Army family 

housing throughout the country.92

Figure 3-7. The first home in the nation completed under Army housing 

privatization, as part of the CVI project at Fort Carson.

Courtesy of Balfour Beatty Communities.

Beyond Colorado Springs, however, the assessment of Fort Carson privatization was less positive. 

For example, a 1998 General Accounting Office 

(GAO) report, Military Housing: Privatization Off 

to a Slow Start and Continued Management Attention Needed, outlined significant concerns about 

the Fort Carson pilot, including problems that 

Congress and Department of the Army officials 

wanted addressed.93 Although the GAO report was 

meant to examine DOD privatization achievements and problems as a whole, it was based on 

evaluations of the privatization efforts at Fort 

Carson and a much smaller housing project at 

Lackland Air Force Base.94 The GAO report focused 

on three central problems with DOD privatization programs, all of which applied to Fort Carson. 

Investigators ascertained that the privatization 

pilot project was too slow in its implementation, 

was unlikely to produce the projected cost savings, 

and needed to be “better integrated with other 

elements” of DOD housing programs. Members of 

Congress and some DOD officials voiced similar 

qualms about Fort Carson. In 1998 and 1999, for 

example, the House Subcommittee on Military 

Construction Appropriations questioned the 

delays in implementation, the Army’s economic 

analysis of the potential cost savings derived from 

base housing privatization, and the projected budgets for post-construction housing management.95

Of particular concern to U.S. Representative David Hobson (R-Ohio), chair of the House 

Subcommittee on Military Construction Appropriations, was the question of whether the Omaha 

District’s appraisal of Fort Carson installation 

property and facilities had underestimated their 

value. According to Congressman Hobson, the 

entire Army privatization program faced a deficiency in its property and financial assessments.96

Although the congressman realized certain 

problems and discrepancies were inevitable in an 

initial pilot project of a major program such as CVI, 

he addressed the need for a more standardized 

and systematic approach to the evaluation, financing, and implementation of all Army privatization 

projects. The GAO report likewise recommended 

that the Army take steps to “develop comprehensive plans that integrate all elements” of existing 

DOD and Army housing proposals, so that future 

housing projects around the country could be successfully coordinated and accurately assessed.97

Because many aspects of the housing privatization model had never been attempted before, it 

was inevitable that unanticipated problems would 

surface during the development and implementation of the Fort Carson pilot. Nonetheless, some 

problems were serious enough to prompt the 

Department of the Army—spurred on by Congress—to reconsider its entire approach to housing privatization. The Army examined and began 

working to rectify the weaknesses detected in the 

solicitation and implementation of the Fort Carson 

project. When Mahlon “Sandy” Apgar began his 

work as Assistant Secretary of the Army for Installations and Environment in 1998, he took on the 

challenge of reconfiguring the structure of the 

Army’s privatization program in order to facilitate 

more streamlined processes, comprehensive strategies, and uniform assessment tools for the Army’s 

existing and potential housing privatization 

projects. His approach would significantly alter the 

structure of the Army’s family housing privatization program.
6 6 Privatizing Military Family Housing 6 7

CHAPTER THREE

The Fort Carson CVI Pilot Housing Project, 1994–1999

Endnotes to Chapter 3

1. U.S. Representative Joel Hefley telephone interview by 

Paul Sadin, 22 September 2008, Transcript, 1.

2. Jerry Stafford interview by Paul Sadin, 5 June 2007, Fort 

Carson, Colo., Transcript, 2. Stafford was a member of 

the Fort Carson family housing privatization team in its 

early years, and later returned to join the housing partner, 

GMH, as an assistant community manager.

3. Stafford interview, 2.

4. U.S. General Accounting Office [GAO], Military Base 

Closures: Better Planning Needed for Future Reserve 

Enclaves, Report No. GAO-03-723 (Washington, D.C.: U.S. 

General Accounting Office, 2003), digital copy (no page 

numbers) available at <http://www.gao.gov/htext/d03723.

html> (21 May 2010); see also U.S. Department of Defense, 

Report of the Defense Secretary’s Commission, “Base 

Realignment and Closures,” December 1988, 6-11, digital 

copy available at <http://www.hqda.army.mil/acsimweb/

brac/003283.pdf> (21 May 2010).

5. “Pentagon to Seek Scaled-Back List of Base Closings,” 

New York Times, 25 February 1995.

6. Thomas Schwartz personal communication with Paul 

Sadin, 2 May 2008.

7. Thomas Kraeer interview by Matthew Godfrey, 18 

October 2007, Crystal City, Va., Transcript, 4.

8. Tony Koren telephone interview by Paul Sadin, 24 July 

2008, Transcript, 3.

9. Schwartz personal communication with Paul Sadin, 2 

May 2008.

10. U.S. Army, “Environmental Assessment for the Fort 

Carson Affordable Housing Program, Fort Carson, CO,” 

June 1996, 1, Share Drive database, RCI Program Office, 

Crystal City, Va. Hereafter cited as RCI Office. 

11. U.S. Army, “Environmental Assessment, Fort Carson 

Affordable Housing Program,” 1.

12. U.S. Army, Fort Carson, “RCI’s History,” http://www.

carson.army.mil/RCI/RCI%20History/ rci_history.htm.

13. Koren interview, 3.

14. Community members participating included William 

Hybl, head of the El Pomar Foundation; Ryer Hitchcock, 

a Colorado Springs investment banker; Hal Litrell, 

president of the Air Force Academy National Bank; Jeff 

Smith, the head of local builder Classic Homes; and Tom 

Schmidt, with the Broadmoor Land Development group. 

Schwartz personal communication with Paul Sadin, 2 May 

2008; and Russ Hamilton interview by Matthew Godfrey, 5 

June 2007, Fort Carson, Colo., Transcript, 3.

15. George Georgalis, Memorandum for Record, 6 March 

1995, Loose papers, Uncatalogued Housing Materials, 

Research Collections, Office of History, U.S. Army Corps 

of Engineers Headquarters (HQUSACE), Alexandria, Va. 

Hereafter cited as USACE Office of History.

16. Georgalis memorandum, 6 March 1995, 2.

17. Hamilton interview, 3.

18. “Process” Memorandum, Received 13 March 1995, 

Loose papers, Uncatalogued Housing Materials, Research 

Collections, USACE Office of History.

19. “Proposal for Fort Carson Housing Initiative,” ca. 

Spring 1995, Loose papers, Uncatalogued Housing 

Materials, Research Collections, USACE Office of History.

20. U.S. Department of Defense, “DOD Tiger Team 

Hurdles to Overcome,” Received 13 March 1995, Loose 

papers, Uncatalogued Housing Materials, Research 

Collections, USACE Office of History.

21. Fort Carson Affordable Housing Program (FCAHP), 

Draft Memorandum for Commander, FORSCOM, 

April 1995 (fax transmission 2 May 1995), Loose papers, 

Uncatalogued Housing Materials, Research Collections, 

USACE Office of History.

22. Koren interview, 2.

23. FCAHP Draft Memorandum for Commander, 

FORSCOM, April 1995, 2.

24. Koren interview, 2.

25. “Elements of Proposal for Fort Carson Housing 

Initiative,” Received 2 May 1995, Loose papers, 

Uncatalogued Housing Materials, Research Collections, 

USACE Office of History.

26. Koren interview, 3-4.

27. Keefe’s Fort Carson staff included Major Brian Schuler, 

Non-Commissioned Officer (NCO)-in-Charge Jerry 

Stafford, and administrative specialist Jody Quinn.

28. Koren interview, 4-5; and John Keefe telephone 

conversation with Paul Sadin, 22 September 2008, Seattle, 

Washington, unrecorded.

29. General Thomas Schwartz to Commanding 

General Dean, FORSCOM, 23 June 1995, Loose papers, 

Uncatalogued Housing Materials, Research Collections, 

USACE Office of History. 

30. Schwartz to Dean, 23 June 1995.

31. “Fort Carson Affordable Housing Program,” 15 June 

1995, 2.

32. Quoted in “Fort Carson Affordable Housing Initiative 

Fact Sheet,” ca. June 1995. See also “Fort Carson Affordable 

Housing Program,” 15 June 1995, 9.

33. Major General Arthur Dean, Deputy Chief of 

Staff for Personnel and Installation Management, to 

Commander FORSCOM, 21 July 1995, Loose papers, Box 4, 

Uncatalogued Housing Materials, Research Collections, 

USACE Office of History.

34. Dean to Commander, FORSCOM, 21 July 1995. 

35. Fort Carson Affordable Housing Program HQ 

FORSCOM Detailed Review Comments, n.d., Enclosed 

with document dated 22 June 1995, Loose papers, Box 4, 

Uncatalogued Housing Materials, Research Collections, 

USACE Office of History.

36. Conrad Hertzler, Financial and Economics Consulting, 

to Don Spigelmeyer, memorandum, 16 August 1995, 

File: Fort Carson Affordable Housing Initiative, Box 4, 

Uncatalogued Housing Materials, Research Collections, 

USACE Office of History.

37. Henry Koren, Jr., Memorandum to Chief, CVI Team, 

14 September 1995, File: Fort Carson Affordable Housing 

Initiative, Box 4, Uncatalogued Housing Materials, 

Research Collections, USACE Office of History.

38. Capital Venture Initiatives Team, Fort Carson 

Affordable Housing Initiative Issues, 19-21 September 

1995, File: Fort Carson Affordable Housing Initiative, Box 

4, Uncatalogued Housing Materials, Research Collections, 

USACE Office of History.

39. Keefe telephone conversation, 22 September 2008.

40. Draft Request for Proposal (RFP), Fort Carson 

Affordable Housing Initiative, ca. September 1995, 

File: Fort Carson Affordable Housing Initiative, Box 4, 

Uncatalogued Housing Materials, Research Collections, 

USACE Office of History.

41. Fort Carson Affordable Housing Initiative Issues, 

25 September 1995, Enclosure no. 2 with Keefe 

Memorandum, 21 September 1995, Unlabeled binder, Box 

4, Uncatalogued Housing Materials, Research Collections, 

USACE Office of History.

42. Conrad Hertzler to Tom Sanders, 15 December 1995, 

Loose papers, Box 4, Uncatalogued Housing Materials, 

Research Collections, USACE Office of History.

43. U.S. General Accounting Office (GAO), Military 

Housing: Privatization Off to a Slow Start and Continued 

Management Attention Needed, GAO/NSIAD-98-178 

(Washington, D.C.: General Accounting Office, 1998), 21.

44. “Fort Carson Affordable Housing Initiative Fact Sheet,” 

ca. June 1995. 

45. Hertzler to Spigelmyer, 16 August 1995.

46. Major John Keefe, Office of the Deputy Commander 

for Partnership XXI, Fort Carson, Memorandum for 

Distribution, 21 September 1995, 2, Unlabeled binder, Box 

4, Uncatalogued Housing Materials, Research Collections, 

USACE Office of History.

47. Colonel Marshall Kaplan, Chief, Standards of Conduct 

Office, Memorandum for DAJA-KL, 26 December 1995, 

Loose papers, Box 4, Uncatalogued Housing Materials, 

Research Collections, USACE Office of History.

48. U.S. Code 18 (1962), § 208, and U.S. Code 18 (1962), § 

205.

49. Kaplan memorandum, 26 December 1995.

50. Colonel Kevin O’Brien, Chief, Contract Law Division, 

Memorandum for Chief, Army Housing Division, 8 

September 1995, File: CVI Ft. Carson - Don Spigelmyer, 

Box 4, Uncatalogued Housing Materials, Research 

Collections, USACE Office of History.

51. Colonel Alan D. Johnson, GS, Chief of Staff, 

Memorandum Thru [sic] Chief of Staff, U.S. Army Forces 

Command, Fort McPherson, Georgia, for Assistant Chief 

of Staff for Installation Management, Headquarters, 

Department of the Army, 10 October 1995, 1-4, Unlabeled 

binder, Box 4, Uncatalogued Housing Materials, Research 

Collections, USACE Office of History.

52. Gregory V. Johnson, Rothgerber, Appel, Powers & 

Johnson, to Mr. John Schuhart, Program Examiner, 30 

October 1995, Loose papers, Box 4, Uncatalogued Housing 

Materials, Research Collections, USACE Office of History. 

53. G. Johnson to Schuhart, 30 October 1995.

54. John Keefe, Memorandum for Capital Venture 

Initiatives Team, 21 March 1996, Unlabeled binder, Box 4, 

Uncatalogued Housing Materials, Research Collections, 

USACE Office of History.

55. “Fort Carson Affordable Housing Initiative, Discussion 

of Open Issues,” 21 March 1996, Unlabeled binder, Box 4, 

Uncatalogued Housing Materials, Research Collections, 

Office of History.

56. Hamilton interview, 1.

57. “Fort Carson Affordable Housing Initiative Update 

Briefing, Fort Carson, Colorado,” PowerPoint Presentation, 

6 August 1996, Loose papers, Box 4, Uncatalogued 

Housing Materials, Research Collections, USACE Office of 

History.

58. John Keefe, Memorandum for the Record, 21 February 

1996, Unlabeled binder, Box 4, Uncatalogued Housing 

Materials, Research Collections, USACE Office of History.

59. Keefe memorandum, 21 February 1996.

60. John Keefe, Memorandum for SEE Distribution, 25 

March 1996, Unlabeled binder, Box 4, Uncatalogued 

Housing Materials, Research Collections, USACE Office of 

History.

61. Keefe memorandum, 21 March 1996.

62. “Fort Carson Affordable Housing Initiative, Discussion 

of Open Issues,” 21 March 1996.
6 8 Privatizing Military Family Housing 6 9

CHAPTER THREE

The Fort Carson CVI Pilot Housing Project, 1994–1999

63. Pat Mikita, Dean Quaranta, and Harrison Cole 

interview by Matthew Godfrey and Paul Sadin, 4 June 

2007, Fort Carson, Colo., Transcript, 9.

64. Koren interview, 7-8.

65. “Fort Carson Affordable Housing Initiative, Discussion 

of Open Issues,” 21 March 1996.

66. Hamilton interview, 5.

67. “Fort Carson CVI Project Issues and Status,” March 

11, 1996, Unlabeled binder, Box 4, Uncatalogued Housing 

Materials, Research Collections, USACE Office of History.

68. Ron Hansen telephone interview by Paul Sadin, 11 

April 2008, unrecorded portion of interview.

69. Hamilton interview, 5.

70. “Ft. Carson CVI,” Unlabeled binder, Box 4, 

Uncatalogued Housing Materials, Research Collections, 

USACE Office of History.

71. Hefley interview, 8.

72. “MHPI Program Evaluation Plan (PEP) Fort Carson 

Project Summary Report, Period Ending 31 December 

2000,” 15 March 2001, 7, Share Drive database, RCI Office.

73. Hansen interview, 3-4.

74. Industry Forum Agenda: Housing Privatization for 

Fort Carson, CO, ca. 1996, document provided by Jerry 

Stafford, CMH Community Management Office, Fort 

Carson Housing Office, Fort Carson, Colo.

75. USACE, Omaha District, “Summary of the Request 

for Proposal for the Purposes of the Construction and 

Revitatization of Affordable Housing at Fort Carson, CO,” 

ca. December 1996, document provided by Jerry Stafford.

76. Kirk Williams, USACE Omaha District, Decision 

Document: Solicitation No. DACA45-96-R0033, 

Development and Management of Military Family 

Housing, Fort Carson, Colorado, 11 June 1998, File: 

DACA45-99-C-0066 Fort Carson Family Housing, LLC 

Privatization of Military Family Housing, Fort Carson, CO, 

Presolicitation Documents, Vol. 1 of 32, Tan file cabinet, 

Drawer no. 1, Office of RCI Program Analyst, Fort Carson.

77. Donald G. Robinson, Chief, USACE Contracting 

Division, to Commander USACE, CEPR-P, 6 December 

1996, File DACA45-99-C-0066 Fort Carson Family 

Housing, LLC Privatization of Military Family Housing, 

Fort Carson, CO, Presolicitation Documents, Vol. 1 of 32, 

Tan File Cabinet, Drawer no. 1, Office of RCI Program 

Analyst, Fort Carson.

78. Hill interview, 11.

79. Mikita, Quaranta, and Cole interview, 13.

80. Mikita, Quaranta, and Cole interview, 13.

81. Williams, Decision Document: Solicitation No. 

DACA45-96-R0033, 2.

82. Williams, Decision Document: Solicitation No. 

DACA45-96-R0033, 2.

83. Williams, Decision Document: Solicitation No. 

DACA45-96-R0033, 2. Hunt was later included in the outof-court settlement of the Pikes Peak litigation, which 

directed that both Hunt and Keller/Catellus be included 

in the competitive range of the bidding, based on the 

proposals they had previously submitted.

84. Williams, Decision Document: Solicitation No. 

DACA45-96-R0033, 2, 4-6.

85. Williams, Decision Document: Solicitation No. 

DACA45-96-R0033, 3, 8.

86. Williams, Decision Document: Solicitation No. 

DACA45-96-R0033, 6.

87. “Source Selection Advisory Council Report, 

Privatization of Military Family Housing, Fort Carson, 

Colorado,” RFP No. DACA45-98-R0024, 14 September 

1999, 1, File: DACA 45-99-COPY-0066 Fort Carson Family 

Housing LLC, Drawer no. 3, Tan file cabinet, Program 

Analyst Office, Housing Division, Fort Carson.

88. “Source Selection Advisory Council Report, 

Privatization of Military Family Housing , Fort Carson, 

Colorado,” 4; and Kimberlee Schreiber, personal 

communication with Paul Sadin, 15 May 2009.

89. Kirk D. Williams, Contracting Officer, to Eric Wilson, 

President Military Housing Benefit Corporation, 17 March 

1999, and “Source Selection Evaluation Board Report, 

Request for Proposal DACA45-98-R0024,” 16 April 1999, 

File: DACA 45-99-C-0066 Fort Carson Family Housing, 

LLC, Tan file cabinet, Drawer no. 3, Program Analyst 

Office, Housing Division, Fort Carson.

90. “Source Selection Advisory Council Report, 

Privatization of Military Family Housing , Fort Carson, 

Colorado,” 4.

91. PEP Narrative, March 15, 2001, Documentum database, 

RCI Office.

92. Hansen interview, 11. Oral history interviews were 

conducted with a total of eight individuals who had 

a hand in the creation or implementation of the Fort 

Carson Affordable Housing project, including Hansen. 

The account of each individual supports the conclusions 

reported here. 

93. GAO, Military Housing: Privatization Off to a Slow 

Start, 20-31.

94. In terms of the number of renovated and new housing 

units, the privatization plan at Lackland AFB was less 

than one-fifth the size of the Fort Carson pilot project, 

as discussed in GAO, Military Housing: Privatization: 

Privatization Off to a Slow Start, 44.

95. House Subcommittee on Military Construction 

Appropriations of the Committee on Appropriations, 

Hearings on Military Construction Appropriations for 

1999, 105th Cong., 2d sess., 12 March 1999, 391-94. 

96. Ernst & Young, LLP, to Steve Hill, USACE, 2 February 

2000, File: Appraisals, Tan file cabinet, Drawer 4, Office of 

RCI Program Analyst, Fort Carson. 

97. GAO, Military Housing: Privatization Off to a Slow 

Start, 32.
7 1

CHAPTER FOUR

The Switch to the Residential Communities 

Initiative (RCI), 1998–1999

Figure 2-1. Historic home that was 

renovated as part of privatization of Army 

housing at Fort Riley, Kans.

Courtesy of Picerne Military Housing.

I

n 1998, while Fort Carson was mired in legal 

proceedings relating to its Request for Proposals (RFP), Mahlon “Sandy” Apgar, IV, a 

real estate consultant, became Assistant Secretary 

of the Army for Installations and Environment. 

Frustrated with what it regarded as the U.S. 

Army’s slow progress in implementing privatization, Congress told Apgar to fix the service’s 

housing problem. A visionary in the real estate 

arena, Apgar jumped at the chance and soon 

began molding the Army’s program according 

to his idea of how privatization should proceed. 

Apgar envisioned not just new houses but whole 

communities rising from the dilapidated, aging 

residences on Army installations. These new communities would include neighborhood centers, 

playgrounds, and retail outlets. Apgar christened 

his vision the Residential Communities Initiative 

(RCI) and proclaimed as its goal the revitalization of Army housing through a close partnership 

with private developers. Between 1998 and 2000, 

Figure 4-1. Privatized housing, Fort Belvoir, Va

Courtesy of Clark Realty Capital.

Apgar and the newly created Army RCI Task Force 

had the job of trying to get Congress, high-level 

Army officials, and soldiers themselves to accept 

this vision of Army housing. It was a rough road, 

fraught with perils and pitfalls, but it marked the 

official beginning of the RCI program.

A New Vision

By 1998, privatization of Army housing seemed 

to be moving at a snail’s pace. In March 1997, John 

B. Goodman, Deputy Undersecretary of Defense 

(Industrial Affairs and Installations), had reported 

to Congress that the Department of Defense (DOD) 

had six projects “approved for development” that 

would produce 4,000 homes. At that time, according to Goodman, Secretary of Defense William 

Perry commented that “it is not as much as I hoped 

but more than I expected.”1

 Nevertheless, Goodman 

realized that the effort was insufficient and told 

Congress of the department’s intentions to “double 

that effort” in Fiscal Year (FY) 1998.2
7 2 Privatizing Military Family Housing 7 3

CHAPTER FOUR

The Switch to the Residential Communities Initiative (RCI), 1998–1999

Yet by 1998, two years after the passage of 

the MHPI legislation, not a single house on any 

Army installation had been privatized and housing conditions had continued to deteriorate. Fort 

Carson had awarded a privatization contract, but 

the resulting lawsuits and protests had delayed 

actual development and necessitated a second 

solicitation. The Army had a good idea of where it 

wanted to go with privatization—the Capital Venture Initiatives (CVI) program—but progress was 

slow. The U.S. General Accounting Office (GAO) 

issued a report in 1998 indicating that none of the 

military services within the DOD had shown much 

movement on the privatization front and that the 

Fort Carson project was the closest to having an 

agreement in place. According to the GAO, the 

DOD blamed the stagnation on the growing pains 

that any new program would experience, as well 

as on the process of working out legal and financial kinks in privatization procedures.3

 The DOD 

had originally estimated that privatization of all 

housing could occur by FY 2006. In March 1997, 

trying to illustrate that progress was being made, 

Goodman informed Congress that the department 

was attempting to reduce the amount of time that 

the site visit process took, as well as to streamline 

approvals of RFPs.4 But ultimately, because of 

delays and slow progress, in 1997 the DOD revised 

their timeline from FY 2006 to FY 2010.5

Although the Army’s CVI program had begun 

and had made significant progress at Fort Carson, 

support for privatization within the service was by 

no means universal. Dean Stefanides, who ran the 

Army Housing program within the OACSIM, supported privatization, but others in that same office 

did not. Doubts about the program centered on 

the removal of housing control from garrison commanders and uncertainty about a private developer’s ability to provide the level of service that 

Army officials expected their soldiers to receive. 

The fact that the Army was, according to former 

Vice Chief of Staff of the Army General Jack Keane, 

very conservative and uncomfortable with change 

did not help either.6 “As the CVI was positioned in 

the Army Staff (OACSIM), everyone had an opportunity to chop on it, to delay it,” recalled Rhonda 

Hayes, one of the members of the RCI team.7

The opposition of some Army officials to privatized housing proposals emerged clearly in a forum 

held on February 20, 1998, in Tulsa, Oklahoma, 

sponsored by the Professional Housing Management Association (PHMA). This forum was held 

in order for installation officials, Army housing 

staff, DOD leadership, and private developers to 

examine privatization closely. It provided an arena 

for lively debate about the CVI program, including 

consideration of whether it was the best way forward. Some at the forum wondered why the Army 

could not just continue to use the Business Occupancy Program (BOP) to improve housing. Ted 

Lipham, who had assumed the helm at CVI within 

the OACSIM, answered that neither this program 

nor a Non-Appropriated-Fund-type organization 

could generate the $6 billion necessary to solve the 

housing problem. Only the private sector had that 

type of money.8

Developers, however, were not enthusiastic 

about CVI. Their main concern was that they 

would have to spend considerable time and money 

to respond to RFPs. Michael Sedivy of GE Capital Real Estate, for example, asked the Defense 

Department, in the words of one reporter, “to cut 

back on the numerous checks in the contracting 

process.” At a minimum, contractors hoped to see 

a two-step RFP process that would allow them to 

spend a relatively small amount of money until 

they knew whether the Army considered them 

competitive for the project. At the same time, as 

had occurred at Fort Carson, installation housing 

managers expressed dismay at privatization, fearing that it would eliminate their jobs. In response, 

Brigadier General (Ret.) Bob Herndon, president of 

the PHMA, counseled that, regardless of whether 

privatization advanced or not, “training, professional certification, and flexibility” would be 

necessary because of inevitable “dramatic changes” 

in military family housing.9

Congress, too, expressed significant reservations about military housing privatization, especially with regard to two problems, which on their 

face seemed contradictory. On one hand, members 

of Congress expressed frustration with the slow 

progress of privatization. On the other, legislators expressed fears that the Army was moving too 

aggressively with the privatization program before 

knowing for certain how well it would work. In a 

March 1997 hearing on privatization, for example, 

U.S. Representative Ron Packard (R-California), 

chairman of the House Military Construction 

Appropriations subcommittee, declared that privatization should be simply a way to supplement construction occurring under the traditional military 

construction (MILCON) program, not replace it.10

A May 1998 report issued by the House Committee on National Security on the National Defense 

Authorization Act for Fiscal Year 1999 reiterated 

that point, explaining that although Congress 

regarded privatization as “a central component 

of the ultimate resolution of the military housing 

crisis,” the DOD should not use it to the exclusion 

of MILCON projects. This was especially important 

in areas that had pressing housing needs and in 

places where implementing privatization would be 

difficult.11 Congressman Packard summarized the 

seeming contradiction of moving faster without 

being overly aggressive as follows: “We’re looking 

for grand success in this area ... but we are concerned about some loopholes that we sense have 

not been carefully addressed.”12 As in the military, 

many in Congress had not yet fully embraced the 

privatization concept and questions remained.

While acknowledging these concerns, proponents of privatization in the Army forged ahead. In 

March 1998 Lipham announced that, by the end of 

FY 1998, 60 percent of the Army’s family housing 

units (or 53,000 of the 90,000 homes) within the 

continental United States would fall under CVI. 

This would enable the Army to meet the DOD’s 

goal of privatizing all housing by FY 2010. By September 1998, the CVI team within the Army Housing Office had determined that it could accomplish 

this goal by implementing six CVI projects a year 

until all 43 Army installations were privatized. A 

total of 11 installations would be converted to CVI 

in FY 2000 and 2001, and the projects would receive 

funding from the DOD’s Family Housing Improvement Fund, from soldiers’ housing allowances, and 

from Army Family Housing Operations funds.13

Enter Mahlon “Sandy” Apgar, the new Assistant Secretary of the Army for Installations and 

Environment. He assumed his new post well 

Figure 4-2. Pre-RCI housing at Presidio of Monterey, Calif. 

In 1998, two years after the passage of the MHPI legislation, 

no new houses had been built on any Army installation, and 

housing conditions continued to deteriorate.

Courtesy of Clark Realty Capital.
74 Privatizing Military Family Housing 7 5

CHAPTER FOUR

The Switch to the Residential Communities Initiative (RCI), 1998–1999

suited to the task at hand, as he had previously 

formed and run his own real estate consulting 

practice and published numerous articles on real 

estate and urban development issues.14 In the 

1990s, Apgar had served as chair of a task force on 

military housing for the U.S. Navy and it was then 

that he first encountered the MHPI legislation. 

In 1998, the Clinton administration nominated 

him to be the Assistant Secretary of the Army 

for Installations and Environment. According to 

Apgar, at his confirmation hearings before the 

Senate Armed Services Committee in May, U.S. 

Senator John Warner (R-Virginia), deputy chairman of the committee, specifically told him to “fix 

the Army’s housing problem.”15 Apgar embraced 

that challenge, assuming that he had the responsibility to fix these problems because his appointment gave him power over the Army’s housing, 

real estate, and facilities. He was sworn in as 

Assistant Secretary on June 19, 1998.16

Apgar brought not only real estate expertise to 

the program but also a large measure of self-confidence and an unwillingness to accept “No” for an 

answer. These characteristics—labeled by some as 

arrogance—led to a perception of Apgar as the proverbial “bull in the china shop.”17 Others characterized him as “tenacious” and as someone who had 

“an idea a minute.”18 The responsibility of picking 

up the pieces behind Apgar was often assumed by 

Bernard Rostker, the Undersecretary of the Army, 

who had a strong commitment to privatization and 

supported Apgar’s views on housing (although he 

did not always agree with Apgar’s methods). As 

Barry Scribner, a Jones Lang LaSalle consultant, 

explained, “Rostker was really covering Apgar as so 

many people inside the Army and in OMB [Office 

of Management and Budget] and in Congress were 

trying to crush him.”19

Only six weeks after taking office, Apgar 

visited Forts Carson and Lewis and decided that 

drastic measures were needed to improve Army 

housing. These visits opened his eyes in two key 

ways. First, they showed him “the awful conditions” in which soldiers and their families lived. 

Second, he found that much of the family housing on Army installations was “just plain ugly.”20

In Apgar’s mind, not only were existing homes in 

many cases dilapidated, they were also “vintage 

1950s.” What he meant is that in the 1950s, the 

average size of a single family home in the United 

States was 983 square feet and included few 

bathrooms and small bedrooms. By the twentyfirst century, the average size had increased to 

2,349 square feet. Nonetheless, many families on 

military installations still had to live in the small 

houses constructed under the Wherry and Capehart programs.21

To address these issues, Apgar wanted the 

Army to thoroughly embrace private development. 

He met with real estate industry representatives to 

ask them how the Army could make partnering an 

easier and more attractive option, and to determine what the private sector could offer installations. Based on these meetings, Apgar decided 

that the CVI program as the Army had conceived 

it had some fundamental problems, including the 

name. In his mind, “Capital Ventures” gave the 

wrong focus to the program because it emphasized 

a venture capital approach which, while important, 

was a short-term perspective. As he later related, 

“the Army needed long-term, visionary thinking as 

well as business savvy and entrepreneurial zeal.”22

In addition, Apgar disliked using RFP solicitations and contracts to engage developers because 

they did not promote a true spirit of cooperation 

or partnership. Under the RFP process, the Army 

would outline ahead of time all of the different 

specifications that it wanted for the housing and 

then expect developers to tell them how they 

would comply with those specifications. Not only 

was this cumbersome for those responding to the 

RFP (and expensive, as it took much thought and 

effort to develop a proposal), it also, in Apgar’s 

mind, was backwards. Instead, Apgar asserted, 

the private sector should inform the Army how 

they could construct well-designed and attractive 

homes for soldiers and their families.23

Apgar also wanted to see more elements of 

New Urbanism in the development of installation housing. New Urbanism was an urban design 

movement that first became popular in the 1980s 

and increased in influence in the 1990s when a 

group of architects formed the Congress for the 

New Urbanism (CNU) in 1993. According to its 

charter, the movement advocated neighborhoods 

Figure 4-3. Mahlon “Sandy” Apgar, IV, Assistant Secretary 

of the Army for Installations and Environment.

Courtesy of Department of Defense.

Figure 4-4. Pre-RCI housing unit at Camp Parks, Calif.

Courtesy of Clark Realty Capital.
7 6 Privatizing Military Family Housing 7 7

CHAPTER FOUR

The Switch to the Residential Communities Initiative (RCI), 1998–1999

with diverse populations centered around “public 

spaces and community institutions.” The areas 

would be pedestrian-friendly and would consist of “architecture and landscape design that 

celebrate[d] local history, climate, ecology, and 

building practice.”24

Columbia, Maryland, a planned community 

built between Baltimore, Maryland, and Washington, D.C., in the 1960s, anticipated many of the 

tenets of the New Urbanism movement. Conceptualized by planner James Rouse of the Rouse 

Company, Columbia had a town center at its core 

and consisted of nine different villages, each with 

its own name and its own village center. Each village in Columbia also had its own neighborhoods, 

parks, roads, apartments, town houses, and singlefamily residences. The goal of Columbia, according 

to Rouse, was to create “neighborhoods where a 

man, his wife and family, can live and work and, 

above all else, grow—grow in character, in personality, in love of God and neighbor and in the capacity for joyous living.”25 The vision and the layout of 

Columbia, together with New Urbanism tenets, 

strongly influenced Apgar’s ideas about Army 

housing. In fact, Apgar had worked for the Rouse 

Company early in his career. To Apgar and others, 

such as Joseph Scanga of Calthorpe Associates, 

an urban design firm, Army installations were 

the perfect arena in which to test New Urbanism 

principles that fostered community, since deployments and frequent re-stationing of troops made it 

difficult for military neighborhoods to maintain a 

sense of community.26

In many ways, Apgar’s vision was not far from 

that of the CVI program. The overall concept—

providing the best homes possible to soldiers by 

teaming with private development—remained the 

same. Yet Apgar clearly wanted to take privatization in a more complicated direction. As Don Spigelmyer later related, CVI, in its original concept, 

focused on “small projects, a couple hundred units 

here and there.” In Spigelmyer’s mind, CVI “really 

wasn’t that much more creative than MILCON 

except we had some of the authorities that we 

could [use] to get [the housing] created.”27 Apgar 

foresaw the privatization of military housing as an 

opportunity to foster community development, 

rather than just to build houses. It was this concept 

that really distinguished RCI from CVI.

To develop an in-depth construct for how these 

ideas would work in practice, Apgar established 

a “skunk works” team at Fort Belvoir in the summer of 1998. This team, which eventually became 

known as the RCI Task Force, included Ted Lipham, 

who had been leading the Army’s CVI efforts; Jean 

Friedberg, who had worked for the Rouse Company 

and other firms as a consultant; and Don Spigelmyer, who had participated in the DOD “tiger 

team” and had been a CVI team member. 

One reason that Apgar was able to form the 

team was that in 1998 the DOD reorganized the 

Housing Revitalization Support Office (HRSO). 

Although the HRSO had had the responsibility for 

approving pilot programs and coordinating the 

privatization process across the military services, 

the DOD, according to former HRSO director 

Joseph Sikes, “sent the people back to the services 

and told them to do their own projects.”28 After the 

HRSO was renamed the Office of the Secretary of 

Defense (OSD) Competitive Sourcing and Privatization Office, it still had an oversight role (involving transmitting lessons learned and coordinating 

with OMB), but it continued to be the responsibility of each individual service to decide how privatization would proceed. 

The DOD decision to let each military service 

determine how to pursue privatization led Apgar, 

on behalf of the Army, to put together the RCI Task 

Force. Throughout the summer and the remainder 

of 1998, this task force prepared a draft strategy for 

the Army’s RCI program. According to Apgar, the 

task force that he assembled with the assistance 

of the ACSIM, Major General David Whaley, was 

“a small but exceptionally able team that combined seasoned professionals in the Office of the 

Assistant Chief of Staff for Installation Management with others from the Office of the Assistant 

Secretary of the Army for Installations and Environment and specialist contractors.”29

Switch from RFP to RFQ

In addition, the Army convened a “brains trust” 

of, in Apgar’s words, “nearly everyone in the Pentagon who had anything to do with military housing,”30 to investigate how it could more effectively 

attract private developers to construct housing on 

installations. This group met in September 1998 

and decided that a Request for Qualifications 

(RFQ), rather than an RFP, was the best way to 

achieve what Apgar wanted. In fact, according to 

Lipham, the Army had already broached the idea 

of using an RFQ under CVI, but the DOD and 

Army legal counsel had not found it to be feasible. With Apgar buying in to the RFQ plan and 

Figure 4-5. The Columbia Work Group making plans for the 

Columbia community. 

Courtesy of Columbia Archives.

Figure 4-6. Architect’s rendering of the planned Fort Irwin, Calif., Town Center, one of 

several RCI developments based on the principles of New Urbanism. The town center was 

completed in July 2011. 

Courtesy of Clark Realty Capital.
7 9

CHAPTER FOUR

The Switch to the Residential Communities Initiative (RCI), 1998–1999

providing the necessary “horsepower,” the Army 

decided to try again and, with the aid of Office of 

General Counsel attorneys, engineers, and housing 

personnel, it drafted a sample RFQ.31

The RFQ became the linchpin of the entire 

RCI procurement strategy, as developed by the 

RCI Task Force. Issued by the Army after an 

installation had decided to privatize—a decision 

based on several factors, including the completion of a housing market analysis to determine 

how many homes were actually needed—the RFQ 

asked developers to provide a résumé of their 

qualifications and their experience in developing 

similar housing projects.32 Instead of outlining 

in great detail all that the Army wanted accomplished, an RFQ described in general terms what 

the Army needed and asked developers to tell 

the Army how it could accomplish those goals. 

Respondents thus had to cover their experience 

and past performance, explain their preliminary 

concept, outline their financial and organizational capabilities, delineate what financial return 

they hoped to make, and explain how they would 

use small businesses as subcontractors.33

From these submittals, a Source Selection 

Evaluation Board (SSEB) would select finalists, 

who would then be asked to construct a more 

detailed plan for housing development on the 

installation and subsequently brief others on their 

visions for the project. Based on these plans and 

vision briefings, the SSEB would recommend an 

ultimate partner to the Source Selection Advisory 

Council (SSAC), consisting of senior level Army 

and consultant personnel. The SSAC would review 

the SSEB recommendation, either approve or reject 

it, and, if it approved, send the recommendation 

to the Source Selection Authority (SSA), usually a 

high-ranking Army official, who would make the 

final selection.34

After the developer had been chosen, the Army 

would enter into a contract with it to produce a 

Community Development and Management Plan 

(CDMP). Based largely on James Rouse’s plans for 

Columbia, Maryland, a CDMP, in Apgar’s words, 

would provide “a robust, comprehensive plan for 

community-building” that essentially outlined 

“the business and financial plans for each RCI 

site.” The CDMP included, among other things, a 

development plan, a financial plan, and an operation, maintenance, and property management 

plan. According to Apgar, it delineated “all major 

RFP vs. RFQ

Although the Army used a Request for Proposals 

(RFP) process to select a developer for housing 

privatization at Fort Carson, the service adopted a 

Request for Qualifications (RFQ) process for subsequent privatization projects. Typically in an RFP, the 

originator of the proposal advertises explicit project 

requirements and then selects a contractor based 

on how well each bidder’s price offer and work plan 

match those requirements. With an RFQ, the project owner defines fewer details of the final project, and interested contractors compete with each 

other by demonstrating their past experience, current expertise, and their preliminary vision for the 

project. In the RFQ model that the Army adopted for 

the RCI program, the developer’s level of expertise 

and design goals are incorporated into the project 

planning, along with the Army’s priorities and the 

particular needs of an installation. This takes place 

through the Community Development and Management Plan (CDMP) process.

In an RFP solicitation process, such as the one 

the Army used for the CVI project at Fort Carson, 

companies compete with one another by submitting bids (also called “offers”) describing detailed 

designs and strategies to accomplish the specifically 

requested work, as well as documenting their prior 

experience and expertise in the field. For most military construction on installations, the Army Corps of 

Engineers oversaw the RFP process, ensuring that all 

particulars met the federal regulations that governed 

contractor selections under RFPs. The Corps’ Omaha 

District prepared the system that the Corps would 

use to evaluate and rank the proposals for the Fort 

Carson housing privatization project, the details of 

which went into a document called the Source Selection Evaluation Plan (SSEP). Under the SSEP guidelines, the Omaha District would evaluate the proposals, using a three-tiered organizational structure 

and a multistage selection process. This evaluation 

mechanism was similar to the selection process in 

other Omaha District military construction (MILCON) 

projects during that time.

The RCI program selected the RFQ approach 

instead of the RFP because the RFQ offered several 

advantages for Army housing privatization, including reduced costs for bidders, improved project 

planning, and fewer risks connected to the final 

CDMP development. In both types of bidding processes, the Army used industry forums as a way to 

advertise upcoming projects and to generate interest in the development community.

programs and activities—including renovation, 

demolition, construction and operations”—that 

would occur over the life of the partnership and 

that necessitated close cooperation between the 

developer and the Army. The Army still had the 

opportunity to end the partnership at this point. It 

provided the developer with $350,000 to produce 

the CDMP (which largely built on the partner’s initial proposal), but if the two sides could not agree 

on the direction of the CDMP, the Army could just 

pay the $350,000 and select a new developer.35

If the Army accepted the CDMP (up to 2007, 

the Army rejected the CDMP developer in only one 

instance), it entered into a formal partnership with 

the developer, forming a limited liability partnership or corporation. This partnership would last for 

50 years (with an option for an additional 25 years) 

and the Army would lease the land to the limited 

liability corporation, which would own the housing. The first 10 years of the partnership would, in 

general, constitute the project’s first development 

period, during which the initial construction and 

renovations would occur and all inadequate housing at that site would be eliminated, by renovation, 

replacement (demolition and new construction), or 

just demolition. 

To help fund this initial period of development, the developer obtained loans secured 

through money that the developer received from 

soldiers’ Basic Allowance for Housing (BAH). 

Some funds would also accumulate in a lockbox 

to ensure that sufficient revenue would exist over 

the life of the 50-year agreement for additional 

maintenance and renovations, so that at the end of 

the 50 years, the Army would not find itself again 

with dilapidated homes. However, the BAH was 

just one source of funding for RCI projects, albeit 

the primary one. Army Family Housing Operating 

funds paid for project development, evaluation, 

7 8 Privatizing Military Family Housing
8 0 Privatizing Military Family Housing 8 1

CHAPTER FOUR

The Switch to the Residential Communities Initiative (RCI), 1998–1999

implementation, and oversight, including Army 

salaries and consultant costs, while monies from 

the DOD Family Housing Improvement Fund 

(reprogrammed from the Army Family Housing 

Construction Appropriation) were used to cover 

any obligations scored by the OMB and to fund any 

gaps in development funds.36

As the RCI Task Force developed the strategy, 

Apgar reached out to the development community. He had brochures prepared about RCI and 

made plans for in-person presentations about 

the concept. He contacted developers through 

organizations such as the Urban Land Institute 

and the National Trust for Historic Preservation. 

When meeting with individuals, he emphasized 

that the Army had incentives that it could use in 

its partnerships, including mortgage guarantees 

and direct loans. Industry representatives were 

cautious but optimistic about the new program. 

“We’re turning the corner,” said Paul Taibl of the 

Business Executives for National Security. But he 

thought that more progress would be made if the 

DOD did not “insist on reinventing the wheel [by] 

designing new real estate contract vehicles and 

financial instruments.”37

By December 1998, the RCI Task Force had 

finalized its strategy and Apgar presented it to 

DOD officials, including Dr. Jacques Gansler, 

the Undersecretary of Defense for Acquisitions. 

Gansler provided general support for the concept, 

allowing Apgar to take it to Capitol Hill as the 

Army’s new privatization program, replacing CVI.38

Apgar later characterized the program as “an ambitious, 10-year plan ... to privatize Army housing at 

43 locations by 2010, representing over 90 percent 

of our U.S. stock, all using the RFQ.” According to Apgar, there were three major changes in 

the program. First came a shift in thinking from 

“housing production to community development.” 

Second was a change in business approach from 

contracting to partnering. Third was the use of 

RFQs instead of RFPs. In short, Apgar explained, 

RCI would “create and sustain attractive, comfortable homes in clustered neighborhoods that are 

safe, clean, and convenient, with the features and 

amenities enjoyed by the majority of Americans.”39

Congress Debates Army 

Privatization Strategies

Congress’s initial reception of the plan, however, was lukewarm. Two House committees—the 

Subcommittee on Military Installations and Facilities of the Committee on Armed Services and the 

Subcommittee on Military Construction Appropriations of the Committee on Appropriations—

raised concerns. U.S. Representative Joel Hefley 

(R-Colorado), chairman of the Military Installations and Facilities subcommittee, for example, 

declared that Apgar’s proposal would implement 

full privatization too quickly, without ensuring 

that RCI was the proper route to take. According 

to Hefley, the Army appeared to be “plac[ing] all 

hopes for recapitalizing and improving military 

family housing on privatization, without being 

certain that it will work in all locations.” Congressman Hefley and others believed that the program 

needed to be tested before it could be accepted as 

the vehicle to end the Army’s housing woes. “We 

simply do not know enough about this program to 

justify the policy decisions which appear to have 

been made by ... the Army,” he concluded.40

Other questions revolved around the issue of 

control. The House’s Military Construction Appropriations Subcommittee had traditionally had the 

power to determine how many housing structures 

would be built at what base. Under RCI, that 

control would be gone. How could Congress know, 

many asked, that money used for RCI was being 

used in the most beneficial way? Would Congress 

still have any kind of oversight over RCI? These 

fears were exacerbated by the fact that, as it moved 

to RCI, the Army placed several MILCON housing 

projects on hold. This especially upset members 

of the appropriations committees because projects 

for which they had appropriated monies were not 

going forward.41 As former Vice Chief of Staff of the 

Army Jack Keane explained, the Army was asking 

Congress “to give up a significant amount of money 

that they [could] take credit for in their congressional districts or in their states.”42

Some of Congress’s reluctance stemmed from 

the nature of the changes that the Army wanted 

to make. Congressional members were generally 

not familiar with the RFQ concept and they were 

therefore uncomfortable with the RFQ process—

even though the U.S. Postal Service, the General 

Services Administration, and state governments 

had been using that procurement method for 

years. Although everything within the RCI program 

fell under the authorities authorized by the MHPI 

legislation, some of the concepts, in Ted Lipham’s 

words, “pushed the envelope,” which again threatened Congress’s comfort level.43

Unperturbed despite the questions, Apgar 

made plans in the fall of 1998 to announce the RCI 

program at an annual industry meeting sponsored 

by the Urban Land Institute in Pebble Beach, 

California. Ten minutes before he was to take the 

podium and make the announcement, he received 

a fax from U.S. Representative David Hobson 

(D-Ohio), chairman of the House Military Construction Appropriations Subcommittee, forbidding him to announce the program. In Apgar’s 

words, Hobson thought the plan was “too risky, too 

fast, and too far reaching.”44 After consulting with 

Bernard Rostker and the Army’s General Counsel, 

Apgar apologized to the group and said that he 

could not make his planned announcement. Upset 

about the matter, Apgar wondered how “a Congressman [could] block a critical, carefully planned 

meeting with the leaders whom we all hoped 

would be helping the Army.”45 According to Rostker, what Apgar did not understand was that “there 

was a board of directors and that board of directors 

was the United States Congress.” As such, Congress 

“could prevent him from spending a dime.” What 

he needed to grasp, Rostker concluded, was the 

necessity of developing congressional support for 

the program.46

Apgar eventually found enough support in 

Congress to announce the program to another 

Urban Land Institute conference on January 28, 

1999, attended by developers, representatives 

of lending institutions, and government officials.47 Yet Hobson’s opposition continued over 

the next several months. In March 1999, Rostker 

met with Hobson about the RCI program, and 

Figure 4-7. U.S. Representative David Hobson (D–Ohio). 

Courtesy of Congressional Pictorial Directory, U.S. Congress.
8 2 Privatizing Military Family Housing 8 3

CHAPTER FOUR

The Switch to the Residential Communities Initiative (RCI), 1998–1999

the congressman raised several questions. These 

included why the Army was proposing to privatize 

all of its housing with RCI when it had not completed any project under the RCI guidelines and 

why the Army had not requested any funds for traditional military construction of family housing. In 

essence, Hobson was echoing Congressman Hefley’s concern that the Army appeared to be putting 

all of its eggs in the RCI basket without knowing 

whether RCI would succeed. “The military housing 

privatization initiative is a pilot program,” Hobson 

emphasized, but apparently “some in the military 

have not gotten the message.”48

Congressman Hobson expected Rostker and 

Apgar to provide him with answers to these questions in a hearing before the Subcommittee on 

Military Construction Appropriations, but the 

night before the hearing commenced he received 

a letter stating that the Army would be unable to 

address the concerns. Angered by what he considered to be nonresponsiveness, Hobson first considered canceling the hearing, but then, as he recollected later, decided to hold it so that he could 

“chew [Apgar] out and shut the hearing down” in a 

public way.49 According to Rostker, Apgar wanted 

to respond to Hobson’s tongue-lashing, but Rostker passed him a note telling him to “just shut up 

and take it.”50 After telling the two that he “did 

not expect to be treated that way,” Hobson quickly 

ended the hearing, declaring that Apgar and Rostker needed to “wait, step back, take a breath, look 

at this, and try to get it in order. And if that is not 

enough message,” he warned them, “then we are 

going to have a real problem.”51

Two days after the hearing, Rostker transmitted answers to Congressman Hobson’s questions, 

apologizing for the situation and explaining that 

Apgar “did not appreciate your need to receive this 

information before the hearing Wednesday.”52 The 

RCI plan outlined in this response was a drastic 

curtailment of Apgar’s original proposal. According to this report, the Army would now test RCI at 

five pilot locations: Fort Carson (where privatization was already underway); Fort Hood, Texas; Fort 

Lewis, Washington; Fort Stewart, Georgia; and 

Fort Meade, Maryland. The Army later dropped 

Fort Stewart from the list of pilot projects. Even at 

these locations, the Army would proceed with caution. Although RFQs would be issued and CDMPs 

developed, the Army would not implement any 

specific steps until Congress approved them.53

The plan also declared the Army’s intent to 

use MILCON funds at installations where privatization was not the ideal solution (for example, 

installations with only a small housing inventory). To keep congressional oversight intact, the 

Army pledged to keep Congress informed as it 

proceeded with RCI plans at installations. It would 

tell Congress of intentions to issue RFQs, intent to 

award contracts, and details of proposed CDMPs. 

In this way, it hoped to alleviate congressional 

fears about the program.54

Garnering Support for RCI

Meanwhile, Apgar faced skepticism from 

several sources within the Army, including the U.S. 

Army Corps of Engineers (USACE), civilians in 

both the OACSIM and Apgar’s own Installations 

and Environment office, and installation personnel. USACE, for example, had been responsible 

for construction on installations, although its 

responsibility usually took the form of overseeing 

contracts with private firms for the actual design 

and construction of the homes. USACE had also 

had responsibility for developing RFPs and for all 

contracting matters under the CVI program. Under 

the RCI, with the change to RFQs and partnerships, and Apgar’s personal program supervision, 

this responsibility would largely disappear. After 

2001, the Baltimore District of the Corps would 

function as the center for RCI procurement (it 

supervised the RFQ and selection process), the 

Mobile District of the Corps would serve as the 

Environmental Team responsible for the preparation of documents to comply with the National 

Environmental Policy Act, and the Norfolk District 

of the Corps would work as the real estate team 

for the RCI, preparing real estate documents and 

supervising boundary surveys and lease compliance assessments. But other districts would have 

little responsibility. As Rhonda Hayes explained, 

“the Corps’ proper role” in the RCI program caused 

“a great deal of consternation.”55 Lipham was a little 

more frank, stating that Corps personnel were 

“hell-bent against” the RCI program.56

The Directorate of Public Works had also traditionally had housing responsibilities, performing 

operation and maintenance duties on family housing. But under RCI, operation and maintenance 

would shift to the developer. Garrison commanders would no longer have direct and sole control 

of the housing function, as the developer would 

assume those responsibilities. In essence, Lipham 

explained, the move to privatization implied to 

existing housing officials that they were “not doing 

a good job” and they “fought us all the way.”57 Such 

concerns continued to pose difficulties as the 

RCI program went forward. Looking back on the 

situation, Apgar considered the concerns understandable, “given the radical departure from past 

practice represented by our proposals.”58

Facing these issues, Apgar took a number of 

steps to redistribute control. He removed the RCI 

Task Force from the jurisdiction of the OACSIM 

in August 1998, establishing it as the RCI Program 

Office within the OASA, I&E and making it responsible only to himself. Apgar characterized this move 

as controversial but necessary, so that he could 

promote creative thinking and innovative ideas 

about housing.59 Prior to that, as Lipham explained, 

CVI had been “buried under about ... four levels 

[of bureaucracy] before we got to the Assistant 

Secretary of the Army.”60 Each layer had to approve 

a decision before implementation, making it a difficult and time-consuming process. As one report 

explained it, “to move a decision from [the OACSIM] to the final decision maker, 12 different leaders had to be briefed and consulted, which led to 

indecision and confusion.” By making the RCI Task 

Force report only to him, Apgar essentially removed 

these bureaucratic layers. He also allowed the task 

force to coordinate directly with installations, 

rather than through the OACSIM and subordinate 

commands. According to several observers, these 

were critical moves, both because they lessened the 

chance that critics of the program within the Army 

could kill it and because they allowed for more 

efficient decision making once the program began 

in earnest. Moving the program to the Secretariat 

allowed the Assistant Secretary to discuss matters 

quickly with the Secretary of the Army, the Chief 

and Vice Chief of Staff, the Office of General Counsel, and four-star field commanders, as well as with 

Congress and the DOD.61

Although moving RCI directly under the 

Secretariat generated some controversy, it was 

not a radical change for the Army. In October 

1986, Congress had passed the Goldwater-Nichols 

Department of Defense Reorganization Act, which, 

in the words of an Army annual report, mandated 

“a variety of organizational and procedural changes 

upon the military establishment to strengthen 

civilian authority.” These included centralizing 

certain functions, such as public affairs, research 

and development, financial management, and 

information management in the Secretariats of 
8 4 Privatizing Military Family Housing 8 5

CHAPTER FOUR

The Switch to the Residential Communities Initiative (RCI), 1998–1999

each service, as well as overhauling the Army’s 

management structure. In many ways, Apgar’s 

placement of RCI under his control was in keeping 

with the reorganization act’s goal of “expand[ing] 

the management role of the service secretaries.”62

The move to the Secretariat also helped facilitate 

crucial communication with the RCI staff in the 

early years of the program. 

As Apgar remembered, he was driven by 

the concern that “the program could easily have 

been derailed or simply withered between late 

1998 and acceptance of the four pilot projects.” 

Apgar worried not only that Congress and high 

Army leaders might kill the program with their 

lack of support but that industry would tire of 

waiting and move on to new interests.63 To keep 

the program moving, Apgar enlisted the help 

of two crucial leaders: Vice Chief of Staff of the 

Army Jack Keane and U.S. Army Forces Command (FORSCOM) Commander General Thomas 

Schwartz. Keane, who had spent most of his military career as a paratrooper and who had served 

as commander of the XVIII Airborne Corps, was a 

willing advocate of RCI. 

Having seen firsthand the poor condition of 

military housing, which he described as having 

“very little aesthetic value,” Keane listened carefully 

when Apgar approached him with plans for RCI 

soon after his appointment as Vice Chief early in 

1999. Apgar showed Keane the planned community 

of Columbia, Maryland, whose design had been 

guided by New Urbanist principles, to provide the 

general with an example of what he was envisioning, and after that excursion Keane became an 

RCI champion. Keane’s support was crucial. For 

one thing, he already had a good relationship with 

Congressman Hobson and helped alleviate some 

of the congressman’s concerns. For another, Keane 

believed that it was crucial to get the support of the 

three-star commanders of the Army’s operational 

commands—the XVIII Airborne Corps, located at 

Fort Bragg, North Carolina; the III Corps, headquartered at Fort Hood, Texas; and the I Corps, 

located at Fort Lewis, Washington—because 

the commanders of these three corps were also 

installation commanders. He was able to explain 

the program to the three commanders—Lieutenant General Dan McNeill (XVIII Airborne Corps), 

Lieutenant General Leon LaPorte (III Corps 

commander), and Lieutenant General Thomas 

Hill (I Corps Commander)—and emphasized the 

improvements to soldiers’ quality of life that RCI 

could bring about. With Keane’s urging, all three 

became supportive of RCI in 1999.64

Perhaps one reason that all three Corps commanders accepted the program so readily was 

that their own commander—General Thomas 

Schwartz, who headed FORSCOM—was already 

an RCI champion. As discussed in Chapter 3, 

Schwartz had played a key role in getting privatization at Fort Carson off the ground. He supported 

the program in part because of his belief that the 

Army had to do something to improve the quality 

of life of its soldiers and make a concrete effort to 

show families that the Army truly cared. Early in 

1999, Schwartz convened a meeting of his senior 

officers to discuss RCI and to convey in no uncertain terms that he wanted FORSCOM installations to pursue it. As Ted Lipham remembered, 

Schwartz told the FORSCOM commanders, “If you 

don’t want to get on board with [RCI], let me know 

and I’ll find you another job because we’re going to 

do this.” Soon after, and with the help of General 

Keane, the FORSCOM installations started to “line 

up.” Additional help came when Secretary of the 

Army Louis Caldera told the garrison commanders the same thing—that the Army was embracing 

the RCI program and that those who did not like it 

would get reassigned.65 By February 2000, Lipham 

could accurately report to internal and external 

stakeholders that the program had “the support of 

the highest levels of the Army.”66

In addition, Apgar continued to discuss RCI 

with members of Congress and their staffs, as did 

Lipham and officials such as Joseph Sikes, Director 

for the Housing and Competitive Sourcing Office 

within the Office of the Deputy Undersecretary of 

Defense for Installations and Environment. These 

conversations took place both formally and informally. Sikes, for example, remembered a breakfast 

on Capitol Hill that included “all the senior leadership of Congress, the Deputy Secretary of Defense, 

the Comptroller, [and] all the senior DOD leadership.”67 In the course of such discussions, RCI 

supporters found two champions of the program 

on the House Military Construction Appropriations subcommittee: U.S. Representative Chet 

Edwards (D–Texas) and U.S. Representative Norman Dicks (D–Washington). Edwards, who represented portions of North Texas, Central Texas, 

and the Brazos Valley (including Fort Hood), saw 

the value in privatizing housing, in part because 

of his interest in improving the quality of life for 

Army soldiers and their families. Edwards also had 

a real estate background: after earning an MBA 

from Harvard, he had worked for Trammell Crow, 

a large real estate developer. Dicks, meanwhile, 

had a legal background. He represented the Fort 

Lewis community in Congress and understood the 

importance of RCI to the installation. According to 

Apgar, both of these congressmen “got it” and they 

spent a good deal of time in 1999 trying to gain RCI 

support from other committee members.68

Figure 4-8. General Jack Keane, Vice Chief of Staff of 

the Army. 

Courtesy of U.S. Department of Defense.

Figure 4-9. Lieutenant General Thomas A. Schwartz (left) 

and Major General Amos Malka (right) in 1997. 

Courtesy of U.S. Department of Defense.
8 6 Privatizing Military Family Housing 8 7

CHAPTER FOUR

The Switch to the Residential Communities Initiative (RCI), 1998–1999

Conclusion

By the end of 1999, the RCI program and 

process had been established. Sandy Apgar had 

changed the focus of the Army’s privatization 

program to communities and, together with the 

RCI Task Force, had created a vision for fam-

ily housing on Army installations. The idea was 

innovative, creative, and controversial. Although 

Apgar and other Army officials established proce-

dures and offices to protect the fledgling program, 

doubts persisted. Many members of Congress, and 

especially of the critical House Military Construc-

tion Appropriations subcommittee, wondered how 

RCI would work in practice, whether it would be 

too expensive, and how it would affect surround-

ing communities. Army officials, especially those 

on installations, were unsure as well, although 

the support of the Secretary of the Army, the Vice 

Chief of Staff of the Army, and the FORSCOM 

commander helped to mitigate those doubts. Yet 

much work remained to be done to convince those 

who questioned the program. Throughout 2000 

and 2001, three pilot programs would test the RCI 

program, producing concrete results and begin-

ning to answer the questions that lingered.

Endnotes to Chapter 4

1. House, Committee on Appropriations, Military 

Construction Appropriations for 1998: Hearings Before 

a Subcommittee of the Committee on Appropriations, 

House of Representatives, 105th Cong., 1st sess., 1997, 

177. Hereafter cited as FY 1998 MILCON Appropriations 

Hearings.

2. FY 1998 MILCON Appropriations Hearings, 177.

3. U.S. General Accounting Office, Military Housing: 

Privatization Off to a Slow Start and Continued 

Management Attention Needed, Report No. GAO/

NSIAD-98-178 (Washington, D.C.: U.S. General 

Accounting Office, 1998), Executive Summary, 3-4.

4. FY 1998 MILCON Appropriations Hearings, 209.

5. GAO, Military Housing: Privatization Off to a Slow 

Start, 20.

6. Jack Keane telephone interview by Paul Sadin, 16 March 

2009, Seattle, Wash., Transcript, 5.

7. Interview of Don Spigelmyer, Dean Stefanides, Rhonda 

Hayes, Mike McCarley, Matt Keiser, Barry Scribner, Bill 

Mysliwiec by Matthew Godfrey, 13 February 2007, Crystal 

City, Va., Transcript, 13. Hereafter cited as RCI group 

interview.

8. Penelope Schmitt, “Privatization Forum Sparks Debate,” 

Public Works Digest 10 (March 1998): 3.

9. Schmitt, “Privatization Forum Sparks Debate,” 3-4.

10. FY 1998 MILCON Appropriations Hearings, 191.

11. House, National Defense Authorization Act for Fiscal 

Year 1999: Report of the Committee on National Security, 

House of Representatives, on H.R. 3616, together with 

Additional, Dissenting, and Supplemental Views, 105th 

Cong., 2d session, 1998, H. Rept. 105-532, 360.

12. FY 1998 MILCON Appropriations Hearings, 216.

13. Penelope Schmitt, “CVI Surges Forward,” Public 

Works Digest 10 (March 1998): 2-3; and “Army Family 

Housing, FY 2000 Budget Estimate, Community [sic] 

Venture Initiatives (CVI) Summary, September 1998,” 

2-4, Binder: Plan to Eliminate Inadequate Army Family 

Housing by FY 2010, Uncatalogued Housing Materials, 

Research Collections, Office of History, U.S. Army Corps 

of Engineers Headquarters (HQUSACE), Alexandria, Va. 

Hereafter cited as USACE Office of History.

14. Mahlon “Sandy” Apgar, IV, interview by Matthew 

Godfrey, 18 July 2007, Baltimore, Md., Transcript, 1-2; and 

“Sandy Apgar, Woodrow Wilson Center Senior Scholar” 

http://www.wilsoncenter.org/index.cfm?fuseaction=sf.

profile&person_id=466401.

15. Apgar interview, 2.

16. Apgar interview, 2; and “President Names Mahlon 

Apgar Asst Secretary of the Army at DOD,” The White 

House, Office of the Press Secretary, Press Release, 

11 March 1998, http://www.clintonfoundation.org/

legacy/031198-president-names-mahlon-apgar-asstsecretary-of-the-army-at-dod.htm.

17. Quoted in Bernard Rostker and Charles Nemfakos 

interview by Matthew Godfrey, 17 July 2007, Arlington, 

Va., Transcript, 4. See also RCI group interview, 14.

18. Ted Lipham telephone interview by Paul Sadin, 13 

October 2008, Transcript, 13. 

19. Quoted in RCI group interview, 14. See also Rostker 

and Nemfakos interview, 5-7.

20. The Honorable Mahlon Apgar, IV, “Remarks Following 

the Presentation of the James Felt Award for Creative 

Counseling, The Counselors of Real Estate, Dallas, Texas, 

November 22, 2002,” 2, document provided by Sandy 

Apgar.

21. See William M. Welch, “Army Housing No Longer 

Homely,” USA Today, 12 October 2005; and Margot Adler, 

“Behind the Ever-Expanding American Dream House,” 

National Public Radio, All Things Considered, 4 July 2006, 

www.npr.org/templates/story/story.php?storyId=5525283.

22. Apgar interview, 3-5.

23. Apgar interview, 5.

24. Congress for the New Urbanism, “Charter of the New 

Urbanism,” http://www.cnu.org/sites/files/charter_

english.pdf. 

25. Quoted in Joseph Rocco Mitchell and David L. 

Stebenne, New City Upon a Hill: A History of Columbia, 

Maryland (Charleston, S.C.: History Press, 2007), 45. See 

also pp. 71-72.

26. William Hamilton, “New Urbanism: It’s in the Army 

Now,” New York Times, 8 June 2006.

27. RCI group interview, 6.

28. Joseph Sikes interview by Matthew Godfrey, 20 July 

2007, Crystal City, Va., Transcript, 2. See also Apgar 

interview, 6-7, 13-14; and “Response to GAO Questions,” 11 

January 2000, Folder: Congress (incl. sub-folders), Share 

drive database, RCI Program Office, Crystal City, Va. 

Hereafter cited as RCI Office.

29 Sandy Apgar personal communication with Matthew 

Godfrey, 26 March 2009.

30. “Residential Communities Initiative (RCI), Integrated 

Process Team (IPT) Meeting, Opening Remarks by the 

Honorable Mahlon Apgar IV, Assistant Secretary of the 

Army for Installations and Environment, January 19, 2001,” 

3, document provided by Sandy Apgar. 

31. Lipham interview, 4-5, 8.
8 8 Privatizing Military Family Housing 8 9

CHAPTER FOUR

The Switch to the Residential Communities Initiative (RCI), 1998–1999

32. A report to the U.S. Government Accountability Office 

(GAO) explained that the Army first used an “Econometric 

Model” to determine whether there was a housing 

deficit at an installation. If a deficit was suspected, the 

Army would hire private experts to perform a housing 

market analysis. If this showed a deficit as well, the Army 

would ask the Army Audit Agency to validate the deficit. 

According to the report, “This provided three independent 

analyses of the housing market.” See “Response to GAO 

Questions,” 11 January 2000. For more information on 

the housing market analysis, see “Army’s Residential 

Communities Initiative—Questions & Answers, as of April 

2002,” 32-33, Folder: Congress (incl. sub-folders), Share 

drive database, RCI Office.

33. “Army Names RCI Partner,” Soundoff!, 8 March 2001.

34. Bill Mysliwiec and Matthew Keiser interview by 

Matthew Godfrey, 15 February 2007, Crystal City, Va., 

Transcript, 12-13; and Apgar interview, 6-7. The SSEBs and 

the RCI Procurement Team (originally set up to support 

the Integrated Process Team [see below]) fell under 

the jurisdiction of Headquarters, U.S. Army Corps of 

Engineers.

35. Apgar, “Remarks Following the Presentation of the 

James Felt Award,” 5. See also RCI group interview, 11-13, 

24; and “Response to GAO Questions,” 11 January 2000.

36. “Response to GAO Questions,” 11 January 2000.

37. Quoted in Sandra Fleishman, “Army Tries to Recruit 

Developers,” Washington Post, 27 November 1999.

38. Apgar interview, 8.

39. Quoted in House Subcommittee on Military 

Installations and Facilities of the Committee on Armed 

Services, Hearings on National Defense Authorization 

Act for Fiscal Year 2000—H.R. 1401 and Oversight of 

Previously Authorized Programs Before the Committee on 

Armed Services, House of Representatives, One Hundred 

Sixth Congress, First Session, Military Installations and 

Facilities Subcommittee Hearings on Division B—Military 

Construction Authorizations (H.R. 1401), 106th Cong., 1st 

sess., 1999, 298-300. Hereafter cited as FY 2000 MILCON 

Authorization Hearings. 

40. FY 2000 MILCON Authorization Hearings, 292.

41. See RCI group interview, 15; Apgar interview, 10; and 

Sikes interview, 13-14.

42. Keane interview, 3-4.

43. Lipham interview, 10. See also “Residential 

Communities Initiative (RCI), Integrated Process Team 

(IPT) Meeting, Opening Remarks by the Honorable 

Mahlon Apgar IV,” 3.

44. “Residential Communities Initiative (RCI), Integrated 

Process Team (IPT) Meeting, Opening Remarks by the 

Honorable Mahlon Apgar IV,” 3.

45. Apgar interview, 9-10.

46. Rostker and Nemfakos interview, 5.

47. See Honorable Chet Edwards of Texas, “Honoring the 

United States Army’s Residential Communities Initiative 

Upon Its 10th Year,” Congressional Record—Extension of 

Remarks, 28 January 2008, E82, thomas.loc.gov.

48. House Subcommittee on Military Construction 

Appropriations of the Committee on Appropriations, 

Military Construction Appropriations for 2000: 

Hearings Before a Subcommittee of the Committee on 

Appropriations, House of Representatives, One Hundred 

Sixth Congress, First Session, 106th Cong., 1st sess., 1999, 

213. Hereafter cited as FY 2000 MILCON Appropriations 

Hearings.

49. U.S. Representative David Hobson interview by Paul 

Sadin, 24 June 2008, Washington, D.C., Transcript, 6.

50. Rostker and Nemfakos interview, 5.

51. FY 2000 MILCON Appropriations Hearings, 289.

52. Bernard D. Rostker to The Honorable David L. 

Hobson, 19 March 1999, Copy in FY 2000 MILCON 

Appropriations Hearings, 267.

53. Attachment to Rostker to Hobson, 19 March 1999, 

Copy in FY 2000 MILCON Appropriations Hearings, 268.

54. Attachment to Rostker to Hobson, 19 March 1999, Copy 

in FY 2000 MILCON Appropriations Hearings, 269, 276.

55. Quoted in RCI group interview, 15. See also Mysliwiec 

and Keiser interview, 8; Dillard Horton, “Residential 

Communities Initiative (RCI) Information Executive 

Brief, Norfolk District,” 14 January 2004, PowerPoint 

presentation, Documentum database, RCI Office; ASA-I&E 

RCI Real Estate Project Delivery Team, “Draft RCI Real 

Estate Handbook,” 16 January 2004, Chapter 2, page 2, copy 

in Documentum database, RCI Office; and “RCI Program 

Provides Housing for Army Families,” Engineer Update

(U.S. Army Corps of Engineers), April 2007, http://www.

hq.usace.army.mil/cepa/pubs/apr07/story3.htm.

56. Lipham interview, 5-6.

57. Lipham interview, 6.

58. Apgar interview, 17.

59. Sandy Apgar personal communication with Matthew 

Godfrey, 26 March 2009.

60. Lipham interview, 4. See also Joyce VanSlyke personal 

communication with Matthew Godfrey, 24 March 2009. 

61. “Question One: Why operate and manage the housing 

privatization program from the Secretariat?” Folder: LEAN 

SIX SIGMA, Shared Drive database, RCI Office. See also 

Apgar interview, 13; RCI group interview, 13-14; and Joyce 

VanSlyke interview by Matthew Godfrey, 27 June 2008, the 

Pentagon, Transcript, 3.

62. Quoted in Mary L. Haynes, Department of the Army 

Historical Summary: Fiscal Year 1987, ed. Cheryl Morai 

Young (Washington, D.C.: U.S. Army, Center of Military 

History, 1995), 69-71, 76.

63. Apgar interview, 11.

64. Keane interview, 2, 6-7.

65. Lipham interview, 7, 19. See also Schwartz personal 

communication with Paul Sadin, 2 May 2008; and Apgar 

interview, 11.

66. “Initiative to Improve Housing On Post,” Soundoff!, 17 

February 2000.

67. Sikes interview, 14.

68. Apgar interview, 8, 10.
9 1

CHAPTER FIVE

The Beginning of the RCI Pilot 

Projects, 1998–2001

Under the leadership of Assistant Secretary 

of the Army for Installations and Environment (ASA, I&E) Mahlon “Sandy” 

Apgar, IV, the U.S. Army had begun developing 

an effective approach to getting private developers involved in the construction and operation of 

on-post family housing. Yet the newness of the 

program, coupled with Apgar’s aggressiveness in 

promoting it, exacerbated congressional concerns. 

Facing opposition from Congress, Army leaders 

decided to implement three RCI pilot programs 

to test the MHPI legal authorities and determine 

whether or not RCI would work. The success of 

the pilots would largely determine whether the 

program had enough congressional support to 

proceed to full implementation. As the pilots progressed, numerous questions arose about the RCI 

program specifically and privatization in general. 

Congressional committees kept a close eye on the 

program, while those on the ground tried to work 

through issues and develop plans, although they 

had no real templates on which to draw. Carrying 

out the pilot programs and addressing the issues 

they produced were critical for the success of the 

RCI program. 

At the same time, the redirection of privatization energy toward the RCI model that the pilot 

programs embodied spelled the end of the Capital 

Venture Initiatives (CVI) vision, at Fort Carson and 

elsewhere. Apgar was intent not just on building 

houses but also on offering “ancillary facilities”—

such as school, community centers, shops, and 

recreational and cultural facilities—that would 

cement a sense of community. 

Selection of the Pilots

Privatization of family housing was only 

one of three methods that the U.S. Department 

of Defense (DOD) as a whole hoped to use to 

improve housing for service members. Its other 

two options were to use traditional military 

construction (MILCON) and to raise service 

Figure 5-1. RCI housing, Presidio of Monterey, Calif.

Courtesy of Clark Realty Capital.
9 2 Privatizing Military Family Housing 9 3

CHAPTER FIVE

The Beginning of the RCI Pilot Projects, 1998–2001

members’ Basic Allowance for Housing (BAH) to 

levels that allowed soldiers to afford quality offpost housing. To accomplish the latter, Secretary 

of Defense William Cohen announced an initiative on January 6, 2000, “to eliminate service 

members’ out-of-pocket costs for off-base housing 

in the United States.”1 The initiative provided for 

the DOD to move $3 billion into the BAH program between 2000 and 2005, each year increasing the amount that service members received as 

their BAH until the funding covered all out-ofpocket costs. However, since existing legislation 

mandated that BAH payments could only equal 

85 percent of the average cost of housing in a 

community, the DOD needed specific legislation 

to eliminate all out-of-pocket housing costs.

Because the RCI program proposed using 

soldiers’ BAH as a rental stream for developers, 

and because soldiers living off-post relied on BAH 

to pay for their housing, any proposal to increase 

the BAH positively affected RCI as well—both in 

terms of financing the program and in terms of 

the demand for housing. As Congress examined 

the proposal to elevate BAH levels, it questioned 

the effects on RCI, specifically, whether increases 

would reduce demand for on-post housing. Army 

officials responded that they would continue to 

conduct Housing Market Analyses (HMAs) at 

installations to determine how much on-base 

housing was necessary.2

 They also noted that 

increasing the BAH would make more money 

available to developers for RCI construction 

and renovation.3

 Because soldiers would obtain 

quality-of-life benefits by receiving more BAH, the 

National Defense Authorization Act for Fiscal Year 

2001 (passed in October 2000) implemented the 

department’s recommendation. That same piece 

of legislation also extended the life of the MHPI 

authorities to 2004.4

The BAH increase had an unintended consequence at Fort Carson: it created a flood of additional income for development company J.A. Jones, 

which had based its bid on a more conservative 

estimate of the amount of rental income from the 

project.5 Some Army officials, together with U.S. 

Representative David Hobson (D-Ohio), were 

“outraged” at the amount of additional revenue 

it would provide to J.A. Jones over the 50 years 

of the contract.6 Indeed, the situation seemed to 

confirm a congressional worry that the program 

would turn out to be a boondoggle that fleeced 

the taxpayers and the military and lined the 

pockets of private developers—one of the reasons 

that Congress eliminated the Wherry Housing 

program of the 1940s and 1950s.7

 In a 2008 interview, Hobson stated that in the cases of the early 

RCI pilot projects the Army and Congress tried 

to make the contracts “triple net lease so they 

[contractors] couldn’t steal the money away. The 

contractor could make some money, but we did not 

want them to make too much.”8

 Accordingly, the 

increased BAH eventually prompted a restructuring of the original Fort Carson housing contract.

Notwithstanding congressional qualms that 

RCI might be too good a deal for developers, 

Assistant Secretary Apgar and the RCI Task Force 

continued their efforts to implement the RCI concept at a select few installations. Initially Apgar and 

the task force targeted four posts: Fort Hood, Fort 

Lewis, Fort Meade, and Fort Stewart.9

 Fort Stewart 

eventually was dropped from consideration and in 

July 1999 Congress approved using Hood, Lewis, 

and Meade as the pilot projects.10 Apgar later 

described how these pilots were chosen. Staffers 

within his Installations and Environment office 

just wanted “the next four [scheduled] MILCON 

housing projects as the pilots for RCI.” Apgar disagreed and instead asked his staff and Jones Lang 

LaSalle (JLL) consultants to list 20 possible installations, taking into account “the geography and 

market conditions ... the Army’s basing network ... 

the existing infrastructure, and several other criteria.” Based on the criteria, three installations stood 

out: Fort Hood, because it had the strong backing 

of U.S. Representative Chet Edwards (D-Texas), 

as well as the support of Army leadership at the 

installation; Fort Lewis, because it was “one of the 

Army’s real estate crown jewels”; and Fort Meade, 

because it “housed multiple agencies and was set 

in a very strong regional market.”11

Others remembered additional reasons for 

the selection of Hood, Lewis, and Meade. For one 

thing, privatizing these large installations would 

enable the Army to improve 13 percent of its housing inventory. For another, the installations taken 

together presented “a wide diversity of market 

conditions associated with military housing.” Fort 

Hood was located in the isolated community of 

Killeen, Texas, for example, while Fort Meade was 

in a major urban area between Baltimore, Maryland, and Washington, D.C.12 The fact that the 

installation commanders at both Fort Hood (LTG 

Leon LaPorte) and Fort Lewis (LTG James Hill) 

embraced privatization helped as well. As Rhonda 

Hayes, now the Director of Capital Ventures in 

ASA, IE&E, said, they were “raising their hand, saying we’ll do it.”13 Finally, all three installations had 

housing managers—Robert Erwin at Fort Hood, 

Louis Bain at Fort Lewis, and George Barbee, working for the Military District of Washington to guide 

the RCI project at Fort Meade—who were committed to thinking outside the box to solve their housing problems. Barbee called RCI “a history-making 

event,” that allowed him and his counterparts “to 

provide for our military members the same type of 

housing that the people that they defend live in.”14

Because several members of Congress, especially Congressman Hobson of the House Subcommittee on Military Construction Appropriations, 

were concerned with the fast pace originally 

proposed for RCI, the Army assured Congress 

that it would proceed “cautiously” with the pilots. 

Each site would undergo a project planning phase 

in which the installation would work with the 

selected partner to develop the Community Development and Management Plan (CDMP). Undersecretary of the Army Bernard Rostker, in his 

response to questions on the topic from Congress, 

asserted that Army officials, with the advice of 

financial consultants, would “ensure that the plan 

is well conceived, comprehensive and consistent 

with the authorities provided by Congress.”15 Once 

the CDMP was completed, the Army would decide, 

in consultation with Congress, whether or not to 

proceed with privatization on a case-by-case basis. 

The Army’s strategy for the pilot programs would 

therefore be relatively “low-risk.”16

In going forward with the pilots, the RCI Task 

Force sought to apply lessons learned from the 

Fort Carson project, even though Carson was being 

completed under the CVI program. The biggest 

lesson learned from Fort Carson, in the mind of 

Army officials, was that the Request for Proposals 

Figure 5-2. Older, pre-RCI duplex in the Clarkdale 

development at Fort Lewis.

Courtesy of U.S. Army.
9 4 Privatizing Military Family Housing 9 5

CHAPTER FIVE

The Beginning of the RCI Pilot Projects, 1998–2001

(RFP) process did not work very well and that it 

was necessary to switch to a Request for Qualifications (RFQ) process. But the Army also believed 

that the success of the Fort Carson endeavor demonstrated the need to communicate with outside 

interests and stakeholders, such as school districts 

and local government officials.17

Another lesson learned from Fort Carson 

was that privatization cost more money than its 

supporters had originally estimated. When the 

Army submitted its budget request for Fiscal Year 

(FY) 2000, the service did not know how expensive the Fort Carson effort would be. When those 

figures became available, Army officials realized 

that they had significantly underestimated the 

costs of privatization. In order for the three RCI 

pilots to succeed, the installations would need a 

higher level of program oversight, more project 

managers, and more consulting time, all of which 

would require additional funding. A Congressional information paper concluded that “the Army’s 

original estimates were significantly lower than 

that which is now required.”18 Assistant Secretary 

Apgar was more specific, stating that the original 

budget did not include funds for monitoring the 

Fort Carson project; for negotiating CDMPs at 

Forts Hood, Lewis, and Meade; for conducting 

lessons-learned sessions; and for adequate Army 

staff and consultants to respond to requests from 

Congress and private industry and to develop 

policies and procedures.19

In November 1999, Apgar discussed with 

Undersecretary Rostker the additional funds 

needed. Although Rostker did not approve an 

increase in staffing for the projects, he did support reprogramming $6.1 million from the Army 

Family Housing Operations budget for the RCI 

program’s use, primarily to cover JLL consulting 

costs. In January 2000, Rostker and Apgar visited 

Congressman Hobson at his home in Springfield, 

Ohio, to discuss the funding issue and RCI in 

general. Although Rostker later maintained that 

the meeting removed a lot of Hobson’s discontent 

with RCI, the congressman still had some reservations about the program. After Rostker sent a letter 

to Hobson notifying him that the reprogramming 

would “keep our program on schedule and ensure 

its success,” Hobson responded that the Army 

needed to make a formal reprogramming request 

to the congressional defense committees before 

any transfer could occur.20

The Army made its formal request on February 11, 2000.21 However, the Senate Subcommittee 

on Readiness and Management Support of the 

Armed Services Committee opposed the transfer 

of $6.1 million if it would be used only to fund 

consultant costs.

At about this same time, the Army reprogrammed $8.4 million “from estimated savings 

within the Army Family Housing Operations Utilities account to fund the RCI program.” This money 

had originally been requested in the Army Family 

Housing Operations account in the President’s FY 

2000 budget, but Congress had removed it from 

that account in the actual appropriation. The Army 

had then reduced its RCI budget by $8.4 million, 

making it zero for FY 2000. In order to keep RCI 

going, the Army reprogrammed that amount in 

October 1999. According to Apgar, because that 

action “was below the threshold required for Congressional notification,” it was an action that the 

Army could take without going through Congress.22

Clearly, however, the Senate’s opposition to 

the transfer of the $6.1 million indicated that 

there was still some work to do to convince 

Congress of the need for the requested funds. 

When Apgar appeared at hearings of the various military subcommittees in March 2000, the 

reprogramming request was a topic of discussion. 

U.S. Representative Joel Hefley (R-Colorado), 

chairman of the Military Installations and Facilities Subcommittee, expressed concern that the 

Army was accruing large consultant costs that 

far exceeded what the U.S. Air Force and the U.S. 

Navy were paying. Hefley also did not want to 

transfer money out of the Army Family Housing 

Operations account because most of that account 

was already obligated. Apgar responded that the 

consultant costs were justified, especially because 

RCI was a “very complex, very innovative and ... 

largely unprecedented program.” He explained 

that, based on the Fort Carson figures, the Army 

now estimated that it would cost $18.1 million to 

take the Carson, Hood, Lewis, and Meade projects 

through the award and planning stages. For what 

the Army was getting, Apgar suggested that those 

costs were quite reasonable and of “very good 

value.” In the end, he thought that there had been 

“some mythology about this issue to date.”23

The House Subcommittee on Military Construction Appropriations also expressed concern 

about the reprogramming of funds, especially in 

terms of consultant costs. Yet after Apgar informed 

the subcommittee that the Army could not go forward with the Hood, Lewis, and Meade pilots until 

the reprogramming was approved, Representative 

Edwards, who represented Fort Hood, and U.S. 

Representative Norman Dicks (D-Washington), 

who represented Fort Lewis, urged the other committee members to support the request and to act 

on it expeditiously.24

Despite Edwards’ and Dicks’ pleas, the other 

committee members did not immediately approve 

the reprogramming request. Hobson requested 

more information on March 15, which Apgar 

provided, reiterating what items the Army’s FY 

2000 budget did not include. Apgar also provided 

detailed financial information on the consultants 

that the Army used, as well as the products and 

services that they provided.25 This information satisfied the House subcommittees, but in April 2000 

U.S. Senator Conrad Burns (R-Montana), chairman of the Senate Subcommittee of the Committee on Appropriations, asked the same questions 

as Hobson. He received the Army’s answers later 

that month and, in June 2000, Burns’ subcommittee approved the reprogramming request, as long 

as no funds were obligated until the Office of the 

Secretary of Defense (OSD) had re-reviewed the 

request. The OSD’s review occurred soon after and, 

on June 19, 2000, the Army received approval to 

obligate the funds, thereby making them available 

for distribution.26

The drawn-out negotiations over the reprogramming effort frustrated Apgar and others who 

were anxious to move forward with RCI. As the 

Figure 5-3. Chet Edwards (right), U.S. Representative from 

Texas’ 11th District, and Colonel Michael Pratt touring a 

renovated home during the first phase of military housing 

privatization at Fort Hood, Tex., in 2002.

Photograph by Steve Bibiano. Courtesy of U.S. Department of Defense.
9 6 Privatizing Military Family Housing 9 7

CHAPTER FIVE

The Beginning of the RCI Pilot Projects, 1998–2001

subcommittees continued to ask questions, Apgar’s 

aggravation became apparent. In a meeting with 

the House Subcommittee on Military Construction 

Appropriations on March 15, for example, Hobson 

asked for another breakdown of the reprogramming request. Apgar replied, “We’ve spent hundreds of hours [responding to questions], but every 

time we submit [answers] we get more questions.”27

The reprogramming request clearly raised tensions 

on both sides.

Differing perceptions of RCI’s economic 

benefits contributed to these tensions. Apgar 

claimed that, under RCI projects, the Army would 

realize savings of $100,000 per house and that it 

could “leverage” its “tight military construction 

budgets” since “for every dollar of public funding, 

private investors will provide $10 or more.”28 A 

look back on these comments some 10 years later 

reveals that Apgar’s predictions were correct. But 

at the time he made them, many disputed the 

rosy economic outlook, claiming that the Army 

and the entire DOD were overstating the lifecycle cost savings and the leveraging effect. In 

fact, however, a 2000 General Accounting Office 

(GAO) report suggested that the RCI program was 

cost-effective: it concluded, after examining the 

two privatization projects already awarded and 

another 12 that were approved for solicitation, 

that even if life-cycle cost analyses for the projects 

were “incomplete, inaccurate, or inconsistently 

prepared,” most privatization projects would 

generally save around 11 percent over traditional 

military construction. That was true despite the 

fact that some of the projects would cost more 

than traditional military construction.29 Congress 

also questioned whether the 10-to-1 leverage ratio 

was really accurate. However, the Army consistently computed the leverage ratio using the OSD 

definition and found that the RCI program had 

exceeded the 10 to 1 ratio for a number of years. 

For example, at the end of FY 2001, the ratio was 

23 to 1, and then reached a high of 27 to 1 at the 

end of FY 2002. 

However, the ratio has decreased over the years 

since 2002 because of the equity that the Army put 

into existing projects to eliminate the deficits. In 

most of those cases, the contributed funds could 

only be leveraged at 1 to 1. Therefore, as funds 

have been added, the annual leverage ratios have 

decreased accordingly to a recent low of 6.6 to 1 at 

the end of FY 2010.30

The amount of money that the Army was paying to consultants remained a sensitive subject 

throughout 2000. In February 1999, the Army had 

entered into a contract with JLL—a global real 

estate financial and investment services firm—to 

provide help negotiating with private developers.31

In the eyes of Army officials, consultants provided 

“high-level skills/expertise” in financial matters 

that the government did not have. A list of consultant products and services prepared by the Army 

indicated how integral consultants were to the RCI 

program. It showed that, among other things, they 

helped prepare RFQs; provided media outreach; 

developed analytical models and scenario developments for pilot programs; planned and executed 

industry forums; supported the Integrated Process 

Team (discussed below); provided due diligence 

at the pilot programs; trained those sitting on 

Source Selection Evaluation Boards (SSEB); helped 

installations conduct CDMP negotiations; assisted 

with transitions to RCI partners; and helped with 

closings.32 Don Spigelmyer explained that it was 

“essential to have the appropriate skills and expertise in place to ensure the government is getting a 

fair deal” in negotiating contract terms with private 

companies.33 JLL consultants played a critical role 

by providing the necessary expertise, which the 

government RCI team did not have, in managing 

commercial real estate and financing deals with 

dollar values in the hundreds of millions over the 

course of 50 years. JLL also became “instrumental 

in developing the Portfolio and Asset Management 

program for the Army.”34

However, Congress considered the amounts 

that the Army was paying to JLL to be exorbitant. 

Each time Apgar or other Army officials appeared 

before congressional committees to discuss RCI, 

they faced questions from congressional members about consultants and their costs, especially 

questions about why the Army was spending more 

on consultants than the other military services 

were.35 Specifically, Congress questioned how many 

consultants worked on RCI (as of April 2000, the 

number was 10 full-time employees); whether a 

contract selecting JLL as the consulting firm had 

been competitively bid (the answer was “yes”); and 

how the Army justified spending more for contractors than the Navy or the Air Force.36 Because of 

consultants’ indispensable expertise, the Army considered their costs—which it estimated at $800 per 

home—both necessary and reasonable. In the large 

scheme of things, the costs were “relatively minor.”37

Fort Hood (Texas)

After Congress approved the reprogramming 

request, the Army had both the funds and the 

authority to proceed with the pilots. The first pilot 

Figure 5-4. Townhouse-style family housing prior to RCI renovation of the McNair 

neighborhood at Fort Hood.

Courtesy of Lend Lease.
9 9

CHAPTER FIVE

The Beginning of the RCI Pilot Projects, 1998–2001

9 8 Privatizing Military Family Housing

to receive attention was Fort Hood, Texas, which 

the CVI team had originally considered for privatization under the CVI program and which was the 

largest military installation in the United States.

Fort Hood encompassed approximately 217,000 

acres and housed two Army divisions: the 1st 

Armored Cavalry and the 4th Mechanized Infantry. 

Founded as Camp Hood in the 1940s, it became Fort 

Hood in the 1950s. Located 60 miles north of Austin 

and 50 miles west of Waco, Texas, Fort Hood had 

a total area population of approximately 245,000, 

including on-post residents. As of 2001, approximately 42,500 military members were assigned to 

duty at Fort Hood. Approximately 25,000, or 60 

percent, of the soldiers had families, and nearly 

12,000 civilians were employed on the installation in various roles, including DOD employees, 

contractors, and volunteers. Approximately 33,000 

military retirees, along with 38,000 family members 

of retirees and deceased soldiers, were also living in 

the area surrounding Fort Hood.38

Prior to implementation of the RCI program, 

there had been other efforts to privatize Fort Hood 

family housing. Under both the Wherry program of 

the first half of the 1950s and the Capehart program 

of the second half of the 1950s through 1962, the 

Army had contracted with private developers for the 

construction of new housing. In addition, the Army 

built Liberty Village, a Fort Hood housing community, under the Section 801 program. According to 

Carol Anderson, Chief of Housing Services at Fort 

Hood, “Fort Hood has experienced every privatization initiative dating back to the late ’40s.”39 In 1995, 

Hood was one of four installations deemed ready 

for the CVI program. The Army prepared a concept 

plan, under which it would enter into a limited 

partnership to construct 200 four-bedroom homes 

for junior non-commissioned officers.40 Little other 

planning occurred until 1997.

In 1997, Fort Hood officials again considered 

using the CVI program to privatize Fort Hood 

housing, in part because the cost to improve and 

renovate housing on the installation was estimated to be at least $300 million. Financing such 

renovations and construction through traditional 

MILCON appropriations meant that it would take 

the Army 30 to 40 years to complete the necessary 

improvements. In a 1999 local newspaper article, 

Fort Hood’s garrison commander, Colonel David 

Hall, explained the advantage of privatization: 

“We want a private developer who will come in and 

not only spend that money year to year maintaining and keeping up the standards that we have 

been doing, but we want him also to leverage that 

capital to improve the quality of life.”41 According 

to Hall, normal upkeep of the houses was not the 

root of the problem, since the soldiers’ level of 

discipline ensured that they would maintain their 

homes. “It’s the things you don’t see like the sewer 

and water systems,” Hall stated.42 In addition to the 

support of Hall, Fort Hood also had the backing of 

two other high officials. General Thomas Schwartz, 

the U.S. Army Forces Command (FORSCOM) commander, had been involved with early privatization 

discussions, including the CVI privatization of 

Fort Carson, and was a strong proponent of RCI.43

General Leon LaPorte, who served as commander 

of the 1st Cavalry Division and was later the installation commander for Fort Hood, also supported 

the idea of privatization for the base.44

Under CVI, the original plan was to use an 

RFP developed by the Fort Worth District of the 

U.S. Army Corps of Engineers (USACE) to privatize more than 5,000 homes. The developer would 

maintain 4,000 of those homes, demolish 700, and 

build 1,000 new ones. Robert Erwin, who led the 

CVI process at Hood, explained that privatization 

was necessary because most of Fort Hood’s housing 

had been built at least 30 years earlier. According 

to Erwin, the installation required 1,000 four- and 

five-bedroom homes for its enlisted personnel 

and these needed to be constructed as quickly as 

possible—“not in the 60 or more years it would take 

under the normal appropriations process.”45

On March 3, 1998, the Army held an industry forum in Killeen, Texas, for the Fort Hood 

CVI project. Nearly 200 representatives from the 

private sector, the military, and state and local 

governments attended. Developers inquired about 

various aspects of the program, including what 

the tax situation would be if they built on government land. They also asked about the applicability of Davis-Bacon Act wage requirements and 

who would be responsible for road infrastructure 

within the development. At the end of the forum, 

Dr. Rebecca Griffith, Corps Program Manager, 

announced that the RFP for the Fort Hood project 

would be issued in August 1998 with a potential 

award by March 1999.46

However, the Army never issued the Fort Hood 

RFP. When Apgar took Army privatization down 

the RCI path, Fort Hood became an RCI project 

and Army staff had to rework plans for housing 

privatization there to fit the new RFQ framework. 

To begin the RCI process, the Army determined 

that nearly 5,000 of the existing homes at Fort 

Hood needed renovation or replacement within 

the first 10 years of the project.47 During the 

initial decade of construction, the Army would 

require the developer to construct a maximum of 

1,149 new homes to eliminate the housing deficit, 

meaning that enough housing would then exist 

at Hood, on and off post, to adequately house all 

of the soldiers with families stationed there. As 

part of the development plan, the Army and the 

developer would work together to verify that these 

original figures accurately reflected Fort Hood’s 

housing needs. Expansion of the installation’s 

housing stock beyond the 1,149 homes was not 

authorized.48 Apgar also wanted to see developers 

construct ancillary facilities on the installation, 

defined by Ted Lipham, head of the RCI Task 

Force, in a New Urbanist, community-oriented 

context, as “small-scale shopping, entertainment 

and other appropriate, profit-making enterprises 

with not-for-profit recreational and cultural activities.” Apgar proposed that the Army “reinvest a 

share of the total profits in local, family-oriented 

facilities and services that could not be privately 

financed,” although he did not define what the 

term “profits” meant.49

After conducting the HMA, the Army held 

another industry forum in December 1998 in 

Dallas, Texas. More than 250 people attended the 

event, including developers, property managers, 

lenders, and representatives from government and 

the military services. The forum focused on both 

the Fort Hood project and on the RCI program in 

general. Lieutenant General LaPorte gave a presentation on Fort Hood, informing participants 

that out of the 40,000 soldiers at the installation, 

“62 percent are married, 86 percent are male, 98 

percent have high school diplomas, and 76 percent of sergeants and below have dependents.” 

Garrison Commander Colonel Richard Craig also 

made comments, while Herman Bulls, the managing director of LaSalle Partners (a forerunner to 

JLL), discussed the need for all parties to come to 

agreement on how the privatization process would 

work. According to a report about the meeting, the 

Dallas forum facilitated communication between 

the Army and the private sector.50

In December 1998, the Army notified Congress 

of its intention to issue Fort Hood’s RFQ. However, 

Congress was still skeptical about the entire RCI 

program. Its members were especially concerned 
100 Privatizing Military Family Housing 101

CHAPTER FIVE

The Beginning of the RCI Pilot Projects, 1998–2001

about Apgar’s commercial development proposals. 

Such development did not sit well with the Army 

and Air Force Exchange Services (AAFES), whose 

members saw RCI as infringing on AAFES activities. AAFES therefore complained loudly to Congress about the construction of ancillary facilities. 

Congress then put RCI on hold until those issues 

could be resolved, and work on the Fort Hood project (and preliminary planning for the Lewis and 

Meade pilots) essentially stopped.51

For the next several weeks, the Army 

attempted to address the ancillary facilities issue. 

Notes from the RCI Task Force indicate that Apgar 

and other RCI staff met several times with members of Congress and their staffers. Apgar and his 

staff also prepared a letter to Congress redefining 

Apgar’s vision of ancillary facilities as those “integral to a viable contemporary community, such as 

schools, community centers, childcare facilities, 

indoor and outdoor recreational facilities, and 

storage facilities.” 52 Apgar believed that the MHPI 

legislation provided the authority for such endeavors, and he committed in the letter to ensuring 

that such facilities did not compete with off-post 

activities or with AAFES, the Defense Commissary Agency, or Morale, Welfare and Recreation 

(MWR) facilities.

By the end of March 1999, congressional members seemed mollified and Congress indicated that 

it would allow Fort Hood to go forward on its RCI 

journey. The Army then finalized the Fort Hood 

RFQ and released it on August 6, 1999.53 No other 

installation had used the RFQ process, so there 

were no examples for Fort Hood personnel to follow. Apgar, members of the RCI Task Force, and 

JLL consultants, as well as Robert Erwin and the 

Fort Hood housing staff, all contributed advice to 

the USACE Headquarters in the preparation of the 

draft RFQ.54

Upon completion, the Fort Hood RFQ outlined 

in general terms what the Army wanted to achieve 

with a private development partnership at Fort 

Hood. It also provided information about Hood 

and the surrounding area. According to the RFQ, 

the developer’s responsibility would be to renovate 

existing housing and to construct new homes in 

order to “ensure that eligible soldiers and their families have access to quality, attractive, and affordable 

housing.” The developer would also have to construct “ancillary supporting facilities that enhance 

the Installation’s residential community,” such as 

tot lots, daycare centers, and community centers. In 

addition, the developer would be responsible for the 

management and maintenance of the installation’s 

housing inventory.55 Specific details about how the 

developer would accomplish these purposes would 

come with the development of the CDMP.

In the summer of 2000, after receiving eight 

applications, the Army selected the Fort Hood 

developer, making the award to a partnership of 

Actus Lend Lease, which would be responsible 

for construction, and Trammell Crow Residential, 

which would manage the properties. Fort Hood 

conducted the official signing ceremony on August 

8, 2000, with Apgar, Congressman Edwards, and 

Lieutenant General LaPorte in attendance.56 Actus 

and Trammell each had years of collective experience in both construction and property management. Actus Lend Lease was a joint venture 

between Lend Lease Projects, Inc. (a property 

management company based in Australia), and 

Actus Corporation, a California company formed 

in 1999 specifically to construct housing for the 

military.57 Trammell Crow Residential, meanwhile, 

formed in 1977 as an offshoot of the Trammell 

Crow Company, a national development firm. It 

had expertise in developing, constructing, and 

acquiring multi-family rental and condominium 

communities throughout the United States.58

According to Apgar, both Actus Lend Lease and 

Trammell Crow were prominent fixtures in the 

development and property management fields.59

The Actus Lend Lease/Trammell Crow team 

offered several strengths to the Fort Hood RCI 

project, including a recognition that the most 

important housing deficit at Fort Hood was for 

junior enlisted personnel (Privates, pay grades E-1 

and E-2, and Privates First Class, pay grade E-3). 

The team also had several creative ideas about 

ancillary facilities as well as a commitment to 

customer satisfaction.60 Matthew Keiser, procurement attorney for the Office of General Counsel, 

USACE Headquarters, remembered that the team’s 

conceptual design was given substantial weight, 

noting that it featured “fancy concepts,” including 

installing a lake in one of the communities.61 As 

Fort Hood RCI specialist Robert Erwin explained, 

“they were the best qualified with the best overall 

... deal for the Army.”62

The official name of the joint venture between 

Actus Lend Lease and Trammel Crow was Fort 

Hood Family Housing, LP, and the Army contracted to pay this entity $350,000 for the preparation of the CDMP.63 Writing the CDMP involved 

personnel such as Michael Nix of Fort Hood’s 

Housing Engineering Support Branch (who 

brought a vast knowledge of maintenance and 

existing home renovation) and Steve Schlabach 

of the Army Contracting Agency (who helped 

develop reporting requirements and other aspects 

of business management).64 In addition, the Corps 

of Engineers provided support for the CDMP, and 

as many as five persons from JLL assisted with the 

financial aspects.65

As they began the CDMP process, Fort Hood 

Family Housing and the Army were once again 

breaking new ground, as no CDMP had been 

completed up to that point. Therefore, the Army 

relied heavily on JLL consultants for help in 

evaluating real estate and financial matters, even 

though, according to Erwin, JLL’s private-sector 

experience “wasn’t exactly a fit because we were 

introducing into this process a military culture that 

they weren’t used to.” With JLL’s help, however, 

Fort Hood Family Housing successfully produced 

a CDMP and the corresponding legal documents. 

Erwin remembered that the support and participation of high-level officials (including Apgar) were 

very important to the process, as was the fact that 

these officials gave Erwin the flexibility to construct a workable plan.66

Even with the involvement of senior leaders, 

the CDMP had to undergo an extensive review 

period, especially since it was the first such plan. 

In late 2000 and early 2001, the Corps of Engineers, 

FORSCOM, and the OACSIM all reviewed and 

commented on the CDMP and Army personnel at 

Fort Hood, in conjunction with Fort Hood Family Housing, responded to these comments and 

made appropriate revisions.67 As one example, 

FORSCOM expressed concern about the Americans with Disabilities Act (ADA) requirements not 

being mentioned in the CDMP. Army staff at Fort 

Hood agreed that this was an issue and indicated 

that the final documents would specify an appropriate percentage of homes that were compliant 

with the ADA.68 Although the comments of all 

three entities helped Fort Hood Family Housing 

refine its CDMP, the refinement process took quite 

a long time, delaying the transfer of housing at 

Fort Hood to the spring of 2001.

Other delays arose in March 2001 as Congress and the Office of Management and Budget 

(OMB) questioned the project’s financial structure. Congressman Hobson believed that, because 

Fort Hood consisted of nearly 6,000 houses, “If 
102 Privatizing Military Family Housing 103

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The Beginning of the RCI Pilot Projects, 1998–2001

it doesn’t work right, then all [DOD] privatization, not just the Army,” would suffer.69 Therefore, 

careful and close analysis of the proposed project 

was essential. One of the issues that gave the OMB 

pause was that the Army would be contributing 

both equity (in the form of the buildings conveyed to the developer) and $52 million to provide 

initial financing for the developer. Because the 

Army would also be a partner in the program, 

the OMB wondered, according to Randall Yim, 

Deputy Undersecretary of Defense for Installations, whether the cash investment created a 

“government entanglement” that could make this a 

federal, rather than a private-sector development.70

Yim and Raymond Dubois, Yim’s predecessor, both 

worked extensively with the OMB to resolve issues 

concerning the cash investments in RCI projects. 

Ted Lipham also composed memoranda answering 

questions about Hood’s CDMP and informing the 

OMB that, as Executive Director of RCI, he “fully 

supports the Fort Hood CDMP as a tremendous 

agreement.”71 Such backing was crucial to obtaining OMB approval in March 2001.

Fort Lewis (Washington State)

As the CDMP review process unfolded at 

Fort Hood, the Army began making progress on 

the Fort Lewis pilot project. Located in western 

Washington about 35 miles south of Seattle, 

Fort Lewis was officially established in 1919 and 

covered approximately 86,000 acres. It housed 

several troop units, including I Corps headquarters; 2nd Battalion, 75th Ranger Regiment; the 1st 

Brigade, 25th Infantry Division; the 3rd Brigade, 

2nd Infantry Division; and 1st Special Forces. As of 

2001, its population included nearly 20,000 activeduty soldiers, as well as 9,192 family members and 

4,920 civilian employees. Most of the family housing on the base had been built in the 1950s and 

1960s under the Capehart and Wherry programs.72

Like Fort Hood, Fort Lewis had originally been 

slated for privatization under the CVI program. 

Although it was not one of the installations named 

as a CVI pilot project in 1996, Fort Lewis had begun 

CVI preparations by early 1998. Louis Bain, who 

was in charge of housing at the base, was especially 

interested in privatization and worked with the 

installation’s commanding general to position Fort 

Lewis to become another of the CVI pilot projects.73 But Fort Lewis never got far enough along in 

the CVI process to generate an RFP before Apgar 

changed the direction of Army privatization. 74 The 

Army had originally planned an industry forum at 

Fort Lewis for March 1999, but with Fort Hood on 

hold because of the ancillary facilities question, 

the forum was postponed until December 16, 1999. 

At that time, the 185 people in attendance heard 

representatives of JLL and Lieutenant General 

James T. Hill, Commanding General of both Fort 

Lewis and I Corps, discuss the RCI program.75

The Army released the RFQ for Fort Lewis on 

December 10, 1999, and bids were received in the 

two-month period that followed. As with the Fort 

Hood RFQ, the Fort Lewis document described 

the needs of the installation in relatively general 

terms. Interestingly, the RFQ did not clearly state 

what the fort’s housing deficit was because of an 

existing disagreement between Army headquarters 

(HQDA) and Fort Lewis about the number. The 

Army considered it to be 366, based on its own 

analysis completed in 1997, but Fort Lewis, which 

had had a private contractor perform an analysis, 

claimed it was 863. Because HQDA did not want 

to delay issuing the RFQ unnecessarily, it decided 

not to notify Congress about the inconsistencies 

in the deficit until it had validated the figure and 

until the Army had selected the private partner. In 

addition, the RFQ noted that 300 of the existing 

3,589 homes at Fort Lewis were deemed potentially 

historic and eligible for listing on the National 

Register of Historic Places. Fort Lewis would thus 

be “the first Army installation to privatize a historic 

housing area.”76

The Fort Lewis SSEB reviewed applications for 

minimum experience requirements, eliminating 

firms that did not meet those prerequisites. A firm 

not selected as competitive under that process then 

filed a protest with the GAO on May 22, 2000. On 

June 29, 2000, for reasons that are not clear, the firm 

withdrew its protest and a selection of the partner 

was made soon after. On July 11, the Army notified 

Congress of its intent to award the project.77

On August 30, 2000, Secretary of the Army 

Louis Caldera announced that EQR/Lincoln Fort 

Lewis Communities, LLC, would be the developer. 

According to a press release, EQR/Lincoln would 

renovate or replace more than 3,500 homes, as 

well as construct 360 new homes. Congressman 

Norman Dicks commented that the project “means 

our Army families will get the kind of housing and 

communities they deserve.”78 Bain stated that the 

partnership’s goal was to erase the housing deficit 

on the installation by 2010.79 With those goals in 

mind, EQR/Lincoln and Army personnel began 

work on the CDMP.

Fort Meade (Maryland)

Progress also took place on the Fort Meade 

pilot project, instituted by the Army in 2000. 

Originally established in 1917 as a cantonment 

site for troops drafted to serve in the First World 

War, Fort Meade covered 5,415 acres and had a 

Figure 5-5. Aerial view of sprawling Fort Lewis, Wash., showing installation’s 

existing and planned neighborhoods.

Courtesy of Lincoln Military Housing.
104 Privatizing Military Family Housing 105

CHAPTER FIVE

The Beginning of the RCI Pilot Projects, 1998–2001

population of 109,000. Situated between Washington, D.C., and Baltimore, it was known as a “purple” installation because it housed members from 

all services—Army, Navy, Air Force, U.S. Marines, 

and U.S. Coast Guard—as well as national guard 

and reserve troops. In 1993, Fort Meade became 

part of the Military District of Washington 

(MDW), which oversaw military operations in the 

National Capital Region.80

As with both Fort Hood and Fort Lewis, the 

Army had worked on the housing issue at Fort 

Meade for several years. In 1995, for example, George 

Barbee, who managed housing at Meade as part of 

the MDW, began consulting with Ted Lipham and 

Don Spigelmyer about ways to privatize housing. He 

discussed the matter with Meade’s garrison commander and with representatives of Anne Arundel 

County, and he developed a plan whereby Fort Meade 

would maintain ownership of the land on which 

the housing sat, transfer the existing homes to the 

county, and have the county cooperate with private 

developers to either replace or renovate the homes.81

A version of this plan came forward in 1996 when 

Barbee proposed that private developers construct 

housing in one area of the installation in exchange for 

the Army giving the developers access to 200 acres of 

Army land elsewhere. The area where the developers 

would construct the housing was the Meade Heights 

neighborhood, where the existing 250 houses 

and apartments were in an extremely run-down 

Figure 5-6. Design graphic detailing EQR/Lincoln’s design team’s renovation plans 

for the historic Broadmoor neighborhood at Fort Lewis, Wash.

Courtesy of Urban Design Associates.

Figure 5-7. Housing at Fort Meade, Md., before the implementation of RCI.

Courtesy of Picerne Military Housing.

condition. The Army worked with the county to 

launch this program, but when CVI began in earnest, 

it subsumed the county plan.82 Unfortunately, according to one source, the county had invested so much 

time and money into the project that its cancellation 

created resentment and “bad blood.”83

In March 1998, a CVI report noted that Fort 

Meade had a housing deficit of 263 four-bedroom 

homes for junior non-commissioned officers and 

enlisted personnel, and that the Army had $20.8 

million available for privatization efforts. Under 

the CVI program, the selected developer would 

receive title to the installation’s inventory of 2,862 

homes and would construct an additional 263 

four-bedroom houses. Of the 2,862 houses and 

apartments, it would replace 1,888 and renovate 

712, including 112 historic homes.84

An article in the July 23, 2000, issue of the

Washington Times emphasized the need for 

renovations and additional housing at Fort Meade. 

This article described the poor condition of Fort 

Meade’s housing, reporting the experiences of 

individuals such as Navy Petty Officer Lee Thompson, who lived in the Argonne Hills neighborhood. 

Thompson’s home, the article stated, had walls 

“covered with lead-based paint, which is spread 

so thick the Thompsons say they can peel it off in 

chunks.” Major Philip VanWiltenburg, who lived 

in the MacArthur Manor neighborhood, had to 

endure clogged air conditioning and heating vents: 
106 Privatizing Military Family Housing 107

CHAPTER FIVE

The Beginning of the RCI Pilot Projects, 1998–2001

“The only air or heat he [Major VanWiltenburg] 

and his wife, Trish, get is from a narrow opening in a window frame between the kitchen and 

dining room.” Major VanWiltenburg’s house also 

suffered from mold in the bathroom and cupboards that would not close because the doors had 

“been painted over so many times they no longer 

stay shut.”85 With such conditions, the need to do 

something at Fort Meade was pressing.

In 1999, the Army decided to use Meade as 

one of the pilot projects and preparation of an 

RFQ began. Barbee, who was designated as head 

of Meade’s RCI project, recruited enlisted personnel, officers, and their spouses to serve on installation committees that would advise him and others about how housing could be improved.86 Fort 

Meade Garrison Commander Colonel Michael J. 

Stewart also formed an RCI Staff Advisory Team 

and an RCI Support Team to work on the RCI 

plans.87 These entities helped prepare the installation’s RFQ, which was released on May 1, 2000, 

and which outlined plans very similar to those 

conceived under the CVI program. According 

to the RFQ, the successful developer would be 

expected to “transform existing military housing areas into planned and integrated residential 

communities which foster family lifestyles.” The 

RFQ also specified that the developer selected 

needed either to replace or renovate approximately 2,600 of its 2,862 existing homes, including 112 historic houses. Such construction needed 

to occur within the project’s first 10 years. The 

developer would be expected to build approximately 308 additional homes (although this 

Figure 5-8. Housing at Fort Meade, Md., prior to the implementation of RCI.

Courtesy of the RCI Office.

Figure 5-9. A brochure announcing the Fort Meade RCI 

Forum.

Courtesy of Mahlon “Sandy” Apgar, IV.

number was not finalized) within the project’s 

first four years.88

Four days after issuing the Fort Meade RFQ 

on May 1, 2000, the Army sponsored an industry 

forum in Baltimore, promoting the project to 

developers as “the first Army post in a metropolitan area to undergo housing revitalizations 

through the RCI program.”89 Several individuals, 

including Apgar, Rostker, and Major General Robert Van Antwerp, the ACSIM, made presentations 

about RCI and housing privatization at the forum, 

which was attended by approximately 280 individuals. Apgar especially emphasized that RCI was an 

extraordinary opportunity for developers and that 

the Army had “streamlined the process” so that 

it was not so onerous. He hoped that developers 

would see that the Army viewed establishing partnerships with them as a priority.90 Van Antwerp 

echoed those thoughts, telling developers that 

the Army wanted RCI to be profitable for them. It 

did not intend the program to “strain the last bit 

of blood.”91 One newspaper called these talks “a 

sophisticated sales pitch” to forum participants,92

while another noted that Apgar appealed to developers’ sense of patriotism.93

With the information obtained from this 

forum, developers crafted their responses to the 

RFQ. The solicitation period closed on July 31, 

2000, and the SSEB began reviewing the submissions soon after.94 Seventeen firms responded to 

Fort Meade’s RFQ—the most of any of the pilot 

projects. On October 25, 2000, the SSEB selected 

three finalists. The Community Partnership 

LLC, a firm that had not been selected, submitted a protest to the GAO on November 20, 2000, 

stating that it was unduly removed from consideration. The protest, according to an RCI information paper, “questioned the RFQ evaluation 

process, the integrity of the evaluation team, 

as well as the judgement [sic] of the evaluation 

team members.”95

Community Partnership was a nonprofit organization consisting of Archstone Communities, 

Keating Development Company, and the Housing 

Commission of Anne Arundel County, Maryland. 

Representatives of Keating and Anne Arundel had 

met with Assistant Secretary Apgar in April 1999 to 

discuss the possibilities of using a nonprofit in the 

RCI program. Apgar had told the representatives to 

examine the MHPI legislation and make sure that 

their proposal fit within its guidelines and tools. 

Whether the partnership did this is unclear, but the 

Meade SSEB found 37 weaknesses in Community 
108 Privatizing Military Family Housing 109

CHAPTER FIVE

The Beginning of the RCI Pilot Projects, 1998–2001

Partnership’s proposal.96 According to a newspaper 

account, these weaknesses included the firm’s lack 

of experience in both historic preservation and 

residential property management. The SSEB also 

had concerns about the financial viability of the 

partnership.97 After a 100-day investigation, the 

GAO concluded that two of the weaknesses were 

“unreasonably based,” but the rest were legitimate. 

It therefore denied the protest.98

Congressman Hobson, however, was not as 

easily satisfied. Hobson wanted reassurance that a 

high level of competition in the Fort Meade solicitation existed and that the winning developer’s 

investment approach was sound.99 In February 

2001, the congressman informed the Vice Chief of 

Staff of the Army that the Army should not make 

an award at Fort Meade.100 The Army worried that 

any delay in selecting the partner “would be a 

breach of faith with the bidders” and could potentially “expose the Army to multiple lawsuits and 

make [the Army] potentially liable for additional 

damages to those firms in the competitive range.”101

Part of his reservation, Hobson later revealed, was 

that he wanted to see the Army use a public housing authority, such as the Housing Commission of 

Anne Arundel County, and he was disappointed 

when Fort Meade opted to use a for-profit firm. 

“I just didn’t want every [privatization project] to 

look exactly alike,” Hobson remembered. “I wanted 

to try different ways to set them up.” After various 

Army officials, including Ted Lipham, visited with 

Hobson and his staff, he decided to “stop fighting 

it” and allow the program to go forward.102

Interviews with the three finalists were held.103

On March 6, 2001, the Army announced that MC 

Partners, LLC, which was a partnership of Picerne 

Real Estate Group and the IT Group, had been 

awarded the Fort Meade project. According to 

John Picerne, President of the Picerne Real Estate 

Group, one reason that MC Partners was chosen 

was because it had consciously focused its proposal on how it could provide the most benefit 

and service to soldiers and their families.104 George 

Barbee agreed, stating that it was Picerne’s “frankness” and “sense of honesty” during the interview 

that convinced him that Fort Meade could work 

and collaborate with Picerne. The Army expected 

that MC Partners would complete the CDMP by 

the end of 2001 and that construction could begin 

in the spring of 2002.105

Sharing Lessons

Public-Private Partnership Conference

As work progressed on the three pilot projects, Apgar and the RCI Task Force looked for 

ways to share the important lessons learned from 

each installation’s experience. One effort focused 

on gaining an international perspective on the 

RCI program. From April 14 to 16, 2000, the 

Defense Department and the United Kingdom 

Ministry of Defense (MoD) held a joint conference on public-private partnerships, co-chaired 

by former Secretary of Defense (and soon-tobe Vice President) Richard Cheney and former 

United Kingdom Chief of Defense Staff Field 

Marshal Lord Vincent. As part of the conference, 

a Housing Working Group discussed RCI and 

the United Kingdom’s Private Finance Initiative, 

implemented in the 1990s to “move the MoD out 

of the housing business altogether” by relying 

solely on the private sector to house military 

members. The DOD was not interested in this, 

however, as it saw providing some on-post housing as “a fundamental military requirement.”106

The two sides found common ground on 

other issues. First, they were in accord that three 

Figure 5-10. John Picerne, head of Picerne Military Housing.

Courtesy of Picerne Military Housing.

Figure 5-11. One of Picerne Military Housing’s new family housing developments at Fort Meade, Md.

Courtesy of Picerne Military Housing.

things were necessary in order to form a successful partnership with private industry. These were 

“sharing risks and profits, encouraging innovation, 

and overcoming personnel changes.” Second, they 

agreed that two major barriers worked against 

privatization efforts: political opposition and “the 

cultural divide and knowledge gap between the 

public and private sectors.” The groups discussed 

how to deal with these obstacles, concluding that 

both industry and Army officials needed to lobby 

Congress on behalf of RCI, and that both military 

and industry leaders needed to receive training in 

each other’s cultures.107

Fort Carson Conference on Lessons Learned 

In addition to discussing privatization concerns with representatives of the United Kingdom, 

Assistant Secretary Apgar emphasized the need 

for domestic seminars on lessons learned so that 

installations contemplating RCI could see what 
110 Privatizing Military Family Housing 111

CHAPTER FIVE

The Beginning of the RCI Pilot Projects, 1998–2001

other posts that had been through the process had 

experienced. In February 2000, at the Pentagon, 

Apgar conducted the first conference on privatization lessons learned. Then, in August 2000, Apgar 

and the RCI Task Force decided to hold these 

conferences on bases. 

Apgar collaborated with Major General Edward 

Soriano, then the senior mission commander at 

Fort Carson, to develop the first seminar on lessons learned to be held on an actual installation. 

The purpose of this seminar was to discuss some 

of the issues that had arisen in the course of the 

development and implementation of privatization 

at the installation. Since transferring housing to 

the developer in September 1999, Fort Carson had 

already seen new construction and, by Christmas 

2000, more than 200 homes that had been vacant 

because of maintenance issues would become 

available to the installation’s residents. Assistant 

Secretary Apgar and the RCI Task Force worked 

closely with Major General Soriano to arrange 

the conference and prepare the agenda. In addition to Assistant Secretary Apgar and RCI Task 

Force Director Ted Lipham, several senior officials 

attended the seminar, including General John 

Hendrix, FORSCOM commander; Lieutenant 

General LaPorte from Fort Hood; and the ACSIM, 

Major General Robert Van Antwerp.108

During the seminar, Colonel Michael Kazmierski, garrison commander at Fort Carson, made a 

detailed presentation on lessons learned. Kazmierski outlined lessons in three major categories: 

pre-award activities, closing and transition activities, and post-award activities. Under the first 

category, Kazmierski emphasized the need for 

close and constant communication with school 

districts over the way that an increased number 

of on-post resident families would affect school 

facilities, as well as the way that it would affect the 

amount of impact aid that schools received from 

the DOD. Another important issue to address early 

was taxation. As Joseph Faccone, a financial manager with Ernst & Young, asserted, “The issue of 

taxation on these improvements is a state-by-state 

battle the Army is going to face.” In the case of Fort 

Carson, El Paso County determined that because 

the installation was under federal jurisdiction, the 

county did not have the power to tax it, but other 

counties or states might not necessarily make 

the same decision. In Kazmierski’s mind, it was 

imperative that commanding generals at installations discuss taxation policies with local and state 

authorities early in the process.109

In terms of the closing process, Kazmierski 

explained that because of the numerous things that 

had to be accomplished, setting the closing to occur 

90 days after the acceptance of the $350,000-contract deliverable, the CDMP, would be preferable to 

30 days, which was the timeframe for Fort Carson’s 

closing. The shorter time period placed too much 

pressure on the partner and was not reasonable. In 

addition, both the partner and the Army needed to 

make sure that the soldiers and the outlying communities were well-informed about what was going 

on with privatization. Kazmierski recommended “a 

robust public affairs plan,” in addition to constant 

monitoring of soldiers’ and community residents’ 

opinions of the program.110

Finally, the group discussed several post-award 

lessons learned. One of the major concerns at Fort 

Carson was what the partner could do to make 

family housing feel more like a community. The 

developer at Carson wanted to hold an Easter egg 

hunt, as well as provide welcome baskets to new 

move-ins. However, Fort Carson’s legal office disapproved of such activities because they believed 

that they violated the Joint Ethics Regulations, 

which stated that a contractor could not provide to 

a government employee (which included a soldier) 

anything that cost more than $20. The lessonslearned participants believed this to be too narrow 

an interpretation of the regulations and charged 

Mark Connor, attorney in the Office of the General 

Counsel for the Army, with resolving the issue. 

Connor, through consultations with Fort Carson’s 

legal staff, decided that the Joint Ethics Regulations allowed exceptions for the types of activities 

that the Carson partner proposed. Prior to this 

decision, however, Fort Carson Family Housing 

had decided to look at other ways to develop a 

sense of community.111

The conference also addressed problems 

encountered when “historic housing” was included 

in privatized housing development. Many of Fort 

Carson’s homes would be more than 50 years old 

by the time the renovation program went into 

effect. According to guidelines promulgated by the 

Advisory Council on Historic Preservation (ACHP) 

and enforced by each state’s Historic Preservation Office, a building was eligible for placement 

on the National Register of Historic Places once 

its age exceeded 50 years, if it met certain criteria 

for historical significance. Apgar emphasized that 

this issue was not one that only Fort Carson faced, 

as the Army had approximately 12,000 homes 

that were either listed on the National Register 

of Historic Buildings or eligible for that listing. 

Apgar explained that he was in discussions with 

the ACHP about how the Army could proceed with 

historic homes under the RCI program, noting that 

preservation leaders had shown “a great deal of 

flexibility” in working with the Army on this issue. 

However, because each state’s Historic Preservation Office had its own character, state-by-state 

negotiations would be necessary.112

When the Fort Carson conference on lessons 

learned ended, participants concluded that it was 

a worthwhile event—so much so that additional 

conferences were planned after CDMP awards 

had been made at Fort Lewis and Fort Meade. 

Louis Bain, head of the RCI efforts at Fort Lewis, 

explained that the meetings facilitated interaction between those installations that had already 

privatized housing and those that had not, thereby 

elevating the comfort level of leaders who were 

uncertain about the RCI process.113 Because Bain 

and individuals from Fort Hood were present at 

the Fort Carson conference, the Army was able, 

in Apgar’s words, “to capture real-time issues and 

results from that conference and inject the findings directly into the evolving RFQs, procurement 

requirements, and other policies.” He considered 

the Fort Carson seminar to be one of the most 

effective events of his tenure.114

Integrated Process Team

Another step that Apgar took to ensure the 

success of privatized housing was to create the 

RCI Integrated Process Team (IPT) in early 2000. 

Acting on a suggestion from Jacques Gansler, 

the Undersecretary of Defense for Acquisitions, 

Apgar formed the IPT as a mechanism to provide 

high-level policy guidance to RCI. According to 

Figure 5-12. Participants at the Fort Carson Conference on 

Lessons Learned, 2000. 

Courtesy of Jerry Stafford, Fort Carson, Colo.
112 Privatizing Military Family Housing 113

CHAPTER FIVE

The Beginning of the RCI Pilot Projects, 1998–2001

its charter (signed by the Secretary of the Army 

in March 2000), the IPT, with an initial life of 24 

months, would supervise the RCI pilot programs 

and formulate policy on issues affecting more than 

one installation. Its membership consisted of the 

Assistant Secretary of the Army for Installations 

and Environment, who would chair the committee; the Assistant Secretary of the Army for Financial Management and Comptroller; the Assistant 

Secretary of the Army for Manpower and Reserve 

Affairs; the Assistant Secretary of the Army for 

Acquisition, Logistics and Technology; the General 

Counsel of the Army; the Chief of Engineers; the 

Assistant Chief of Staff for Installation Management; and the Commanding General, FORSCOM. 

Ted Lipham served as staff director of the IPT, 

while Colonel Ivan Bolden was the staff executive, and JLL provided consultant private-sector 

expertise and support. The Vice Chief of Staff for 

the Army co-chaired the team with Apgar, something that Lipham called a “smart” move because 

it ensured attendance: “None of those two- and 

three-stars were going to tell the vice they weren’t 

going to show up for the meeting.”115 In addition, 

the IPT provided Apgar with a way to build more 

support for RCI from senior leaders in the Department of the Army, thus lessening opposition from 

installation commanders.

According to Apgar, the IPT was “a board of 

directors combined with a think tank.” It met 

monthly, and its members could not delegate 

attendance responsibilities. “Because of the 

four-star co-chairs,” Apgar remembered, “the 

three-stars tended to change their schedule when 

they had to.” Lipham and Bolden would conduct 

analyses of issues needing decisions and then present their findings at the IPT meeting. Members 

would discuss the findings and then make policy 

recommendations. In Apgar’s words, the IPT “kept 

the Army leadership engaged in the process on a 

policy-making level, while preventing key issues 

from being sidelined in the complex staff machinery.”116 According to Lipham, it essentially “wrote 

policy on the fly.”117

The IPT held its first meeting on May 15, 2000, 

when Apgar, Bolden, and General John W. Hendrix, FORSCOM commanding general, explained 

how the team would work. Hendrix emphasized 

that in making policy the IPT had to acknowledge 

an installation commander’s authority, while also 

preserving military culture and providing transparency to soldiers. Apgar echoed this sentiment, 

stating that “installation commanders are the RCI 

‘clients.’” Bolden explained that the IPT would 

employ a “five-step systems-based approach to 

issue identification, resolution, and implementation” and that it would address both major and 

minor issues.118

Policy Issues

Other issues that surfaced with the pilot 

projects in 2000 and early 2001 remained to be 

resolved. Many of these came before the IPT, 

which, once it had approved a course of action, 

had the power to issue a directive outlining a new 

policy. For example, at its June 15, 2000, meeting, 

the IPT discussed housing market analyses, their 

usefulness to RCI, and their ideal frequency. Based 

on this discussion, the IPT issued a directive in 

July stating analyses were “critical to the planning, 

programming, and associated fiduciary responsibilities” of RCI and that they would be performed 

every three to five years, or whenever an “installation or community experiences significant changes 

in demographics, supply of housing, economics 

of the region, and/or Basic Allowance for Housing (BAH).” The RCI Task Force would fund the 

analyses for installations privatized over the next 

five years, and the ACSIM would assume responsibility for them thereafter.119 Other topics included 

conducting the lessons-learned seminars, deciding whether residents could pay rent in arrears 

(the IPT said “yes”), determining what standards 

RCI housing should meet (those developed by 

the installation and developer during the CDMP 

process, subject to congressional approval), ascertaining the best method for implementing resident 

satisfaction surveys (having a third party conduct 

them semi-annually for the first five years), and 

using a third-party vendor to transfer soldiers’ BAH 

to the partner.120

Some issues required lengthier discussions. 

For example, on June 15, 2000, the IPT debated 

how installation family housing staffing would be 

affected after an RCI award to a developer. This was 

a difficult issue because many within the installation housing offices feared that RCI would end 

their jobs.121 Yet setting a clear policy was important so that the installation knew at the start of 

CDMP development what housing responsibilities 

it would retain and what duties it would release to 

the partner.122

In the course of the IPT discussion, Ted 

Lipham explained that the Army already had a 

policy governing post-award housing staffs, based 

on its experience at Fort Carson. This policy stated 

that the Army would still be responsible for managing the partnership and interacting with the outside community, including aiding soldiers with offpost housing referrals. The IPT discussed whether 

this policy was adequate or whether another would 

be more appropriate and examined four options. 

The first option was to keep the existing policy, 

whereby Army headquarters would fund one position for every 1,000 houses, as well as fund someone to deal with off-post housing and the Deposit 

Waiver Program (by which installations would 

work with landlords to waive deposit requirements 

for soldiers), and someone to serve as community 

liaison. If more positions were needed, the installation’s Major Command (MACOM) would fund 

them. Under options two and three, each pilot site 

would select the number of necessary Army staff 

positions based on conditions at the installation. 

Under option two, Army headquarters would pay 

for the positions, while in option three, the post’s 

MACOM would fund them. Option four would 

require installation staff to oversee the partner. A 

staff of five Army personnel, for example, would 

monitor 3,000 to 6,000 homes, while others would 

deal with off-post referrals, the Deposit Waiver 

Program, and community liaison work.123 Ted 

Lipham recommended the implementation of 

option one, but the IPT decided to examine both 

option one and option four in more detail.124

In its July 17, 2000, meeting, the IPT recognized that, because of their experience, those 

who had been working as housing staff before the 

implementation of RCI would be in high demand 

by both the government and the developer to fill 

positions after the RCI conversion. Lipham recommended that CDMPs include specific provisions 

stating that government workers had the right of 

first refusal for any contracted housing jobs that 

would exist after RCI.125 Based on these discussions, 

the IPT issued a directive with four main provisions. First, Army family housing staffing levels 

would consist of one individual for every 1,000 

homes on an installation, as well as three people 

to supervise the RCI project from both an administrative and financial standpoint. Second, staffing 

levels would be maintained at current levels during the transition phase to RCI. Third, personnel 

ramp-down would begin at the end of the transition phase. The fourth provision was that the Army 

would continue to have responsibility for off-post 
114 Privatizing Military Family Housing 115

CHAPTER FIVE

The Beginning of the RCI Pilot Projects, 1998–2001

referrals and the Deposit Waiver Program. This 

four-pronged policy would ensure that Army housing personnel could respond quickly to soldiers 

and their needs.126

The IPT examined another issue that had 

complicated matters at Fort Carson and that the 

three RCI pilot projects were all grappling with—

the effects of privatization on school systems. In 

hearings held in March 1999 before the House 

Military Installations and Facilities Subcommittee, 

Congressman Hefley stated that he interpreted 

“ancillary facilities,” as delineated in the MHPI 

legislation, to include schools. He wondered what 

the DOD’s thoughts were on schools and privatization, especially since many privatization projects, 

by adding to available housing, would increase the 

number of students in an area. Deputy Undersecretary Yim explained that few of the services had 

actually looked at building schools and that the 

main issue was how privatization would affect the 

impact aid program with respect to schools. 

Under the impact aid program, the DOD paid 

school districts certain amounts of money to offset 

the number of students that its members added 

to the schools. The level of impact aid depended 

on how many students lived off base (in housing 

subject to taxation) and how many lived on base 

(where school-funding taxation did not apply). 

Lower levels of aid were provided for students living off base, and higher levels for students residing 

on base. Since RCI’s primary goal was for housing 

to be constructed, operated, and maintained by the 

private sector (although located on installations), 

Congress and school districts questioned whether 

posts should continue to pay the same level of 

impact aid. Yim indicated that installations would 

still provide the higher level since privatized housing to that point had not been subject to taxation. 

In Yim’s view, this was the primary way that the 

DOD could ensure that privatization did not have 

a detrimental effect on local schools.127

The Fort Carson project had highlighted the 

need to engage outside interests sooner in discussing issues such as school impacts, but the pilot 

installations did not always learn that lesson. Not 

long after the issuance of Fort Meade’s RFQ, for 

example, members of the Anne Arundel County 

School Board expressed concern that privatization would strain the capacity of several schools. 

According to a newspaper article, the Anne Arundel School District did not have the facilities to 

accommodate the numbers of new students, estimated by RCI Project Manager George Barbee to be 

as many as 700. “If all the numbers come true that 

Mr. Barbee talked about,” Thomas Rhoades, county 

schools director for program planning, said, “we’d 

be a few elementary schools short.”128 Michael J. 

McNelly, a member of the school board, explained 

that the main problem was that the Army had not 

communicated the impacts early enough to the 

district. “We’re being brought on board after the 

fact,” McNelly declared.129

In addition to communication issues, another 

sticking point was that the Army did not intend 

to use the MHPI authorities to construct schools 

under the RCI program. This was in part because 

RCI leaders felt that a soldier’s BAH should be used 

only for the development, operation, and management of residential communities and in part 

because Congress had not offered approval for the 

RCI program to construct schools.130 After discussing the matter at its January 2001 meeting, the IPT 

issued a directive that it would be RCI policy for 

school systems to foot the bill for any new construction necessitated by implementing RCI. However, 

installation leaders needed to ensure that close 

communication with stakeholders occurred early in 

the RCI process. The IPT directive communicated 

that the Army was willing to offer land for school 

use and that the higher level of impact aid to 

school districts would continue. The directive also 

explained that the RCI program wanted to keep 

open the option to allow exceptions to the policy, in 

case “we construct large-scale developments in new 

areas or school districts refuse to build new schools 

regardless of requirements.”131

Late in 2000, the IPT became aware of funding 

issues with the FY 2001 budget. The Army wanted 

to budget both for the completion of the pilots 

and for work on the next wave of RCI projects. But 

the House Armed Services Committee told Army 

officials that the committee would not approve 

funds for implementing RCI at other installations 

until they provided Congress with “‘proof’ of RCI 

success.” The congressional committee also wanted 

a report on how additional funds would affect the 

Army’s family housing program in general. The 

IPT discussed ways of alleviating congressional 

concerns, which they considered legitimate. At the 

same time, it expressed a desire to fund the execution of up to six additional RCI projects each year.132

On October 30, 2000, the Army made another 

reprogramming request to Congress, this time 

asking that $6.6 million originally budgeted to 

complete the pilot sites instead be redirected to 

start the follow-on FY 2002 projects. Congress 

considered the issue for a few months, and Army 

officials met with representatives and staffers to 

address concerns. Finally, in early 2001, Congress 

acted favorably on the reprogramming request, 

ensuring that the Army would be able to continue 

with additional projects and signifying approval of 

the way that RCI pilots had been conducted.133

The Utilities Controversy

One of the more complicated issues that the 

IPT addressed involved determining how soldiers 

would pay for utilities under privatization. This 

had been a contentious issue at least since the early 

planning stages of the Fort Carson project. In the 

past, the Army had paid for the water, electric, 

and heating bills of military families on the base, 

whereas soldiers living off base paid for their own 

utilities from their BAH. During the planning 

stages of the CVI program at Fort Carson, the Army 

left open the question of who would pay for utilities once the private partner took over management of family housing. According to Fort Carson 

Chief of Staff Tony Koren, several installation 

leaders vehemently objected to any proposal that 

soldiers be required to pay for their utilities. He 

recalled that some generals “would stand up and 

literally scream, ‘You people are trying to screw my 

soldiers. I will never permit a project that makes 

my soldiers pay for their utilities,’” even though 

only about 30 percent of the garrison population 

lived on base, meaning that the other 70 percent 

were already paying for their utilities.134

Facing such opposition, the Army postponed 

making a firm policy decision about utility payments. It placed a clause in the Fort Carson RFP 

that when a project produced sufficient revenue to 

assume utility costs without raising the soldier’s 

rental amount, the Army might require the partner 

to pay for utilities. Still, no set policy was made.

Previously, the OSD had based guidelines 

for the payment of utilities under privatization 

programs on its 1998 policy on resident utility 

payments. This policy stated that utility payments would come from a service member’s BAH, 

based on the assumption that if the developer 

were responsible for this cost, it would “introduce 

uncertainty into [the developer’s] rental stream,” 

thereby affecting the project’s scope.135 The amount 

would be set as an average baseline cost for the 

house and would come directly from a portion of 
116 Privatizing Military Family Housing 117

CHAPTER FIVE

The Beginning of the RCI Pilot Projects, 1998–2001

the service member’s BAH designated as a “utility 

allowance.” The service member would pay outof-pocket for any utility usage that exceeded the 

amount in his or her utility allowance. When the 

issue came before the IPT, however, its members 

did not like the policy because it might lead to 

soldiers paying out-of-pocket for utilities. Instead, 

the IPT proposed that the partner would pay utility 

costs up to a certain cap and the Army would pay 

for anything above that cap. The IPT also favored 

adding incentives in CDMPs so that developers 

would construct energy-efficient homes, thereby 

driving down utility costs.136

When Army officials took this proposal to the 

OSD, the OSD rejected it, maintaining that its policy would lead to more energy conservation than 

the Army’s proposal. The House MILCON Appropriations Subcommittee supported the OSD’s 

stance, as did the OMB. The Army then decided to 

have the Undersecretary of the Army and the Vice 

Chief of Staff take the idea to the Principal Deputy 

Undersecretary of Defense for Acquisition, Technology and Logistics. Apgar told the IPT that if no 

“relief” was obtained from that source, he intended 

to approach higher officials about the matter.137

Discussions were held with the deputy undersecretary. Army officials reminded him that the 

OSD rationale behind the utilities policy included 

ensuring that developers had a steady revenue 

stream from BAH and that soldiers had an incentive to conserve energy. The OSD also did not want 

to subsidize utility costs above a cap because it 

could have potential scoring implications with the 

OMB. The Army believed that the policy outlined by the IPT answered all of these concerns 

and fulfilled the service’s “long-standing policy 

that privatization will be transparent to soldiers 

and families, i.e., there will be no [out-of-pocket] 

expenses.”138 After a few months of deliberations 

and consultations, the OSD finally decided to let 

the Army test its proposed method of utility payment at Fort Hood.139

The Fort Hood CDMP, which was approved 

by Fort Hood’s commanding general and the 

FORSCOM commander on December 13, 2000, thus 

contained a stipulation that developers would pay 

for utility usage up to a cap and the Army would 

pay for any usage over that cap. However, after the 

CDMP was sent to the OMB, the OSD, and Department of Army headquarters for approval, this 

policy became a sticking point. The OMB stated 

that if the Army did not require soldiers to pay for 

their utility use, the project would be considered 

a government project. This would, in essence, 

prevent it from receiving favorable scoring.140

Between December 15, 2000, and February 6, 2001, 

the OSD, the OMB, and the Army discussed the 

utilities issue. Ultimately, they decided that the 

Army could not implement its program because 

the National Defense Authorization Act of 2001

stated that, although the Secretary of the Army 

could provide utilities and services to service 

members, the Secretary had to be reimbursed for 

whatever utility services were provided.141 Therefore, part of service members’ BAH would be used 

to pay for utilities, and the original OSD concept of 

how utilities would be covered under privatization 

would stand. In March 2001, the Army informed 

installation leaders that RCI projects would use the 

OSD’s utility policy “effective immediately.”142

In June 2001, the RCI Task Force assembled a 

“Utility Tiger Team” to develop a strategy for implementing the utilities policy across the Army. This 

effort included consulting with soldiers, installation commanders, utilities experts, and other 

stakeholders to develop a program that would 

be easy to implement.143 The strategy formulated 

was then vetted and discussed at a Utility Policy 

Implementation Workshop in April 2003, as well 

as at a Professional Housing Management Association seminar in January 2004, which included 

representatives from installations and RCI partners. Based on all of this work, in 2005 the Army 

implemented on six installations a “mock utility 

billing” program that allowed residents to see how 

much energy they actually used while also helping 

them learn how to conserve.144

Fort Hood provided a good example of how the 

mock program proceeded. The installation utilized 

a program developed by the U.S. Department of 

Energy for determining the normal household 

utility usage based on data specific to each house, 

including the façade orientation, window size, 

ceiling height, number and types of appliances, 

and frequency of laundry machine use. Establishing a standard utility baseline proved challenging, 

especially since more than 200 different floor plans 

existed in Fort Hood housing before privatization. 

The installation of meters to measure utility usage 

also proved difficult.145 After passing through the 

mock program, Fort Hood, together with Forts 

Carson, Hood, Meade, Lewis, and Campbell, implemented the utility policy in September 2006.146

The End of Apgar’s Tenure

With the election of President George W. Bush 

as President of the United States, Apgar’s tenure 

as Assistant Secretary of the Army for Installations 

and Environment came to an end. As he prepared 

to leave office in January 2001, Apgar, together with 

Vice Chief of Staff General Jack Keane, planned 

one last event that he hoped would solidify RCI’s 

position as a viable and continuing program—

a Senior Installation Leaders’ Conference on 

how to partner with the private sector. Fifty 

two- and three-star generals in Army leadership 

attended the conference, held January 10-11, 2001. 

“Partnering with private enterprise on Army installations” constituted the main theme of the conference, which covered more than just RCI. General 

LaPorte, who had experienced the RCI process at 

Fort Hood, told his colleagues at the conference 

that RCI was a positive thing that would benefit 

their soldiers. According to Apgar, the attendees 

were all “engaged” and committed to RCI. In his 

mind, this conference meant that senior Army 

officers had truly bought into the RCI program, 

thereby ensuring its success.147

A few days after the conclusion of the conference, Apgar attended his final IPT meeting as 

Assistant Secretary. At the gathering, he declared 

that RCI was now “an established program” 

that had “become institutionalized, to a point.” 

Vice-President-elect Cheney supported it, Apgar 

explained, as did the incoming Secretary of the 

Army and most members of Congress. Some dissenters still criticized the program, but, on the 

whole, RCI had gained general acceptance. Apgar 

shared with IPT members what he thought were 

his biggest accomplishments as Assistant Secretary, among them executing the pilot projects, 

implementing the RFQ and CDMP processes, 

and establishing the IPT. Apgar also maintained 

that his tenure had brought a shift in the Army’s 

thinking about installations, in that Army leaders 

now regarded them as “strategic assets.” Instead of 

“looking at thousands of individual buildings,” he 

explained, “we are viewing the portfolio.”148

Looking to the future, Apgar expressed concern that his RCI team was still considered a task 

force rather than a permanent office. “OSD and 

other services have permanent people assigned 

to their privatization offices.... We must do the 

same.” He also advocated using the RCI privatization strategy to solve other issues on installations. 

Finally, he counseled the Army to ensure that RCI 
118 Privatizing Military Family Housing 119

CHAPTER FIVE

The Beginning of the RCI Pilot Projects, 1998–2001

continued to have the “flexibility and responsiveness” that had made it successful. Only by avoiding bureaucracy, he concluded, could the Army 

continue the progress that RCI had made.149

Conclusion

Apgar’s assessment of his accomplishments 

and the problems facing RCI were largely accurate. Under his leadership, the Army had restructured its thinking about how to proceed with 

privatizing family housing and had implemented 

several procedures. However, the changes did not 

come easily. Apgar faced numerous battles with 

Congress, especially with Representative Hobson, 

over his proposed changes to the Army’s program. 

To Hobson (and other congressional leaders), it 

appeared that Apgar was proceeding too quickly 

with something that was a radical departure for 

the government. To Apgar, Congress acted in 

almost an obstructionist way with regard to a program that he believed would drastically improve 

housing on Army installations. Both sides had 

valid points. Perhaps Apgar did not fully appreciate the need for congressional buy-in to the 

program. And it may be that Congressman Hobson especially was reluctant to embrace change, 

no matter how valuable it might be. Hobson 

later defended his actions by saying, “Everybody 

thought I was out to kill housing privatization, 

and that was not true.” Instead, he said, he merely 

wanted the program to go forward “in a way that 

achieves the goals that everybody wants, and 

achieves them in a cost-effective manner.” Hobson contended that he did not want people in the 

future looking back at RCI and asking themselves, 

“Why did they do these dumb deals?”150 Of course, 

to Apgar, these were not “dumb deals.” But he had 

a difficult time persuading Hobson and others of 

RCI’s efficiencies and effectiveness.

Congress was not the only group with reservations. As we have seen, Army leaders themselves—

both in the Pentagon and on installations—had 

qualms about relinquishing control of housing to 

private developers. Apgar obtained their buy-in 

through the establishment of the IPT, through 

the support of key Army leaders such as Generals 

Schwartz and LaPorte, and through meetings such 

as the Senior Installation Leaders’ Conference. The 

work of Apgar’s subordinates, such as Ted Lipham 

and Don Spigelmyer, also mitigated discontent. 

Most importantly, the progress of the three pilot 

projects in 2000 and 2001 convinced many that RCI 

was legitimate, while also providing opportunities for Army leadership to tweak the program as 

issues arose. At the IPT meeting on May 10, 2001, 

after Apgar had left office, Raymond J. Fatz of the 

Office of the Assistant Secretary of the Army for 

Installations and Environment explained that 

“RCI has ‘turned a corner,’” in that “interest and 

acceptance from Congress and OSD/Army leaderships have changed dramatically over the past two 

months.”151 It appeared that going forward into the 

Bush administration, RCI was on safe ground and 

had become an accepted and established program. 

Yet each of the three pilot sites—as well as Fort 

Carson—would experience growing pains as they 

progressed toward completion.

Endnotes to Chapter 5

1. Quoted in “Defense Department Funds Historic 

Increase in Housing Allowance,” U.S. Department 

of Defense, Office of the Assistant Secretary of 

Defense (Public Affairs) News Release, 6 January 

2000, http://www.defenselink.mil/releases/release.

aspx?releaseid=2281. See also House Subcommittee on 

Military Installations and Facilities of the Committee 

on Armed Services, Hearings on National Defense 

Authorization Act for Fiscal Year 2001—H.R. 4205 and 

Oversight of Previously Authorized Programs Before the 

Committee on Armed Services, House of Representatives: 

Military Installations and Facilities Subcommittee 

Hearings on Division B—Military Construction (H.R. 

4205), 106th Cong., 2d sess., 2000, 263.

2. House Subcommittee on Military Construction 

Appropriations of the Committee on Appropriations, 

Military Construction Appropriations for 2001, 

Hearings Before a Subcommittee of the Committee on 

Appropriations, House of Representatives, 106th Cong., 

2d sess., 2000, 286. Hereafter cited as FY 2001 MILCON 

Appropriations Hearings.

3. Untitled document beginning “Question: When will 

the Army announce the winner for Fort Hood?” Folder: 

Congress (incl. sub-folders), Share Drive database, RCI 

Program Office, Crystal City, Va. Hereafter cited as RCI 

Office. 

4. National Defense Authorization Act for Fiscal Year 2001, 

Public Law 106–398, U.S. Statutes at Large 114 (2001): 1654, 

1654A148, 1654A415.

5. Russ Hamilton interview by Matthew Godfrey, 5 June 

2007, Fort Carson, Colo., Transcript, 8.

6. Hamilton interview, 9.

7. See William C. Baldwin, “Four Housing Privatization 

Programs: A History of the Wherry, Capehart, Section 

801, and Section 802 Family Housing Programs in the 

Army,” October 1996, Office of History, U.S. Army Corps 

of Engineers Headquarters (HQUSACE), Alexandria, Va. 

Hereafter cited as USACE Office of History.

8. U.S. Representative David Hobson interview by Paul 

Sadin, 24 June 2008, Wash., D.C., Transcript, 3-4.

9. See Bernard D. Rostker to The Honorable David L. 

Hobson, 19 March 1999, attachment with question 

responses, in House Subcommittee on Military 

Construction Appropriations of the Committee on 

Appropriations, Military Construction Appropriations for 

2000: Hearings Before a Subcommittee of the Committee 

on Appropriations, House of Representatives, One Hundred 

Sixth Congress, First Session, 106th Cong., 1st sess., 1999, 

268. Hereafter cited as FY 2000 MILCON Appropriations 

Hearings.Fort Carson is often referred to as the first pilot 

project, but it was completed under CVI, not RCI.

10. FY 2001 MILCON Appropriations Hearings, 225; and 

“Family Housing Primary Concern, Meade Chosen as a 

Pilot Site,” Soundoff!, 9 December 1999.

11. Mahlon “Sandy” Apgar, IV, interview by Matthew 

Godfrey, 18 July 2007, Baltimore, Md., Transcript, 14-15.

12. “Army Residential Communities Initiative (RCI) 

Questions and Answers, As of December 14, 1999,” 15, 

Folder: Army Installations—Hood, Lewis Meade, Share 

Drive database, RCI Office.

13. Interview of Don Spigelmyer, Dean Stefanides, Rhonda 

Hayes, Mike McCarley, Matt Keiser, Barry Scribner, Bill 

Mysliwiec by Matthew Godfrey, 13 February 2007, Crystal 

City, Va., Transcript, 20-21. Hereafter cited as RCI Group 

interview.

14. As quoted in Walt Barron, “Building a Better Tomorrow 

for Military Housing,” CQ Weekly, 22 April 2000, 947.

15. Rostker to Hobson, attachment, in FY 2000 MILCON 

Appropriations Hearings, 268.

16. Rostker to Hobson, attachment, in FY 2000 MILCON 

Appropriations Hearings, 268.

17. “18 February 2000, Excerpted from RCI Hearings of 03 

February 2000, Master Set of RCI Questions and Answers,” 

5, Folder: Congress (incl. sub-folders), Share Drive 

database, RCI Office.

18. “Information Paper (Q&A), 22 February 2000, Subject: 

Army Family Housing Reprogramming of $14.5M to 

support the Residential Communities Initiative (RCI) 

Program,” Folder: Congress (incl. sub-folders), Share Drive 

database, RCI Office.

19. Mahlon Apgar to Honorable Conrad Burns, Chairman, 

Subcommittee on Military Construction, Committee on 

Appropriations, United States Senate, Draft, 17 April 2000, 

Folder: Congress (incl. sub-folders), Share Drive database, 

RCI Office.

20. Bernard D. Rostker to Honorable David L. Hobson, 

Chairman, Subcommittee on Military Construction, 

Committee on Appropriations, 27 January 2000, Folder: 

Congress (incl. sub-folders), Share Drive database, RCI 

Office. See also “Chronology of RCI Reprogramming 

Actions,” Folder: Congress (incl. sub-folders), Share 

Drive database, RCI Office; “Information Paper (Q&A), 

22 February 2000”; and Bernard Rostker and Charles 

Nemfakos interview by Matthew Godfrey, 17 July 2007, 

Arlington, Va., Transcript, 6.

21. “Information Paper (Q&A), 22 February 2000.”
120 Privatizing Military Family Housing 121

CHAPTER FIVE

The Beginning of the RCI Pilot Projects, 1998–2001

22. “Army Residential Communities Initiative (RCI), 

Questions and Answers as of March 08, 2000, 

Reprogramming Request,” Folder: Congress (incl. subfolders), Share Drive database, RCI Office; Quotes appear 

in Apgar to Burns, 17 April 2000. See also “Information 

Paper (Q&A), SAIE-RCI, 22 February 2000,” 1, Folder: 

Congress (incl. sub-folders), Share Drive database, RCI 

Office.

23. Quoted in House Subcommittee on Military 

Installations and Facilities of the Committee on Armed 

Services, Hearings on National Defense Authorization Act 

for Fiscal Year 2001, 291-92.

24. FY 2001 MILCON Appropriations Hearings, 255-56.

25. Mahlon Apgar, IV, to Honorable David L. Hobson, 

Chairman, Subcommittee on Military Construction, 

Committee on Appropriations, 24 March 2000, Folder: 

Congress (incl. sub-folders), Share Drive database, RCI 

Office.

26. “Chronology of RCI Reprogramming Actions,” Folder: 

Congress (incl. sub-folders), Share Drive database, RCI 

Office. For a draft of Apgar’s response to Burns, see Apgar 

to Burns, 17 April 2000.

27. “HAC Milcon Subcommittee, Family Housing 

Privatization Hearing, 15 March 2000,” Folder: Congress 

(incl. sub-folders), Share Drive database, RCI Office.

28. Mahlon Apgar IV, “Fort Meade Part of Army’s Housing 

Revolution,” Baltimore Sun, 17 April 2001.

29. United States General Accounting Office, Military 

Housing: Continued Concerns in Implementing the 

Privatization Initiative (Washington, D.C.: United States 

General Accounting Office, 2000), 7.

30. Ratio data received from Dean Stefanides, written 

comments to authors, 30 January 2011. The leverage ratios 

for each year were as follows: yearing ending FY 2000, 23 

to 1; FY 2001, 23 to 1; FY 2002, 27 to 1; FY 2003, 20 to 1; FY 

2004, 16 to 1; FY 2005, 13 to 1; FY 2006, 12 to 1; FY 2007, 10 

to 1; FY 2008, 9 to 1; FY 2009, 7 to 1; FY 2010, 6.6 to 1; and 

FY 2011, 6.5 to 1.

31. “Statement of Mr. John Andersen, Jr., Managing 

Director, Jones Lang LaSalle, to the House of 

Representatives Appropriations Subcommittee on Military 

Construction, March 16, 2000,” 3, Folder: Congress (incl. 

sub-folders), Share Drive database, RCI Office. For 

information on this history, see Robert Erwin interview 

by Leigh Cutler, 19 September 2007, Fort Hood, Tex., 

Transcript, 2. In 1999, Jones Lang Wooton & Sons had 

merged with LaSalle Partners in what was termed the 

“largest international real estate industry merger to date,” 

thereby forming Jones Lang LaSalle. “A Tale of Two Cities 

and Global Expansion,” http://www.joneslanglasalle.com/

Pages/JonesLangLaSalle-KeyFacts.aspx.

32. “Honorable Hobson Discussion Points,” Folder: 

Congress (incl. sub-folders), Share Drive database, RCI 

Office. See also “Consultant Products/Services for RCI,” 

and “HASC MHPI & Utility Privatization – 16 March,” 

Folder: Congress (incl. sub-folders), Share Drive database, 

RCI Office.

33. Don Spigelmyer, written comments to authors, 20 

January 2011.

34. Spigelmyer comments, 20 January 2011.

35. “HASC MHPI & Utility Privatization – 16 March.”

36. See, for example, “Responses to Questions, SAC 

Subcommittee on Military Construction Letter of April 

13, 2000,” Folder: Congress (incl. sub-folders), Share Drive 

database, RCI Office.

37. Quoted in “Honorable Hobson Discussion Points.” See 

also “Consultant Products/Services for RCI,” and “HASC 

MHPI & Utility Privatization – 16 March.”

38. “Executive Summary: Community Development and 

Management Plan, Residential Communities Initiative, 

Fort Hood, Texas; Issued by Assistant Secretary for the 

Army for Installations and the Environment, 5th January 

2001,” Documentum database, RCI Office.

39. Carol Anderson and Michael Nix interview by Leigh 

Cutler, 18 September 2007, Fort Hood, Tex., Transcript, 1.

40. James R. Van Epps for Major General Arthur T. Dean, 

Deputy Chief of Staff for Personnel and Installation 

Management, to Commander, U.S. Army Forces 

Command, 21 July 1995 (with attachment), Loose papers, 

Box 4, Uncatalogued Housing Materials, Research 

Collections, Office of History. 

41. John Clark, “Privatization of Family Housing Will 

Benefit Some Local Contractors,” Temple Daily Telegram, 

28 August 1999: 4B-5B.

42. Kelly Mattingly, “Fort Hood Part of Pilot Program for 

Private Housing Development,” Killeen Daily Herald, 28 

August 1999: A1, A3.

43. Thomas Schwartz personal communication with Paul 

Sadin, 2 May 2008; and RCI group interview, 21.

44. RCI group interview, 16; and Apgar interview, 12.

45. As cited in Penelope Schmitt, “Fort Hood Launches 

CVI,” Public Works Digest 10 (March 1998): 6.

46. Schmitt, “Fort Hood Launches CVI,” 5-6.

47. Bob Niehaus to John Corbett, Carol Anderson, and Jon 

Cole, “re: 1999 Family Housing Market Analysis, Fort Hood, 

Texas, Prepared by Robert D. Niehaus, Inc., for Michael 

Baker, Jr., Inc., Fort Worth District Corps of Engineers, and 

the Fort Hood Residential Communities Initiative Office. 

November. Santa Barbara, California,” 15 September 2000, 

Documentum database, RCI Office; and “Fort Hood RCI 

– CDMP: Responses to Questions from ACSIM,” 5 January 

2001, Documentum database, RCI Office.

48. “Fort Hood Request for Qualifications (RFQ),” Folder: 

Fort Hood, Share Drive database, RCI Office.

49. Quoted in Gary Sheftick, “Private Housing to be 

Tested at Three Posts,” Public Works Digest 11 (September 

1999): 15.

50. Don Spigelmyer, “Industry Holds Forum on Army 

Privatization Initiatives,” Public Works Digest 11 (March 

1999): 1-2.

51. The Honorable Mahlon Apgar, IV, “Remarks Following 

the Presentation of the James Felt Award for Creative 

Counseling, the Counselors of Real Estate,” 22 November 

2002, 6, document provided by Sandy Apgar. See also 

Sheftick, “Private Housing to be Tested at Three Posts,” 15; 

FY 2000 MILCON Appropriations Hearings, 213-15, 288-

89; and Joyce VanSlyke interview by Matthew Godfrey, 27 

June 2008, the Pentagon, Transcript, 4.

52. Mahlon Apgar, IV, to Joel M. Hefley, 8 March 1999, 

in House Subcommittee on Military Installations and 

Facilities of the Committee on Armed Services, Hearings 

on National Defense Authorization Act for Fiscal Year 

2000—H.R. 1401 and Oversight of Previously Authorized 

Programs Before the Committee on Armed Services, 

House of Representatives: Military Installations and 

Facilities Subcommittee Hearings on Division B—Military 

Construction (H.R. 1401), 106th Cong., 1st sess., 401.

53. “Chronology/Timelines, Fort Hood Chronology,” 12 

February 2001, Folder: Fort Hood, Share Drive database, 

RCI Office. Also in the same folder: “Update on RCI Task 

Force Week of 8-12 Feb 99”; “Update on RCI Task Force 15-

26 Feb 99”; “Update on RCI Task Force 22-26 Mar 99”; and 

“Update on RCI Task Force, 19 August 1999.”

54. “Statement of Mr. John Andersen, Jr., Managing 

Director, Jones Lang LaSalle, House of Representatives 

Appropriations Subcommittee on Military Construction, 

March 16, 2000,” 3, Folder: Congress (incl. sub-folders), 

Share Drive database, RCI Office. See also Erwin 

interview, 2.

55. “Fort Hood Request for Qualifications (RFQ),” 1-2.

56. “Fort Hood Residential Communities Initiative Off to a 

Great Start,” The Army Residential Communities Initiative 

Newsletter 1 (August 2000): 1.

57. “Lend Lease Projects and Actus Establish Joint 

Venture,” 20 September 1999, http://www.actuslendlease.

com/llweb/all/main.nsf/all/news_19990820.

58. Trammel Crow Residential, “Company Profile,” http://

www.tcresidential.com/profile/.

59. “Minutes of August 21, 2000 Residential Communities 

Initiative (RCI) Integrated Process Team (IPT) Meeting,” 

31 August 2000, 2, Folder: IPT Documents, Share Drive 

database, RCI Office.

60. “Fort Hood Residential Communities Initiative, 

Evaluation Team Consensus Ratings by Factor,” Folder: 

Fort Hood, Share Drive database, RCI Office; and 

“Congressional Notification, Contract No. DACA02-

00-C-0001,” Share Drive database, RCI Office.

61. Bill Mysliwiec and Matthew Keiser interview by 

Matthew Godfrey, 15 February 2007, Crystal City, Va., 

Transcript, 4. 

62. Erwin interview, 7.

63. “Congressional Notification, Contract No. DACA02-

00-C-0001”; and Gary Sheftick, “Army’s Largest Post 

Selects Developer to Privatize Housing,” Public Works 

Digest 12 (November/December 2000): 25.

64. Anderson and Nix interview, 1; and Steve Schlabach 

interview by Leigh Cutler, 19 September 2007, Fort Hood, 

Tex., Transcript, 3-4.

65. Erwin interview, 2.

66. Erwin interview, 2-3.

67. “Fort Hood CDMP—HQUSACE Comments / Q&As,” 

December 13, 2000, Documentum database, RCI Office; 

“Fort Hood RCI—CDMP, Responses to Questions 

from ACSIM,” January 5, 2001, Documentum database, 

RCI Office; and “FORSCOM Comments to Fort Hood 

Community Development and Management Plan 

(CDMP),” n.d., Documentum database, RCI Office.

68. “FORSCOM Comments to Fort Hood Community 

Development and Management Plan (CDMP).” 

69. House Subcommittee on Military Construction 

Appropriations of the Committee on Appropriations, 

Military Construction Appropriations for 2002: 

Hearings Before a Subcommittee of the Committee on 

Appropriations, House of Representatives, 107th Cong., 1st 

sess., 2001, 652. Hereafter referred to as FY 2002 MILCON 

Appropriations Hearings.

70. FY 2002 MILCON Appropriations Hearings, 652. See 

also pp. 125-26, 643-45, 651.

71. James T. Lipham, Program Director, Residential 

Communities Initiative, Memorandum for Director, 

Competitive Sourcing and Privatization, 14 March 2001, 

Folder: Hood, Lewis, Meade, Subfolder: Fort Hood, Share 

Drive database, RCI Office.

72. Directorate of Public Works, Fort Lewis, Washington, 

Forces Command, U.S. Army, “Final Environmental 

Assessment of the Implementation of the Army 

Residential Communities Initiative at Fort Lewis, 

Washington,” February 2001, ES-1, File: Environmental 

Issues, Final Environmental Asessment—RCI Fort Lewis 

2/9/01, Cabinet C, Drawer 5, RCI Program Archive, 

Residential Communities Office, Public Works Building, 

Fort Lewis, Wash.

73. Louis Bain telephone interview by Paul Sadin, 4 

December 2007, Seattle, Wash., Transcript, 3.
122 Privatizing Military Family Housing 123

CHAPTER FIVE

The Beginning of the RCI Pilot Projects, 1998–2001

74. U.S. General Accounting Office, Military Housing: 

Privatization Off to a Slow Start and Continued 

Management Attention Needed, Report No. GAO/

NSIAD-98-178 (Washington, D.C.: U.S. General 

Accounting Office, 1998). Hereafter cited as Military 

Housing: Privatization Off to a Slow Start. See also 

Penelope Schmitt, “Fort Hood Launches CVI,” Public

Works Digest 10 (March 1998): 6; and Louis Bain personal 

communication with Dawn Vogel, 5 December 2008.

75. Mahlon Apgar, IV, to Honorable David L. Hobson, 

Chairman, Subcommittee on Military Construction, 

Committee on Appropriations, 17 December 1999, Folder: 

Congress (incl. sub-folders), Share Drive database, RCI 

Office.

76. “Information Paper, Privatization of Army Family 

Housing—Residential Community Initiative (RCI),” File: 

Staff Actions Information Paper—Privatization of Army 

Family Housing RCI, Cabinet C, Drawer 4, RCI Program 

Archive, Residential Communities Office, Public Works 

Building, Fort Lewis.

77. “Army Information Paper: Army’s Residential 

Communities Initiative (RCI) project at Fort Lewis, WA,” 

21 August 2000, Folder: Army Installations – Hood, Lewis, 

Meade, Subfolder: Fort Lewis, Share Drive database, RCI 

Office; and Mysliwiec and Keiser interview, 4.

78. “Army Announces Fort Lewis Development Partner 

for Residential Communities Initiative,” 30 August 

2000, Folder: Army Installations—Hood, Lewis, Meade, 

Subfolder: Fort Lewis, Share Drive database, RCI Office.

79. “Information Paper, Privatization of Army Family 

Housing – Residential Community Initiative (RCI),” 14 

September 2000, document provided by Fort Lewis RCI 

staff. See also Bain interview, 13-14.

80. Military District of Washington, “MDW Mission,” 

http://www.mdw.army.mil/content/anmviewer.

asp?a=74&z=6. See also Fort Meade, “About Us,” http://

www.ftmeade.army.mil/pages/about/about.html; and 

Aimee Stafford interview by Matthew Godfrey and Paul 

Sadin, 15 October 2007, Fort Meade, Md., Transcript, 6.

81. George Barbee telephone interview by Paul Sadin, 2 

and 4 December 2008, Seattle, Wash., Transcript, 2.

82. Quotations in “Joint Project to Trade Land for Housing 

Units at Meade,” Maryland Gazette, 2 November 1996. See 

also “Army Seeks Land Deal,” Baltimore Sun, 7 November 

1996; and Barbee interview, 3.

83. Clarke Howard interview by Matthew Godfrey, 15 

February 2007, Crystal City, Va., Transcript, 4.

84. Assistant Chief of Staff for Installation Management, 

“Fort George G. Meade CVI Site Determination Report,” 

March 1998, ES-1 – ES-3, Folder: Hood, Lewis, Mead, 

Subfolder: Fort Meade, Share Drive database, RCI Office.

85. Ellen Sorokin, “At Home, A Losing Battle: Military 

Personnel Leaving Service Over Poor Housing,” 

Washington Times, 23 July 2000.

86. “RCI Enhances Quality of Life,” Soundoff!, 19 October 

2000.

87. “Family Housing Primary Concern, Meade Chosen as a 

Pilot Site,” Soundoff!, 9 December 1999.

88. “Fort Meade, Maryland, Request for Qualifications,” 

Documentum database, RCI Office.

89. “U.S. Army Launches Third RCI Pilot Location,” U.S. 

Newswire, 3 May 2000.

90. The Honorable Mahlon Apgar, IV, “Residential 

Communities Initiative, Fort Meade, Maryland, Program 

Overview,” PowerPoint presentation, 5 May 2000, Box 3, 

Uncatalogued Housing Materials, Research Collections, 

Office of History. See also “A Forum on Housing 

Privatization at Fort Meade,” brochure provided by Sandy 

Apgar.

91. Quoted in Connie Ballenger, “Entrepreneurs Learn 

About RCI,” Soundoff!, 11 May 2000.

92. “Fort Meade Seeks Housing Developer,” Washington 

Post, 6 May 2000; and “Army Information Paper: Army’s 

Residential Communities Initiative (RCI) Project at Fort 

Meade, MD,” 10 July 2000, Folder: IPT Documents, Share 

Drive database, RCI Office.

93. Ballenger, “Entrepreneurs Learn About RCI.”

94. “Information Paper: Army Family Housing 

Privatization at Fort George G. Meade,” 27 February 2001, 

Folder: Fort Meade, Share Drive database, RCI Office.

95. Quoted in “Information Paper: Army Family Housing 

Privatization at Fort George G. Meade,” 27 February 2001. 

See also “RCI Enhances Quality of Life,” Soundoff!, 19 

October 2000.

96. “Information Paper: Army Family Housing 

Privatization at Fort George G. Meade,” 27 February 2001; 

and “Notes from Keating/Anne Arundel County Meeting, 

Friday, April 23, 1999,” Folder: Fort Meade, Share Drive 

database, RCI Office. 

97. “Army Nears Project Award,” Baltimore Sun, 4 March 

2001.

98. “Information Paper: Army Family Housing 

Privatization at Fort George G. Meade,” 27 February 2001.

99. See Joyce VanSlyke email chain, 27 February 2001, 

Folder: Fort Meade, Share Drive database, RCI Office.

100. “Information Paper: Army Family Housing 

Privatization at Fort George G. Meade,” 20 February 2001, 

Folder: Fort Meade, Share Drive database, RCI Office.

101. “Recommended Talking Points,” Folder: Fort Meade, 

Share Drive database, RCI Office.

102. Hobson interview, 14-15. 

103. According to George Barbee, he insisted that he and 

Clarke Howard, who was then working for the housing 

office at Fort Meade, participate in the face-to-face 

interviews. “We wanted to see and meet and make eye 

contact with the potential partners,” Barbee explained, 

“and we wanted to be able to make a recommendation 

to the source selection official as to who we felt we could 

work best with.” For Barbee, “that was a very important 

element of the selection process.” Barbee interview, 6. 

104. John Picerne telephone interview by Matthew 

Godfrey, 5 May 2008, Missoula, Mont., Transcript, 6.

105. Barbee interview, 7. See also “Army Announces Fort 

Meade Development Partner for RCI,” Press Release 

#01-013, 6 March 2001, Folder: Fort Meade, Share Drive 

database, RCI Office.

106. Ellen Pint and Rachel Hart, Public-Private 

Partnerships: Proceedings of the U.S.-U.K. Conference on 

Military Installation Assets, Operations, and Services, April 

14-16, 2000 (Santa Monica, Calif.: RAND, 2001), 31-40. 

Assistant Secretary Apgar presented a keynote address at 

the conference, where he discussed the RCI program and 

the work being done at Fort Carson specifically. Keynote 

Address by The Honorable Mahlon Apgar, IV, Assistant 

Secretary of the Army, Installations and Environment, 

“US-UK Conference on ‘Privatizing Military Installation 

Assets, Operations and Services, Ditchley Park, Enstone, 

Oxfordshire, 14 April 2000,” copy provided by Sandy Apgar.

107. Pint and Hart, Public-Private Partnerships, 31-40.

108. Apgar interview, 33. See also “Residential 

Communities Initiative, Lessons Learned Seminar II, 

Fort Carson, Colorado, August 24, 2000, Transcript of 

Meeting,” Folder: Lessons Learned - PM&PDC & KM, 

Share Drive database, RCI Office. Hereafter referred to as 

Lessons Learned II Transcript. Also see ASA-I&E Office, 

“RCI Primer: An Introduction to the RCI Program,” 1 

June 2001, 7, document provided by RCI Office; FY 2001 

MILCON Appropriations Hearings, 254; and Honorable 

Mahlon Apgar, IV, “Residential Communities Initiative 

(RCI): Congressional Update,” 26 September 2000, 

PowerPoint presentation, 8, Folder: Congress, Share Drive 

database, RCI Office.

109. Lessons Learned II Transcript, 11. See also 

“Information Paper: Residential Communities Initiative 

(RCI) Lessons Learned Seminar II at Fort Carson, 

Colorado, 23-24 August, 2000,” 4 September 2000, Folder: 

Lessons Learned - PM&PDC & KM, Share Drive database, 

RCI Office. Hereafter referred to as Lessons Learned II 

Information Paper.

110. Lessons Learned II Information Paper. See also 

Lessons Learned II Transcript, 24-26.

111. Dru Brenner-Beck, MAJ, JA, Chief, Administration 

& Civil Law, Memorandum for Record—Attorney Client 

Privilege, 28 February 2001, Documentum database, RCI 

Office. See also Lessons Learned II Transcript, 27-29; and 

Hamilton interview, 11. Although the decision regarding 

the ways to develop a sense of community at Fort Carson 

was not a critical element in the grand scheme of Army 

privatization, the discussions that led to the decision 

highlight some of the differences between the government 

and the private sector in managing housing operations.

112. Lessons Learned II Transcript, 30-32.

113. Bain interview, 17.

114. Apgar interview, 33.

115. Quoted in Ted Lipham telephone interview by 

Paul Sadin, 13 October 2008, Transcript, 13. See also 

“Residential Communities Initiative Integrated Process 

Team Charter”; Apgar interview, 17; and “Residential 

Communities Initiative (RCI), Integrated Process Team 

(IPT) Members,” Folder: IPT Documents, Shared Drive 

database, RCI Office.

116. Apgar interview, 19.

117. Lipham interview, 13.

118. James T. Lipham, Program Director, Residential 

Communities Initiative, “Memorandum for the RCI 

Integrated Process Team Members, Minutes of May 15, 

2000 Residential Communities Initiative (RCI) Integrated 

Process Team (IPT) Meeting,” 26 May 2000, 1, Folder: IPT 

Documents, Share Drive, RCI Office.

119. Quoted in Mahlon Apgar, IV, Memorandum for See 

Distribution, “Army’s Residential Communities Initiative 

(RCI) Integrated Process Team (IPT) Policy Directive #1—

Housing Market Analyses (HMAs) at RCI Sites, Draft, 10 

July 2000 (draft form was the only one available), Folder: 

IPT Documents, Share Drive database, RCI Office.

120. See Minutes from the 21 August 2000 and 18 

September 2000 meetings, Folder: IPT Documents, Share 

Drive database, RCI Office.

121. See, for example, Laura Cole interview by Dawn Vogel, 

26 June 2008, Fort Detrick, Md., Transcript, 2.

122. Ted Lipham, “Residential Communities Initiative 

(RCI): Policy Issue Briefing to Integrated Process Team 

(IPT), Installation Family Housing Staffs,” 15 June 2000, 

PowerPoint presentation, 2-3, Folder: IPT Documents, 

Share Drive database, RCI Office.

123. Ted Lipham, “Residential Communities Initiative (RCI) 

... Installation Family Housing Staffs,” 15 June 2000, 3-6.

124. James T. Lipham, Memorandum for the RCI 

Integrated Process Team Members, “Minutes of June 15, 

2000 Residential Communities Initiative (RCI) Integrated 

Process Team (IPT) Meeting,” 7 July 2000, Folder: IPT 

Documents, Share Drive database, RCI Office.
124 Privatizing Military Family Housing 125

CHAPTER FIVE

The Beginning of the RCI Pilot Projects, 1998–2001

125. James T. Lipham, Memorandum for the RCI 

Integrated Process Team Members, “Minutes of August 21, 

2000 Residential Communities Initiative (RCI) Integrated 

Process Team (IPT) Meeting,” 31 August 2000, Folder: IPT 

Documents, Share Drive database, RCI Office.

126. Mahlon Apgar, IV, Memorandum for See Distribution, 

“Army Residential Communities Initiative (RCI) 

Integrated Process Team (IPT) Policy Directive #6 – 

Installation Housing Staffs,” n.d., Folder: IPT Documents, 

Share Drive database, RCI Office.

127. House Subcommittee on Military Installations and 

Facilities of the Committee on Armed Services, Hearings 

on National Defense Authorization Act for Fiscal Year 

2000—H.R. 1401, 287-88; and U.S. House Subcommittee 

on Military Construction Appropriations of the 

Committee on Appropriations, Military Construction 

Appropriations for 1998: Hearings Before a Subcommittee 

of the Committee on Appropriations, House of 

Representatives, 105th Cong., 1st sess., 1997, 219. 

128. Quoted in “Federal Housing Program Could Jam West 

County Schools,” Annapolis Capital, 12 July 2000.

129. Quoted in “Fort Meade Project Criticized by Panel,” 

Baltimore Sun, 13 July 2000.

130. James T. Lipham, Memorandum for the RCI Integrated 

Process Team Members, “Minutes of January 19, 2001 

Residential Communities Initiative (RCI) Integrated 

Process Team (IPT) Meeting,” 23 February 2001, Folder: IPT 

Documents, Shared Drive database, RCI Office.

131. Ray Clark, Memorandum for See Distribution, “Army 

Residential Communities Initiative (RCI) Integrated 

Process Team (IPT) Policy Directive #13 – Schools,” Folder: 

IPT Documents, Share Drive database, RCI Office.

132. James T. Lipham, Memorandum for the RCI 

Integrated Process Team Members, “Minutes of 

September 18, 2000 Residential Communities Initiative 

(RCI) Integrated Process Team (IPT) Meeting #5,” 4 

October 2000, Folder: IPT Documents, Share Drive 

database, RCI Office.

133. James T. Lipham, Memorandum for the RCI Integrated 

Process Team Members, “Minutes of January 19, 2001 

Residential Communities Initiative (RCI) Integrated 

Process Team (IPT) Meeting #7,” 23 February 2001, Folder: 

IPT Documents, Share Drive database, RCI Office.

134. Tony Koren telephone interview by Paul Sadin, 24 July 

2008, Seattle, Wash., Transcript, 7-8.

135. John B. Goodman, Deputy Under Secretary (Industrial 

Affairs and Installations), Memorandum for Assistant 

Secretary of the Army (Installations, Logistics and 

Environment), et al., 8 September 1998, Folder: IPT 

Documents, Share Drive database, RCI Office.

136. “Minutes of May 15, 2000 Residential Communities 

Initiative (RCI) Integrated Process Team (IPT) Meeting,” 

2. See also “Information Paper, Subject: Residential 

Communities Initiative (RCI) Utilities Policy, 11 July 2000,” 

Folder: IPT Documents, Share Drive database, RCI Office.

137. “Residential Communities Initiative (RCI), Opening 

Remarks to Integrated Process Team (IPT), The Honorable 

Mahlon Apgar, IV, Assistant Secretary of the Army, 

June 15, 2000,” 2, Folder: IPT Documents, Share Drive 

database, RCI Office. See also James T. Lipham email 

to Major General James E. Donald et al., 17 April 2001, 

Documentum database, RCI Office.

138. “Information Paper, Subject: Residential 

Communities Initiative (RCI) Utilities Policy, 11 July 2000.”

139. James T. Lipham, Program Director, Residential 

Communities Initiative, Memorandum for the RCI 

Integrated Process Team Members, “Minutes of August 21, 

2000 Residential Communities Initiative (RCI) Integrated 

Process Team (IPT) Meeting,” 31 August 2000, 1, Folder: 

IPT Documents, Share Drive database, RCI Office.

140. Office of Management and Budget, “Ft Hood CDMP 

Review & Approval Process, OMB (14 Dec 00–20 Feb 

01)”; and James T. Lipham email chain, 21 February 2001, 

Folder: Utilities & Utilities Privatization Documents, 

Share Drive database, RCI Office.

141. National Defense Authorization Act of 2001, Public 

Law 106–398, U.S. Statutes at Large 114 (2000): 1654, 

1654A148, 1654A415.

142. “Army Residential Communities Initiative (RCI) 

Statement of Utility Policy with Questions and Answers,” 

12 April 2001, Documentum database, RCI Office; and 

“Workshop Guidance From Mr. Spigelmyer,” no folder, 

Share Drive database, RCI Office.

143. William A. Armbruster, Deputy Assistant Secretary 

of the Army, Privatization and Partnerships (I&E), 

Memorandum for MG Thomas R. Turner, Commander, 

Headquarters, 101st Airborne Division (Air Assault) and 

Fort Campbell, Fort Campbell, KY, 42223-5000, Subject: 

Army’s Residents Utility Program,” 29 August 2006, Folder: 

FT Lewis, Share Drive database, RCI Office. See also “Mr. 

Spigelmyer Welcome Remarks, RCI Utility Workshop, 29 

April 2003,” no folder, Share Drive database, RCI Office; and 

“Workshop Guidance from Mr. Spigelmyer.”

144. Quoted in “Army Families Not Responsible for Utility 

Bills,” ARNEWS (Army News Service), 23 November 2004, 

http://www4.army.mil/ocpa/print.php?story_id_key=6588. 

See also “Army To Begin Utility Billing for Privatized 

Housing,” Soundoff!, 30 August 2006; Gary Sheftick, 

“Mock Utility Billing Aims to Conserve,” ARNEWS (Army 

News Service), 5 October 2004, http://www4.army.

mil/ocpa/print.php?story_id_key=6430; Ivan Bolden, 

Program Manager (Policy), “Residential Communities 

Initiative (RCI), PHMA PDS XVII – Army RCI Day, Utility 

Policy Implementation,” 27 January 2005, PowerPoint 

presentation, Documentum database, RCI Office.

145. Anderson and Nix interview, 8-9.

146. “Army To Begin Utility Billing for Privatized Housing,” 

Soundoff!, 30 August 2006.

147. Apgar interview, 18; and The Honorable Mahlon 

Apgar, IV, “Transforming Army Installations in the 21st 

Century,” 10 January 2001, copy provided by Sandy Apgar.

148. “Residential Communities Initiative (RCI) Integrated 

Process Team (IPT) Meeting: Opening Remarks by the 

Honorable Mahlon Apgar IV, Assistant Secretary of the 

Army for Installations and Environment,” 19 January 2001, 

5-6, copy provided by Sandy Apgar.

149. “Residential Communities Initiative (RCI) Integrated 

Process Team (IPT) Meeting: Opening Remarks by the 

Honorable Mahlon Apgar IV,” 7-8.

150. House Subcommittee on Military Construction 

Appropriations of the Committee on Appropriations, 

Military Construction Appropriations for 2003: 

Hearings Before a Subcommittee of the Committee on 

Appropriations, House of Representatives, 107th Cong., 2d 

sess., 2002, 488. 

151. Quoted in James T. Lipham, Program Director, 

Residential Communities Initiative, “Memorandum for 

the RCI Integrated Process Team Members, Minutes of 

May 10, 2001 Residential Communities Initiative (RCI) 

Integrated Process Team (IPT) Meeting #8,” 11 June 2001, 1, 

Folder: IPT Documents, Share Drive database, RCI Office.
127

CHAPTER SIX

Implementing the RCI Pilot

Projects, 2001–2005

By the summer of 2001, the Residential 

Communities Initiative (RCI) program was 

on firm ground. Although Congress would 

continue to ask tough questions about how RCI 

was progressing, congressional opposition to the 

program had largely ceased. Army leadership had 

generally accepted the program, and several installations were lined up to follow the pilot programs 

in implementing RCI. Yet that actual implementation process sometimes proved difficult. The 

experiences of the three RCI pilot projects—Forts 

Hood, Lewis, and Meade—shed light on the issues 

that arose once the housing had been transferred 

to the partner. Although in almost no case was the 

switch to RCI a seamless process, in general both 

Army and partner RCI staffs developed innovative 

ways of coping with the problems, providing lessons on which other installations could draw.

Changing RCI Leadership

As the time for implementing the three RCI 

pilot projects approached, leadership at the 

national level changed. Assistant Secretary of the 

Army for Installations and Environment Mahlon 

“Sandy” Apgar, IV, departed in January 2001 and for 

several months his position lay vacant. Finally, in 

August 2001, Dr. Mario Fiori was confirmed as the 

new Assistant Secretary. Fiori had served for many 

years as an engineer in the U.S. Navy and had also 

worked in the U.S. Department of Energy. Because 

he lacked Apgar’s real estate background and RCI 

was already off and running, Fiori did not focus on 

RCI as much as his predecessor had. Instead, he 

delegated much of the RCI oversight to two others: Geoffrey Prosch, Principal Deputy Assistant 

Secretary of the Army (Installations and Environment), and William Armbruster, Deputy Assistant 

Secretary (Privatization and Partnerships). 

Prosch, who became Principal Deputy Assistant Secretary in June 2001, was a veteran of both 

Figure 6-1. RCI family housing, 

Fort Belvoir, Va.

Courtesy of Clark Realty Capital.
128 Privatizing Military Family Housing 129

CHAPTER SIX

Implementing the RCI Pilot Projects, 2001–2005

the Vietnam and Desert Storm conflicts and had 

been garrison commander at Fort Polk. He retired 

as a colonel in the Army after serving for 31 years. 

Armbruster, who was appointed to his newly created 

position by Fiori, was a graduate of the College of 

William & Mary, had served for 26 years in the Navy, 

and had real estate experience through previous 

service with the City of Emporia, Virginia, for which 

he developed a revitalization plan. He also served as 

director of the Fort Pickett Local Reuse and Redevelopment Authority after the Army designated 

Pickett for closure under its 1995 Base Realignment 

and Closure (BRAC) plan. Although Fiori still maintained oversight of the RCI program, Prosch and 

Armbruster assumed the main responsibility for 

it. According to Armbruster, the fact that the U.S. 

Army had created the position of Deputy Assistant 

Secretary for Privatization and Partnerships showed 

“the importance and emphasis the Army is placing 

on privatization initiatives,” especially housing.1

Under Prosch and Armbruster’s leadership, the 

programs at Forts Hood, Lewis, and Meade progressed to the actual transfer of housing into private 

hands. The Army, at the behest of Congress and in 

response to the Secretary of Defense’s goal to eliminate inadequate housing by the year 2010, issued a 

family housing master plan in the summer of 2000 

and revised it in 2001. Required under the Military Construction Appropriations Act of 2001 (P.L. 

106-246), the master plan explained how the Army 

would meet the Secretary of Defense’s goal. According to the October 2001 version, the Army planned 

on using the three-legged stool of traditional 

military construction, privatization, and elimination of out-of-pocket housing expenses to meet the 

goal, which by then had been moved forward by the 

Bush administration from 2010 to 2007. The Army’s 

master plan predicted that by the end of 2005, 

approximately 52 percent of its worldwide inventory 

of 111,228 homes would be privatized, including 20 

installations in Fiscal Years (FY) 2002 and 2003.2 

Ultimately, the Army was the only service to meet 

the Office of the Secretary of Defense’s (OSD) goal 

of getting all of the required homes built, primarily 

using privatization, by 2010. As of 2010, the Army 

had privatized 98 percent of the housing inventory 

in the United States, totaling 85,424 homes.3

In 2002, the Army also created a new organization under the Office of the Assistant Chief 

of Staff for Installation Management (OACSIM) 

with authority over installations—the Installation 

Management Agency (IMA). Conceived as a way 

to streamline the management of Army installations, the IMA consolidated responsibility for most 

U.S. posts in one organization. Before its creation, 

in the words of Deputy Assistant Secretary of 

the Army (Installations and Housing) Joseph W. 

Whitaker, the Army “had fifteen major commands 

doing installation management fifteen different 

ways.” With the establishment of the IMA, “now 

we have one agency doing it one way.”4 The IMA 

was headquartered in Arlington, Virginia, and had 

oversight of “all facets of installation management, 

such as construction, family care, food management, environmental programs, well-being, logistics, public works and installation funding.”5 

With this reorganization, the Army assigned 

two commanders to an installation: a senior mission commander (usually a general), responsible 

for military tactics, and a garrison commander 

(usually a colonel), who had oversight of installation operations under the direction of the IMA. 

Because the RCI Program Office was already 

directly under the Secretariat, it did not experience 

much change with the establishment of the IMA, 

but the agency’s creation highlighted the increased 

emphasis that the Army was placing on ensuring 

that installations were well managed.6

In the meantime, all three of the RCI pilots 

were in the process of transferring family housing to the private partner, a task completed by the 

end of 2002. The following sections discuss the 

implementation of RCI at Fort Carson and at the 

pilot projects. Fort Hood had a relatively smooth 

transition, while Fort Meade experienced greater 

difficulty. Fort Lewis also had some bumps along 

the road. The Fort Carson project, meanwhile, 

had its own set of issues as it continued down the 

RFP/contract path. The launch of privatization at 

the pilot installations revealed some of the potential problems that the Army might face at other 

installations and helped the Army leadership make 

necessary adjustments to the RCI program.

Fort Carson (Colorado)

Although not an RCI pilot program, Fort 

Carson’s contract-based Capital Venture Initiatives 

(CVI) program still offered many lessons for the 

Army, especially since it was the first installation to 

undergo privatization. Fort Carson faced jurisdictional issues with which other installations would 

have to grapple, and its experience showed that a 

good working relationship with the developer was 

essential for privatization to succeed. Although 

the original developer had to sell its share of the 

partnership because of the parent company’s 

bankruptcy, Fort Carson’s program experienced 

a smooth transition to another partner, indicating that privatization could overcome significant 

hurdles in the housing development process.7

In November 1999, the Army transferred operations at Fort Carson to developer J.A. Jones. At 

the time, contract administration of the program 

had been transferred from the U.S. Army Corps of 

Engineers (USACE) to Fort Carson. Privatization at 

Fort Carson was dictated by a contract rather than 

a partnership and, for at least the first year after the 

transfer, the RCI Program Office did not pay much 

attention to Fort Carson’s activities. This suited 

the inclinations of Harrison Cole, who became the 

project’s contracting officer. “I tried to avoid being 

involved with the RCI people or the Washington 

people as much as possible,” Cole recalled, happy 

to administer the contract the way that the Army 

administered other contracts. But by the summer of 2000, central Army leadership had begun 

to focus more on Fort Carson, in part because the 

installation was the only privatization project that 

had actually transferred to private ownership and 

commenced building houses.8 It was then that 

Army leadership began to consider Fort Carson as 

part of the RCI program and abandoned reference 

to it as a CVI project.

One of the major issues that Fort Carson faced 

as the first to privatize was determining who had 

jurisdiction over private housing. For example, 

Figure 6-2. Geoffrey Prosch, 

Principal Deputy Assistant 

Secretary of the Army for 

Installations and Environment.

Courtesy of RCI Office.

Figure 6-3. William 

Armbruster, Deputy 

Assistant Secretary of the 

Army for Privatization and 

Partnerships.

Courtesy of RCI Office.
130 Privatizing Military Family Housing 131

CHAPTER SIX

Implementing the RCI Pilot Projects, 2001–2005

installation commanders traditionally had the 

power and responsibility to search houses and 

evict problem residents. Since the housing was 

now privatized, questions arose as to whether 

commanders still had that authority. Fort Carson’s attorneys reached the conclusion early in the 

program that “there might be legal authority” for 

commanders to do searches and evictions, “but just 

practically speaking it would be better not to.”9

 For 

searches, it was necessary to have authorization 

from a military judge before a commander could 

go into a resident’s home. In terms of evictions, 

the contractor, under the terms of the contract, 

had the right to evict residents. But that raised 

the question of which court had jurisdiction 

over such evictions since Fort Carson was under 

federal authority and “there [was] no federal law 

in landlord/tenant relations.”10 Fort Carson’s legal 

department eventually decided that the McGlinn 

Doctrine applied, which stated, according to Fort 

Carson attorney Russ Hamilton, that “the state 

law at the time the federal government takes over 

jurisdiction continues to apply unless it’s inconsistent with federal law.”11 In the case of Fort Carson, 

this meant that those laws that were in effect in the 

1940s would apply. Facing that situation, Fort Carson’s legal department rewrote the landlord-tenant 

lease to state that landlord-tenant relations were 

subject to current Colorado law, as long as that law 

did not conflict with federal law or Army regulations. Evictions were thus subject to state law and 

were litigated in the local courts. If a resident 

refused to move out even with a court order, then 

the installation commander could eject the individual from the base because the commander had 

the authority to prohibit the presence of specific 

individuals on the installation.

As privatization progressed at Fort Carson, 

new and renovated homes quickly came on line. 

According to the Fort Carson contract, J.A. Jones 

would construct 840 new homes and renovate 

1,823 in the five-year initial development period of 

the project. Construction of the new homes began 

in March 2000 and the first soldiers moved into 

new residences in October 2000. By April 2001, 108 

new houses had been built, 257 were in the process 

of construction, and 76 had undergone renovation. 

J.A. Jones’s plan was to complete 20 new homes 

and renovate 40 houses every month “until the 

renovation and construction phases of the project are complete.”12 As new housing development 

got underway, J.A. Jones monitored residents’ 

satisfaction with privatization, even though the 

company’s contract did not tie incentive fees to this 

performance measure. J.A. Jones operations and 

maintenance staff consistently scored excellent 

ratings on resident surveys, and the occupancy rate 

was generally above 90 percent (although at times 

when several homes were off-line for renovation 

purposes, it dipped below 90 percent).13 

The Fort Carson RCI office personnel and 

J.A. Jones staff managed to forge a good working 

relationship. One area in which the relationship 

worked well was office space. After the transfer of 

housing, Fort Carson Family Housing office staff 

(the partner) assumed they would need to work out 

of a trailer or an empty building on the base. Ron 

Hansen, project manager for J.A. Jones, recalled 

that there was even some discussion about whether 

the Army could legally provide any space for the 

partner because it was a private entity. However, as 

soon as he arrived on the base, Carson’s RCI program manager said, “No, we’re working together on 

this,” and gave Hansen half of his office. According 

to Hansen, this collaborative attitude helped make 

the Fort Carson project a success.14 

However, an educational process still had 

to occur with residents as to how privatization 

operated. According to Jerry Stafford, a community manager at Fort Carson and a former soldier 

himself, residents “weren’t used to paying rent,” so 

they had difficulty understanding why their Basic 

Allowance for Housing (BAH) went to the developer. As at other installations, “haves” and “havenots” were present at Fort Carson. Specifically, 

higher-ranking soldiers wondered why they were 

paying more (since the rent was based on the BAH) 

for the same kind of housing as soldiers from the 

lower ranks lived in. The key, Stafford explained, 

was educating soldiers that they had “to look at the 

big picture down the road.” In the future, “We’re 

going to develop and build better housing that’s 

going to be more suited for your rank based on your 

pay rate,” Stafford informed officers, but “getting 

that across was kind of a challenge.”15 In fact, getting 

this point across turned out to be a major challenge 

that the RCI program faced at every Army installation during the shift to privatization.16

Because of higher-than-expected BAH rates, 

the project produced a very favorable net operating income in its initial years—one that exceeded 

projections.17 Despite the initial successes of Fort 

Carson Family Housing, the Army had to find a 

new developer-partner for the project because the 

parent company of J.A. Jones, Philipp Holzmann 

AG, filed for bankruptcy in March 2002, and J.A. 

Jones itself filed for bankruptcy in September 2003. 

In November 2003, GMH Military Housing purchased J.A. Jones’s share of the project and became 

the Army’s new privatization partner. (GMH was 

already the partner at Fort Stewart/Hunter Army 

Airfield in Georgia, Fort Hamilton in New York, 

Walter Reed Army Medical Center in Washington, 

D.C., and Fort Detrick in Maryland.) This was a 

scenario that Congress had frequently asked about 

in privatization hearings. What would happen if 

the developer went bankrupt? Would project assets 

be seized? Would the project itself end? In the case 

of Fort Carson, neither of these scenarios occurred.

According to Harrison Cole, the contract with 

J.A. Jones had a “firewall in place that didn’t allow 

them to touch this project [as] part of the bankruptcy”; therefore, no project assets were in danger 

of going to creditors. In fact, in a privately arranged 

sale fewer than 60 days after the filing, GMH bought 

out J.A. Jones’ interest in Fort Carson Family Housing LLC, and the project continued unhindered. The 

Figure 6-4. New RCI home at Fort Carson.

Courtesy of Balfour Beatty Communities.

Figure 6-5. Groundbreaking for Iroquois Village during 

Phase II of family housing privatization at Fort Carson. Ivan 

Bolden is on the left.

Courtesy of Jerry Stafford, Fort Carson, Colorado.
132 Privatizing Military Family Housing 133

CHAPTER SIX

Implementing the RCI Pilot Projects, 2001–2005

Army ensured that the financial and legal aspects of 

the transition were transparent to all involved.

Philip Grone, Principal Assistant Deputy 

Undersecretary of Defense for Installations and 

Environment, explained, “The project never 

skipped a beat and continues to provide affordable, quality housing to the military families at 

Fort Carson.”18 As GMH assumed property management and construction at Fort Carson, it changed 

relatively little of what J.A. Jones had put into 

place. One of the few differences was that GMH 

decided to assume lawn maintenance for residents, even though it increased operational costs. 

Many Fort Carson residents did not even know 

that the ownership transition had occurred. Ivan 

Bolden, who supervised the Fort Carson project 

from the Washington, D.C., RCI Program Office, 

came to Fort Carson and went “door-to-door to 

talk to people, [but] people had no idea there was 

a bankruptcy going on.”19 The smoothness of the 

transition convinced Grone that “We have the right 

financial and legal structures in place to walk the 

fine line of maintaining private-sector risk while 

still protecting government interests.”20 

A major change for the Fort Carson housing 

program came in December 2005, when the Army 

decided that Fort Carson needed to convert from 

a contractual relationship to a partnership with 

GMH. The “conversion” brought the installation 

into line with the rest of the Army’s RCI program 

and portfolio. “They [the RCI Program Office] 

wanted everybody to be the same,” Dean Quaranta, Program Analyst for Fort Carson’s Housing 

Division, remembered. Individuals in both the 

Office of the ASA, I&E and the RCI Program Office 

worked with Fort Carson personnel on the transition from contract to partnership, which cost 

approximately $1,000,000 to implement but which 

proceeded without major problems.21

In November 2005, Fort Carson had a new 

Housing Market Analysis (HMA) completed in 

response to the restationing of additional soldiers 

as part of BRAC 2005. The study revealed that, 

because of projected additions to Fort Carson, the 

project needed to build another 1,023 new homes. 

GMH ran the numbers and discovered that it would 

not be able to get financing for anything above 650. 

So in coordination with the RCI Program Office 

in Washington, D.C., GMH decided that Phase II 

of privatization at Fort Carson would consist of 

building 404 new homes by February 2010 to fill 

the need at least partially. At that time, Fort Carson 

became the first RCI site to enter its second phase 

of installation construction and renovation.

Fort Carson Family Housing, LLC, also became 

the first privatization project to place all residents 

under the Resident Responsibility for Utilities Program. The program set a baseline average monthly 

utility usage for residents based on their housing 

type. Residents who conserved energy received 

rent credit or a check from Fort Carson Family 

Housing, while residents who failed to take conservation measures were required to pay for excess 

usage. Actual billing for gas and electricity under 

the program began in September 2006. Since then, 

residents have voiced few complaints about the 

program, which is currently being rolled out at all 

RCI locations.22

By June 2007, privatization at Fort Carson 

had produced 841 newly constructed homes, 1,823 

renovated homes, and plans for an additional 

404 new homes. Privatization had apparently 

succeeded at Fort Carson and, as the Army’s first 

privatization program, it influenced many of those 

that followed. As one report indicated, Fort Carson 

had numerous military and congressional visitors 

throughout its development. One lesson learned 

from the project was to not “underestimate the 

interest Privatization would bring and the time it 

would take to address government agencies’ desires 

and requirements.”23 

Fort Hood (Texas)

Fort Hood was the first pilot to go through 

privatization entirely as an RCI project. Like Fort 

Carson, it faced new and unknown privatization situations, but once Fort Hood actually got 

to the point of transferring houses, its program 

proceeded without much incident. The Army 

issued the Request for Qualifications (RFQ) to 

privatize family housing at Fort Hood on August 

6, 1999, and closed the 90-day solicitation period 

on November 5, 1999. On June 28, 2000, the Army 

awarded the Fort Hood RCI project to Fort Hood 

Military Housing LP, a joint venture between Lend 

Lease Actus of Napa, California, and Trammell 

Crow Residential, of Atlanta, Georgia. The scope of 

the final Initial Development Period (IDP) totaled 

$333.8 million, which included loans obtained by 

Fort Hood Family Housing amounting to $211.9 

million, a Lend Lease Actus contribution of $6 million, and the Army’s investment of $52 million. The 

balance of the IDP scope was financed through net 

operating and interest incomes.24

Subsequently, Fort Hood Military Housing 

LP and the Army jointly created a Community 

Figure 6-6. New neighborhood center constructed by Fort Carson Family Housing, LLC.

Courtesy of RCI Office. 
135

CHAPTER SIX

Implementing the RCI Pilot Projects, 2001–2005

134 Privatizing Military Family Housing

Development and Management Plan (CDMP), 

which laid out in detail all aspects of the project, 

including construction, revitalization, maintenance, and operations. The Fort Hood CDMP 

was completed and approved by the FORSCOM 

Commanding General on December 13, 2000. 

However, shortly after completion of the CDMP, 

two events occurred that significantly improved 

the available revenue for the project. The 2001 

BAH rates increased by 9.5 percent, as opposed 

to the 2 percent which the Army had previously 

assumed, and interest rates moved downward. 

An addendum to the CDMP incorporated the 

financing changes wrought by these two events, 

and the new document was approved by the Fort 

Hood and FORSCOM Commanding Generals on 

January 17, 2001.25

A critical element of the Fort Hood Military 

Housing agreement was the Army’s equity contribution of $52 million to cover an anticipated development gap. The project could not have proceeded 

without these funds. The MHPI Act authorized the 

services to make contributions to defray the cost 

of projects, as long as the contributions did not 

exceed a designated percentage of the total cost of 

a project. Army staff began to call these thresholds 

the “33 percent rule” and the “45 percent rule,” 

both of which were mandated under Title X, Section 2875 of the U.S. Code.26 As the name suggests, 

the 33 percent rule required that government cash 

contributions to RCI projects not amount to more 

than 33 percent of the overall development cost of 

a project. Likewise, the 45 percent rule required 

that cash contributions to RCI projects, plus the 

value of the conveyed assets, stay below “a ceiling of 45 percent ... when compared to the overall 

scope of the project.”27

Although allowed for in the MHPI authorities, 

both the White House Office of Management and 

Budget (OMB) and the U.S. Department of Treasury raised questions about the financial structure 

and tax implications of the Fort Hood financial 

agreement and thus were reluctant to give their 

approval. The OMB argued that the financial and 

partnership structures made Fort Hood Military 

Housing look too much like a government entity, 

rather than a private-public project in which the 

Army was the limited partner.28 In January 2001, 

Treasury officials expressed the concern—in regard 

to potential loss of federal tax revenue—that 

“the structure of the deal with the Special Purpose Entity [Fort Hood Family Housing] may not 

conform to the spirit of the law, even if it conforms 

to the letter of the law. When the government 

invests in private sector business, the government’s 

action should be above reproach.”29 At the heart 

of the matter was the danger that if the Internal 

Revenue Service determined that “the Army’s share 

of the appreciation cannot be used by the Special 

Purpose Entity to reduce its tax bill, the Army 

could be viewed as involving itself in a scheme to 

permit a private concern to avoid paying taxes.”30

Ted Lipham, RCI program director, responded that 

the tax structure of the Fort Hood agreement was 

legal, tax neutral, and “revenue positive” for the 

U.S. Treasury. He explained, “The plan is structured to allow legal tax deferral, as opposed to tax 

avoidance, and the Army’s participation in the 

project is tax neutral ... [and] none of the private 

sector partners [is] using low income tax credits 

to finance the project, taking depreciation tax 

benefits on the government direct loan, nor taking benefits above the amount of private debt and 

equity capital invested in the project.”31

Fortunately for the future of Army housing 

privatization, the OSD supported the Army’s 

position regarding these financial and legal 

issues, clearing the way for Congress to approve 

the Fort Hood Family Housing CDMP in May 

2001. The Army’s ability to overcome these financial hurdles permitted the Fort Hood housing 

privatization to proceed and, perhaps of greater 

long-term importance, resolved several issues 

that had the potential to halt the entire privatization endeavor before the RCI program had made 

significant headway.

With the financing in place for the Fort Hood 

project, the partner, Fort Hood Military Housing LP, began implementing plans laid out in the 

CDMP. The Fort Hood Family Housing CDMP 

proposed a five-year initial development period 

that would include construction of 973 new fourbedroom homes, conversion of 630 two-bedroom 

“stacked” apartments to 315 four-bedroom townhouses, conversion of 760 three-bedroom and fourbedroom homes to two-bedroom and three-bedroom homes, respectively, and demolition of 368 

homes.32 Fort Hood Family Housing also proposed 

to build new community centers in Fort Hood’s 

neighborhoods, and called for the project to obtain 

Installation Status Report (ISR) “Green status” 

for all homes by 2010.33 At that time, only 1,214 out 

of 5,622 homes on the installation were classified 

as “adequate,” that is, “ISR green.” The Fort Hood 

RCI project included the operation, maintenance, 

renovation, and replacement of the existing inventory and new construction resulting in an eventual, 

end-state inventory of 5,912 homes.34

Fort Hood Family Housing proposed constructing an additional 593 homes and renovating or 

improving 5,319 homes in the years following the 

initial development period. The CDMP outlined 

that all cash proceeds from the project, including all “debt, equity, BAH, interest income, etc.,” 

would go into the project’s lockbox accounts and 

that each year Fort Hood Family Housing would 

develop an annual operating budget, approved by 

its Major Decisions Committee (consisting of Army 

Figure 6-7. Construction of RCI housing at Fort Hood, Tex.

Courtesy of RCI Office. 
136 Privatizing Military Family Housing 137

CHAPTER SIX

Implementing the RCI Pilot Projects, 2001–2005

and Actus Lend Lease representatives). Each year 

Fort Hood Family Housing would review its “asset 

condition report and capital works program,” and if 

it found that it had more available funds than estimated in its original pro-forma analysis, it would 

consider “accelerating improvements and replacements, adding amenities and recreational facilities, 

addressing issues not originally anticipated, and 

paying down existing debt.”35 

Although the CDMP received congressional approval in May 2001, the actual transfer of 

housing did not occur until October 1, 2001.36 

RCI officials had initially estimated that 90 days 

would be sufficient for the transfer to occur, but 

at Fort Hood some extenuating circumstances 

delayed the process. First, the developer discovered 

that excessive levels of the insecticide chlordane 

contaminated the ground where family housing 

was located. Because of the environmental concerns, transfer could not occur until the Army had 

produced testing and remediation plans. Second, 

the terrorist attacks that destroyed New York City’s 

World Trade Center on September 11 sent financial 

markets into a tailspin, which delayed the financial closing of the project. Both of these situations 

delayed the transfer until October 1.37 

As part of the transfer, the Army formalized 

the Fort Hood Family Housing Limited Partnership 

(LP). After the transfer, Fort Hood Family Housing 

was able to begin the construction and renovation 

outlined in the CDMP, while also assuming property management duties, such as customer service, 

maintenance, and supervision of soldiers moving 

in and out.38 On November 12, 2001, Fort Hood held 

an RCI groundbreaking ceremony and the project 

was officially under way.39 

As the first RCI pilot project to transfer housing to the partner, Fort Hood was operating in 

uncharted waters. The effect of privatization on 

Hood’s Family Housing Office of 47 employees 

posed one of the first challenges. Based on the 

Integrated Process Team’s (IPT) directive on the 

size of family housing offices, discussed earlier, 

as well as guidance provided in the Army Family Housing Master Plan,40 the Department of the 

Army determined early in 2001 that Fort Hood 

would need only 20 people after the transfer. But 

as a 2002 audit report revealed, the installation 

commander questioned whether that number 

of people could provide sufficient service to Fort 

Hood families.41 As Carol Anderson, who worked 

in the housing office, remembered, Army headquarters wanted to eliminate “a whole lot of tasks 

that [were] taking care of soldiers.” Claiming that 

Hood soldiers needed a variety of services because 

more than 80 percent of the installation’s service 

members were E-6s or below who had experienced 

multiple deployments, Hood officials requested 

that FORSCOM allow it to employ 26 individuals 

to perform various tasks. These would include offpost housing services, implementing the Deposit 

Waiver Program (whereby the Army worked with 

off-post landlords to ensure that soldiers were 

not charged security deposits), acting as liaisons 

with community housing activities, and providing 

counseling services to soldiers delinquent in their 

rent payments. FORSCOM, however, refused to 

grant a waiver, although it did allow Fort Hood to 

staff its office with 26 individuals, as long as Fort 

Hood paid for it. Still, when the transfer occurred, 

the housing office was drastically reduced.42 

In addition to personnel cuts, Fort Hood prepared for the transfer by examining what housing 

functions RCI would privatize. These included 

housing maintenance and waste management. 

The contract for maintenance expired in December 2000, but because the transfer of housing did 

not occur until October 2001, Fort Hood negotiated monthly extensions to the contract. This 

arrangement enabled it to provide uninterrupted 

family housing services without paying contract 

termination fees.43 

Once the transfer occurred, Robert Erwin, 

Fort Hood’s housing manager, and Barbara Sincere, the RCI Portfolio Manager, used a Performance Management Plan to track incentive fees 

for construction, property management, and 

quality of life, as mandated by the CDMP. These 

incentive fees were similar to traditional plans 

utilized in other federal and Army contracts, in 

which contractors received additional pay based 

on their performance on predefined goals and 

metrics.44 The partner’s performance was assessed 

through resident and Army evaluations, the 

results of which were tabulated in a database and 

assigned points. The points earned were then 

reviewed on a quarterly basis and the developer 

received an incentive fee based on its points.45 

Erwin monitored the incentive fee performance through weekly reports. After reviewing 

these reports, Erwin would meet with the Fort 

Hood Family Housing project director to discuss 

any particular area falling below the rating of 

“outstanding” and would also conduct a quarterly 

Figure 6-8. Signing ceremony at Fort Hood that initiated the transfer of family housing to RCI 

partner Actus Lend Lease in August 2000. Front row (left to right): Lieutenant General Leon LaPorte, 

III Corps and Fort Hood Commanding General; Mahlon “Sandy” Apgar, IV, Assistant Secretary 

of the Army for Installations & Environment; Peter Koziol, CEO, Actus Lend Lease. Back row (left 

to right): General John W. Hendrix, Commanding General, FORSCOM; U.S. Representative Chet 

Edwards (D-Tex.); General Eric Shinseki, Chief of Staff, Army.

Photograph by John Byerly. Courtesy of Department of Defense.
138 Privatizing Military Family Housing 139

CHAPTER SIX

Implementing the RCI Pilot Projects, 2001–2005

assessment to follow up on any identified issues. 

Constant communication and reports from the 

field enabled the partnership to address any new 

or imminent issues that might cause a drop in 

performance. “I’m happiest when my partner is 

achieving 100 percent of his performance incentive 

fee,” Erwin noted. “I’ve had input to what’s important and my desire is to make it achievable, but to 

set the bar up high enough that ... when we say it’s 

outstanding, we know that it’s outstanding.”46 

Partner performance was also evaluated 

through resident surveys, focus groups, and town 

hall meetings. Fort Hood Family Housing generally received high marks from residents, but a few 

criticisms did emerge. For example, some soldiers 

felt that the partnership did not move quickly 

enough to improve housing on the base. According 

to Marvin Williams, director of property management for Fort Hood Family Housing, a “have” and 

“have not” syndrome fueled this perception: when 

one resident saw a neighbor living in a new or 

renovated home, he or she wanted one as well and 

was disappointed when one was not forthcoming. 

Patience was the key, Williams explained, as Fort 

Hood Family Housing could not “get to [all the 

housing] all at once.”47 

While some other privatization pilots (and 

eventually other RCI projects) struggled with 

communication problems between the developer 

and the installation’s RCI office, the partnership 

at Fort Hood was solid. In part, this was because 

both the RCI Program Office and Fort Hood 

Family Housing’s office were located in the same 

building, which facilitated communication.48

According to Sincere, the “most successful partnerships” were those in which the Army and its 

partners shared a building: “When they’re not in 

the same building, it almost always [creates] that 

adversary kind of mentality.”49 

In addition, at least in the mind of Fort Hood 

Family Housing Asset Manager Jim Switzer, the 

close working relationship developed because both 

sides—Actus Lend Lease and the Army—truly 

embraced the idea that this was a partnership 

and not a contractual relationship. “Where that 

relationship is strong,” he explained, “you can have 

disagreements but still work through it and get 

to the right answer.” Fort Hood Family Housing 

Project Director Mack Quinney agreed. The partnership attitude led both sides to ask, “How do we 

make this work to the best advantage for the quality of life for the soldiers,” and cooperation ensued 

without any kind of territoriality.50 

The success of the partnership was also due 

to the fact that Actus Lend Lease staff acclimated 

fairly quickly to the military culture at Fort Hood. 

Yet because the garrison commander had to 

look out for the interests of his or her soldiers, 

the Army’s involvement in housing privatization occasionally meant that value decisions took 

precedence over the more business-oriented, 

profit-driven point of view of the developer. As 

one example, when a service member was killed 

in action, the Army allotted the surviving spouse a 

casualty stipend, which included a housing allowance for several months. Even with this stipend, 

the garrison commander asked Actus Lend Lease 

to provide the family with three months of free 

rent, essentially allowing the spouse to keep the 

BAH for three months. Although such a concession had an adverse economic effect on Actus Lend 

Lease, the company agreed to the request, believing that it was “the right thing to do.”51 

On the flip side, the Army had to become accustomed to the fact that its partner was a for-profit 

company. Quinney believed that this perspective 

was one that military leadership and soldiers had a 

hard time understanding, but Erwin embraced the 

concept and did “an admirable job [of] instilling in 

his folks that perspective.” The for-profit aspect also 

benefited the soldiers, at least according to Quinney 

and Switzer, as Actus Lend Lease had to provide the 

best services possible to soldiers so that they did not 

choose to live off post.52 

Realizing that soldiers had a choice of where 

to live, Actus Lend Lease, in conjunction with the 

Fort Hood Family Housing team, made it a priority 

to engage Fort Hood residents and to plan activities promoting a sense of community. In 2003, 

Actus Lend Lease began publishing a two-page 

newsletter, entitled Hood Highlights, that provided progress reports on the construction of new 

housing, along with explanations of community 

activities. In June 2004, for example, the newsletter reported that Actus Lend Lease and Fort 

Hood Family Housing had “hosted an enchanting 

evening Wine Tasting Reception for residents of 

Patton Park.”53 Likewise, in August 2005, Fort Hood 

Family Housing sponsored “National Night Out 

Figure 6-9. Lieutenant General Leon Laporte and the 

Honorable Mahlon Apgar, IV (right), speak with reporters 

following the official signing ceremony for the RCI 

Partnership Declaration at Fort Hood, August 2000.

Photograph by John Byerly. Courtesy of U.S. Department of Defense.

Figure 6-10. New RCI housing at Kouma Village, Fort Hood, Tex.

Courtesy of RCI Office.
140 Privatizing Military Family Housing 141

CHAPTER SIX

Implementing the RCI Pilot Projects, 2001–2005

events” that included “free food and drinks, DJ’s, 

and a multitude of games and other activities.”54

Hood Highlights also included information 

about Fort Hood Family Housing personnel, such 

as Leslie Catlin, Ana Roman, Shundilina Black, and 

Kirk Williams, who constituted the management 

team of the Comanche III Village. Both Catlin 

and Williams, the newsletter stated, were former 

active-duty soldiers, while Roman and Black were 

spouses of soldiers serving in Iraq. The fact that 

neighborhood management teams had a military 

background enabled them to understand resident 

concerns and the military culture in general more 

quickly. “The entire staff was great and went above 

and beyond any of my expectations,” one Comanche III resident said. “Thank you for employing 

such nice people.”55 

One of RCI’s major selling points at Fort Hood 

was the benefit to the local economy. In 2001, the 

year privatized housing construction began at 

Fort Hood, the Fort Hood Family Housing team 

anticipated subcontracting at least $100 million 

of work to locally owned businesses during the 

five-year initial development period. Local subcontractors were needed for traditional construction 

work, such as framing, plumbing, roofing, and air 

conditioning, as well as for services such as pest 

control, carpet cleaning, and vehicle maintenance 

for primary contractors.56 By January 2002, the percentage of contracts awarded to local businesses 

was even greater than initially predicted—Fort 

Hood Family Housing had awarded 84 percent of 

the initial contracts to local businesses, with 64 

percent going to small local businesses.57 

Despite the success of RCI at Fort Hood, some 

problems did emerge. One of these was the economic effect that privatization had on the Killeen 

Independent School District, an issue to which 

U.S. Representative Chet Edwards (D-Texas) gave 

specific attention. Edwards wanted to have new 

schools constructed in order to accommodate the 

increase in the number of children living on base 

at Fort Hood. He preferred this alternative to busing students to other areas of town. However, using 

RCI funds for schools had not been approved in the 

CDMP and required approval by the Office of the 

Assistant Secretary of the Army for Installations 

and Environment.58 The Army’s policy, according to 

one observer, was that “school construction costs 

associated with military housing privatization may 

not be financed as part of the privatization transaction.” But the school district did not have the 

necessary funds either, even though privatization 

actually brought more federal impact aid to the 

Killeen school district. (An increase in the number 

of students residing on federal land allowed the 

district to receive higher levels of funding.) In the 

2001-2002 school year, for example, the district 

received $33 million in federal impact aid, or a total 

of $3,026 per on-post pupil, which was more than 

other school districts received. The district associated with Fort Meade, for example, received $888 

per on-post student, while the Fort Lewis district 

received $2,171 and the Fort Carson district received 

$2,877 per on-post student.59 

Since the Killeen school district was interested in seeing privatization succeed at Fort 

Hood, it had not challenged the Army policy on 

school construction during the time when the 

Army and Fort Hood Family Housing prepared 

the CDMP. Instead, Superintendent Dr. Charles 

Patterson worked with Congressman Edwards’ 

office on Impact Aid Education Construction 

funding. Although the overall numbers of children 

attending Killeen district schools did not increase 

dramatically simply as a result of privatization, the 

geographic distribution of children did shift when 

more families moved on base. Working together, 

Fort Hood and the Killeen Independent School 

District agreed that new housing construction 

and renovations would result in the presence of 

approximately 1,000 more elementary school-aged 

children (grades 1-6) and 632 additional middle 

school students (grades 7-8) on base. The school 

district worked extensively in 2002—the first full 

year of the RCI program at Fort Hood—to ensure 

that the installation’s schools met the state-mandated 22:1 ratio of students to teachers. However, 

the growing population of the base meant that 

the district could achieve this goal only by adding 

unattached modular classrooms at each of the onpost schools. Given the anticipated growth in the 

student population, the school district had to try 

to accommodate the equivalent of two additional 

elementary schools and one additional middle 

school to educate on-post children.60 

In 2002, Killeen Independent School District 

also passed a $100 million bond issue for school 

construction and dedicated $35 million of that 

money to building the schools needed because of 

privatization.61 Constant collaboration between 

the Army, the private developer, and the school 

district ensured that the new schools were located 

in close proximity to new RCI housing and neighborhoods, facilitating the sharing of utilities. For 

example, when installing a water line to one of the 

new schools, Actus Lend Lease used a line large 

enough to accommodate both the school facility 

and housing in the area. As a result of Actus Lend 

Lease’s collaborative attitude, the school district 

was saved from overspending funds on infrastructure development. In turn, the district saved the 

developer money because it financed a portion of 

that particular water line.62 

Not only did Actus Lend Lease work with the 

local school district on construction, but it also 

collaborated with the school district on improving community relations. This partnership led to 

activities such as an annual Earth Day celebration 

with the neighborhood schools and a golf tournament to benefit the district. In addition, representatives from Actus Lend Lease served as members of 

the Killeen Independent School District education 

foundation board, actively participating in programs that the board initiated.63 The handling of the 

school issue at Fort Hood’s RCI privatization pilot 

highlighted what the Fort Carson pilot program 

had already told the Army—that early community 

Figure 6-11. A community event sponsored by 

Fort Hood Family Housing at Kouma Village, 

Fort Hood, Tex.

Courtesy of RCI Office.

Figure 6-12. Congressman Chet Edwards (third from 

the left), participating in the handover of the key to Kouma 

Village at Fort Hood, Tex.

Courtesy of RCI Office.
142 Privatizing Military Family Housing 143

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contact and information-sharing with school districts were essential to resolving school issues.

As RCI matured at Fort Hood, some managerial changes occurred. For example, in 2003, Trammell Crow withdrew from the partnership after the 

company decided to extricate itself from military 

housing. To replace the property management services that Trammell Crow had offered, the partnership turned to Winn Residential Military Housing 

Services. Winn Residential was a joint venture of 

WinnCompanies and Actus Lend Lease. As of 2008, 

Winn Residential oversaw property management 

and maintenance but maintained a contractual 

relationship with Fort Hood Family Housing rather 

than a complete partnership. Winn possessed no 

equity in the project, leaving Actus Lend Lease and 

the Army as the actual business partners.64

As it had with Fort Carson, the Army made 

it a priority to document lessons learned at Fort 

Hood, with the hope that when another installation underwent privatization, it could avoid some 

of the difficulties that Fort Hood experienced and 

build on Hood’s successes. But sharing lessons 

learned turned out to be problematic. When 

Robert Erwin made a presentation in February 

2002 at a conference on lessons learned, the other 

two pilot programs found it difficult to obtain any 

concrete information about Fort Hood. As Louis 

Bain, who was the first director of RCI at Fort 

Lewis, explained, Actus Lend Lease had sued the 

federal government early in Fort Hood’s RCI program, accusing it of sharing information from the 

Fort Hood CDMP with Fort Lewis. The case was 

eventually dismissed, but the episode dampened 

Fort Hood’s willingness to share its experiences 

with others.

Nor was this an isolated situation. Both Dean 

Quaranta of Fort Carson’s housing office and 

Harrison Cole, contracting officer at Fort Carson, 

were reluctant to share financial information with 

even the central RCI Program Office in Washington, D.C., because, they said, they wanted to 

avoid distributing proprietary information. Such 

reluctance did not contribute to an atmosphere 

of openness. As Bain disclosed, “I never had an 

opportunity to talk to my counterpart at Fort 

Hood about what they were doing and all because 

we were concerned that there would be this perception of impropriety.”65

Despite difficulties with information sharing, 

Fort Hood did offer the other RCI pilots a set of 

legal documents that they could use as templates 

for their own programs. Moreover, the eventual 

approval from the Treasury Department and OMB 

of the Fort Hood CDMP and the Army’s $52 million equity contribution set the stage for the Army 

to work out the complex financial agreements 

essential to the success of other RCI projects.66 Fort 

Hood also showed other installations the successes 

that could occur by establishing a working partnership between the Army and the developer early on 

and locating the developer and the Army housing 

office in the same building.67 

In addition, there were general lessons learned 

that Fort Hood provided to other installations. 

One such lesson was that having a team of people 

in the installation’s RCI housing office who had 

complementary strengths was essential to a thriving operation. “This is big business,” Erwin related. 

“When you’re negotiating ... [a deal in the billions] 

for 50 years, you’ve got to have the right talents at 

the table, because the partners are bringing in the 

best and the brightest that is available across the 

world.” Therefore, it was essential for the government to provide the RCI program with leaders who 

possessed the skills and education to facilitate 

negotiation with the private sector.68 

By June 2006, Fort Hood could report that Fort 

Hood Family Housing had successfully completed 

the initial development period of the project by 

eliminating all inadequate housing. In addition, 

Fort Hood Family Housing had a better-than-estimated financial performance, in large part because 

the Army had increased the BAH at the installation 

to rates higher than foreseen in the CDMP, raising the net operating income of the project. With 

additional money coming into the project, Fort 

Hood Family Housing projected that during the 

first phase of the “Secondary Development Period” 

the developer could replace 232 homes and demolish 586 homes, thus creating an “end-state inventory” of 5,912 homes.69 

Fort Lewis (Washington State)

While RCI implementation went relatively 

smoothly at Fort Hood, Fort Lewis experienced 

difficulties during the transition to privatization.70 Unlike Fort Hood, the partnership between 

the RCI staff at Fort Lewis and the developer and 

property manager was not strong, due in large 

measure to frequent turnover in the Residential 

Communities Office. Fort Lewis also faced fluctuations in the number of homes needed at the 

base, which forced the developer to look for innovative ways to build more homes for less money. 

In addition, a group representing residents with 

disabilities sued EQR/Lincoln, the Fort Lewis 

partner, claiming that their houses were inaccessible and that bureaucratic red tape prevented 

timely improvements to the houses. Although the 

Army believed that many of the complaints were 

without foundation, the lawsuit pointed to the 

Figure 6-13. Residents outside of RCI housing at Comanche III Village, Fort Hood, Tex.

Courtesy of RCI Office.
144 Privatizing Military Family Housing 145

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need to ensure that RCI worked for all soldiers 

and their families.

Preparation of Fort Lewis’s CDMP fell to EQR/

Lincoln and staff in the installation’s Residential 

Communities Office. Work on the CDMP began 

at the end of August 2000 but proceeded slowly. 

Because Lewis was one of the pilot projects, 

neither EQR/Lincoln nor the Residential Communities Office staff had preexistent templates for 

their work. Nor could they obtain ideas from the 

other pilot projects because the lawsuit against 

Fort Hood made all the parties wary. In June 2002, 

Lieutenant General James T. Hill, Commanding 

General of Fort Lewis, addressed this issue in a 

letter to Assistant Secretary Fiori, explaining that 

“We may have done better if we were less restricted 

by the developer’s proprietary concerns about all 

the Community Development and Management 

Plan documents.”71 Later projects were able to take 

advantage of lessons learned by the pilot projects, 

but Forts Hood, Lewis, and Meade essentially 

worked separately in preparing their CDMPs. 

According to Kimberlee Schreiber, managing 

director for Fort Lewis Communities (the partnership between EQR/Lincoln and the Army), Fort 

Lewis’s CDMP was “written with more checks and 

balances and government oversight” than the others.72 Nancy Barnes, housing specialist manager, 

said that Fort Lewis “put everything in [the CDMP] 

that you can think of.”73 

In order to get resident input, Fort Lewis 

established several focus groups and held public 

meetings on the CDMP. It also hosted a weeklong design charette, at which focus groups could 

provide input on neighborhood design options. 

From this, the team developed a concept plan 

that it hoped “honor[ed] the historic legacy of the 

post,” including “the American military traditions 

of dignity, rank and character.” Part of the design 

concept aimed to establish greater connections 

among Fort Lewis’s different neighborhoods by 

using parks, connector streets, bicycle and walking 

trails, and open spaces. The plan also called for the 

establishment of “a strong sense of neighborhood” 

through “patterns of tree-lined streets with sidewalks, residential-scale street lighting, small-scale 

neighborhood parks within convenient walking 

distance and a pleasant, civic character for houses 

facing the streets.”74 

Members of the CDMP team also visited each 

property, conducting a review of all of the exteriors and “a statistically relevant portion” of the 

interiors in order to discover their condition. The 

team found that in several homes, the Army had 

recently renovated both interiors and exteriors, 

including replacing kitchen cabinets and installing 

new windows and vinyl siding. The team pledged 

to “maximize the benefits that this investment has 

brought to Fort Lewis through its renovation and 

development plans.”75 

One of the stickiest issues in the development of the Fort Lewis CDMP was a reversionary ownership interest in the installation’s land 

held by Pierce County, Washington. When Fort 

Lewis was established as Camp Lewis in 1917, the 

citizens of Pierce County “voted to bond themselves for $2,000,000 to purchase 70,000 acres for 

donation to the United States for use as a military 

base.” The deed for this land was executed in 1919 

and included a reversionary clause that if the 

land was no longer used for military purposes, 

it would revert to Pierce County’s ownership. In 

1948, Pierce County passed a resolution requiring the county’s consent to any leases, licenses, 

or easements on land subject to the reversionary 

interest. In the late 1950s, the Army and Pierce 

County entered into an agreement by which the 

reversionary interest on specific land was terminated and some land was traded, in order to allow 

investors to secure funding to construct housing 

under the Capehart program.76 

In the course of the CDMP preparation, the 

reversionary interest came up again. In order for 

the partner to secure its funding, it needed to prove 

clear title to the land or else the government would 

have to provide a loan guarantee. In the event that 

Fort Lewis closed and the reversionary interest 

remained in force, Pierce County would own the 

land on which the housing was constructed, a possibility that made lenders wary of providing money 

to a private developer for RCI development. This 

issue was ultimately resolved through a land swap, 

whereby the county’s reversionary interest was 

transferred to another piece of Fort Lewis land not 

needed by RCI. The county then released its claim 

on Fort Lewis land slated for privatized housing 

development. That way, if the base closed, the land 

on which the housing was constructed would have 

no legal encumbrance upon it.77 

Another part of the CDMP was to ensure 

that impacts on natural resources were either 

avoided or mitigated through the completion of 

an Environmental Assessment, as required by the 

National Environmental Policy Act of 1969. As one 

document explained, “When initially setting up 

the housing footprint ... the RCI program evaluates existing resources and sites within the footprint to avoid resource impacts that would necessitate preparation of an Environmental Impact 

Statement.”78 Although these assessments could 

usually be done expeditiously, delays occurred at 

Fort Lewis in late 2000 when then Assistant Secretary Apgar, in consultation with EQR/Lincoln 

and Fort Lewis, decided to change the construction footprint at the installation. As Apgar later 

remembered, he believed that the unique topography of Fort Lewis needed to be emphasized more 

in the plan. He recalled,

Figure 6-14. An artist’s rendering of RCI housing and neighborhoods at Fort Lewis, Wash.

Courtesy of RCI Office.
146 Privatizing Military Family Housing 147

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Fort Lewis is a gem, one of the Army’s real 

estate crown jewels, because of its setting with 

hills rising above the Puget Sound, natural 

valleys, crests and corridors. So the design 

challenge there was to respect the contours, 

work within the topography itself, and 

emphasize the water views. I recognized that 

if we were a private enterprise, we’d consider 

those sites to be very high value, reserved for 

recreation and other public uses and for certain 

housing. Then, inner sites, away from the 

water and closer to highways, would be natural 

locations for logistics, maintenance, major 

shopping and community facilities.79 

In response to Apgar’s ideas, EQR/Lincoln and 

the Army decided to change the location of some 

of the new home construction on the installation. 

The alteration of the footprint, however, changed 

the scope of the Environmental Assessment, 

requiring additional work and delaying its completion. Since the Environmental Assessment needed 

to be approved before the CDMP could be finalized, the delay pushed back the completion of the 

CDMP. In February 2001, the senior mission commander, Lieutenant General Hill, finally approved 

the assessment, finding “no significant direct, 

indirect, or cumulative impacts on the quality of 

the natural or human environment.”80

Because of these delays, the Army missed the 

original May 2001 deadline for CDMP approval. 

Indeed, not until that month did it submit a Fort 

Lewis CDMP to the Office of the Secretary of 

Defense (OSD) for review. Here the CDMP experienced further delays, as the OSD’s Competitive Sourcing and Privatization Office expressed 

concern that the CDMP did not guarantee that 

Fort Lewis’s existing inadequate housing would 

be eliminated by 2010. In addition, the office 

explained, the CDMP had provisions allowing the 

partner to walk away from the deal, thus shifting 

the risk from the partner to the Army. Once Fort 

Lewis changed these two things, the OSD provided its acceptance and passed it on to the OMB. 

The Fort Lewis deal required no monetary contribution by the government; therefore, the OMB 

did not score the project and it did not encounter 

the difficulties that Fort Hood experienced in its 

OMB review. 

Don Spigelmyer, former RCI director, touted 

the program:

This is a key, positive aspect of public-private 

ventures that the RCI program provided and 

a goal for any future government privatization 

initiatives. It shows that the government can 

leverage its assets of land and structures, plus 

a potential future income stream, to bring in 

billions of private-sector dollars to provide 

homes and infrastructure for military families 

at no additional cost to taxpayers. This type of 

collaboration can work in many other areas. 

It highlights what government and private 

industry can accomplish when they work 

together. I believe we are going to need this 

type of synergy to stay competitive in the future 

global economy.81

Congress approved the Fort Lewis CDMP in 

December 2001.82 In its approved form, the CDMP 

proposed that EQR/Lincoln would build 953 new 

houses and renovate 2,610 homes within the first 10 

years of the project, although the 366-unit housing 

deficit would only be eliminated after year eight. 

In addition, during the 50 years of the partnership, 

EQR/Lincoln would complete three renovations of 

historic home interiors and would ensure that the 

“end-state average age” of all others was approximately 24 years. EQR/Lincoln would also construct 

two community centers within 10 years, would 

either replace or upgrade all of the installation’s 110 

playgrounds, and would build a centrally located 

park.83 The CDMP also stated that EQR/Lincoln 

would work so that all Fort Lewis family housing 

obtained ISR Green Status. RCI Housing Manager Louis Bain explained that the objective was 

to “negotiate the highest-level quality standard of 

housing for the Army at Fort Lewis and make sure 

that it’s going to survive for the future.”84 

In addition, the CDMP outlined the way in 

which Lewis’s RCI project would be governed. The 

Army and EQR/Lincoln would enter into an LLC, 

called Fort Lewis Communities, of which EQR/

Lincoln would be the managing member. This 

meant that its employees would conduct the dayto-day management of the project, including putting together annual project budgets.85 The Army’s 

Residential Communities Office would work in 

tandem with EQR/Lincoln, and Anton Tramp, the 

RCI Portfolio Manager in Washington, D.C., would 

provide oversight.

After Congress gave its approval, Fort Lewis 

began a transition period during which financial and legal documents were negotiated prior 

to the transfer. This period, scheduled to last 90 

days, allowed EQR/Lincoln to prepare to assume 

responsibility for on-post housing maintenance 

Figure 6-15. Proposed design plan for the Beachwood neighborhood at Fort Lewis, Wash., 

incorporating some of the installation’s natural features, such as the woodland and the shores of 

American Lake into the design.

Courtesy of RCI Office.
148 Privatizing Military Family Housing 149

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and management, while also permitting the Fort 

Lewis housing office to restructure and prepare for 

its altered role. EQR/Lincoln worked to get soldiers 

to sign their housing leases so that the BAH funds 

would be automatically paid to the partner once 

the transfer of housing was complete. The partner 

and the Army also held community update sessions to inform residents of the upcoming changes 

and to answer questions about how housing would 

operate once EQR/Lincoln assumed control.86 

Transfer of the housing was initially scheduled 

for March 1, 2002. In January 2002, however, the 

transfer was delayed when EQR/Lincoln discovered 

mold in some of the homes. According to EQR/

Lincoln, when it conducted its initial inspection of 

Fort Lewis housing, it found no indication of mold. 

That may have been because of drought conditions 

at the time of the inspection, or because maintenance budget shortfalls led to the repair of mold 

symptoms but not the treatment of the causes of 

mold. Whatever the case, mold was now present 

and discussions commenced over how to address 

the problem. The Lewis case was one of the first 

instances in which the property management community faced the issue of residential mold, and 

little information was available upon which to base 

decisions. Eventually, the two sides agreed to transfer the majority of the homes on April 1, 2002, a 

month later than originally scheduled, and to have 

the Army provide EQR/Lincoln with a contract (to 

be paid out of project funds) to remediate the mold 

in the remaining homes before taking possession 

of them. Approximately 450 homes required remediation, and these were expected to transfer to the 

partner within 60 days of closing.87 

Although mold prevented many Fort Lewis 

units from transferring on April 1, EQR/Lincoln did 

receive a number of historic homes at that time. 

Fort Lewis was the first pilot project to confront 

the issue of how to renovate historic homes to 

meet modern living standards while still maintaining the buildings’ unique historic character, as 

mandated by the National Historic Preservation 

Act of 1966 (NHPA). This act required government 

agencies to help preserve historic resources in the 

United States through three mechanisms. First, the 

law established the National Register of Historic 

Places to list all “districts, sites, buildings, structures, and objects significant in American history, 

architecture, archaeology, engineering, and culture.” Second, Section 106 of the act required the 

heads of any federal or federally assisted project 

to “take into account” the effects of undertakings 

“on any District, site, building, structure, or object 

that is included in or eligible for inclusion in the 

National Register.” Third, the act created the Advisory Council on Historic Preservation and authorized it and State Historic Preservation Offices 

(SHPO) to oversee the Section 106 process and the 

National Register in a federal-state partnership.88

These provisions meant that whenever a federal 

entity, such as the Army, began an undertaking, it 

had to investigate what archaeological or historical 

resources might be affected, and then consult with 

the SHPOs and the Advisory Council about how to 

avoid or mitigate the consequences. 

To streamline consultation with SHPOs and 

the Advisory Council on Historic Preservation, the 

Office of the ASA, I&E conferred with the Advisory Council in 2000 about what to do with its 

large stock of houses that were approaching the 

age of 50, many of which dated from the Wherry 

and Capehart era. The Army estimated that it had 

approximately 19,000 Capehart and Wherry houses, 

representing about 21 percent of the service’s entire 

housing stock in the United States. With such a 

large number of homes at stake, it was imperative that the Army take measures to streamline 

compliance with the Preservation Act. Negotiations 

with the Advisory Council resulted in the development of a document in May 2002 entitled “Program 

Comment on Capehart and Wherry Era (1949-1962) 

Army Family Housing, Associated Structures, and 

Landscape Features.” Essentially, this agreement, 

which was based on historic context studies of 

Capehart and Wherry housing and included guides 

to preserving design aspects, allowed the Army to 

proceed with renovations or demolitions of approximately 20,000 buildings without going through 

lengthy negotiations with SHPOs.89 

The program comment allowed EQR/Lincoln 

to proceed with renovations of its Capehart housing, most of which was in relatively good shape. 

Prior to privatization, the Army had upgraded 

many of the homes in the Beachwood, Madigan, 

and Davis Hill neighborhoods, which contained 

Capehart-era single-family homes and duplexes. 

However, New Hillside, the remaining neighborhood of Capehart housing, was not in such good 

condition. These homes had partially upgraded 

interior spaces, but still retained their “original 

’60s era aluminum windows and plywood siding.”90 

For other historic houses, the Army had to 

develop programmatic agreements with the appropriate SHPO before renovation or demolition could 

occur.91 Fort Lewis thus consulted with the Washington SHPO and the Advisory Council on Historic 

Preservation on those homes that predated Capehart and Wherry. These negotiations culminated 

in a Memorandum of Agreement that required the 

Army to prepare a National Register of Historic 

Places nomination package for a Fort Lewis Historic District by October 2001 and to document 300 

historic homes in the Broadmoor and Greenwood 

neighborhoods by January 2002.92 Built in the 1920s 

and 1930s, these two neighborhoods served as officers’ housing and were a part of the community that 

the developers designated the Garrison District. In 

most cases, the necessary modifications to these 

homes were minor, and the partner worked hard to 

preserve the historic character of the homes.93 

Including historic houses, Fort Lewis’s CDMP 

goal was 3,982 homes. As the project progressed, 

however, it became clear that more homes would 

be needed because of a projected influx of troops 

to Fort Lewis due to BRAC. In both 2004 and 2005, 

new HMAs were completed, indicating that Fort 

Lewis actually needed 4,954 homes. Since EQR/

Lincoln’s financing was based on a much lower 

number, it had to look for creative ways to finance 

the new development. In one case, EQR/Lincoln 

negotiated with the government to stop converting 

carports into garages on existing homes and used 

the funds originally slated for that purpose to build 

44 additional homes. In other cases, EQR/Lincoln was able to increase its scope thanks to BAH 

increases and the assumption of additional debt.94 

Another way in which the Army proposed to 

address the housing deficit at Fort Lewis was by 

combining privatization at nearby McChord Air 

Force Base, which had a housing surplus, with 

Fort Lewis’s RCI program. This idea, urged by U.S. 

Representative Norman Dicks (D-Washington), was 

first floated in 2004, soon after the Army had successfully privatized housing at the Naval Postgraduate School as part of the RCI project at the Presidio 

of Monterey in California. Fresh from this success, 

leaders wondered whether the same approach could 

work at Fort Lewis. Discussions between the U.S. Air 

Force and the Army occurred throughout 2005 and 

2006. Although the Army was willing to work with 

the Air Force and EQR/Lincoln had no objections to 

combining the two projects, the Air Force expressed 

considerable reluctance. 

One issue was that the Air Force had been 

planning to privatize McChord in combination 
150 Privatizing Military Family Housing 151

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Implementing the RCI Pilot Projects, 2001–2005

with Travis and Fairchild Air Force Bases and it was 

not enthusiastic about retiring McChord from this 

threesome. However, given that Fort Lewis was 

already privatized and EQR/Lincoln was already 

working on the installation, it made little sense 

for McChord to hire a different partner. Another 

concern revolved around the number of homes that 

would be involved. In exchange for allowing its surplus housing to be used, the Air Force wanted the 

Army to build 349 new houses and transfer 90 other 

houses to McChord. Because of project finances, the 

Army could only guarantee the construction of 293 

homes. The 56 others might be renovated, rather 

than new construction. Discussion continued and 

in 2008 the two sides finally reached an agreement, 

transferring a few hundred additional homes to 

the partner in October 2008 and agreeing on the 

construction of another few hundred.95 

In addition to dealing with the greater number 

of required houses, EQR/Lincoln also faced costs 

associated with higher construction standards for 

family housing. In 2002 and 2003, the Army issued 

new minimum construction standards, which, as 

Boyd Lucas, EQR’s Executive Development Manager, explained, “increased bedroom, living areas, 

and patio square footage” requirements while also 

“add[ing] amenities that were considered upgrades 

to the existing level of specifications.” EQR/Lincoln 

had not planned for such upgrades in the original 

CDMP and had to strategize as to how it could 

meet the new requirements while staying within its 

financing. According to Lucas, the “solution was to 

convert our conventional construction to a modular or factory-built product and apply the savings to 

the upgrades.”96 

Modular housing, or housing constructed at 

a factory and shipped to and assembled at a home 

site, had existed in the United States since the late 

1800s. Sears Roebuck Co. was one of the first firms 

to sell prefabricated homes, producing over 500,000 

between 1910 and 1940. When World War II ended, 

modular home sales increased dramatically, in part 

because returning soldiers swelled the demand for 

housing. Yet modular homes carried a negative connotation, as home owners sometimes equated them 

with run-down, cheap mobile homes. As technology 

advanced in the 1980s, modular home builders were 

able to counter these notions by producing larger, 

sturdier, and higher-quality homes.97 

In 2004, EQR/Lincoln and the Army began 

looking in earnest at using modular homes, focusing on Champion Homes of Oregon as a possible 

builder. GMH, the partner at Fort Hamilton, New 

York, had already explored the modular home 

possibility at that installation, and the Office of the 

ASA, I&E had approved the use of modular construction there. Deputy Assistant Secretary Armbruster explained that, with new technology, “the 

result is well built homes with greater efficiency 

and with significant savings.” Anton Tramp, RCI 

Portfolio Manager for Fort Lewis, agreed. “Because 

they are better built,” he declared, “they take less 

maintenance over the years.”98 

Not all were as enamored of the modular home 

proposition, however. Some, such as Joseph Zarelli, a 

Washington state senator, feared that using modular 

Figure 6-16. New RCI housing at Fort Lewis.

Courtesy of RCI Office. Figure 6-17. Lieutenant General Edward Soriano (at right), I 

Corps and Fort Lewis Commander, joins a young Army family 

at a ribbon-cutting ceremony to dedicate a new RCI family 

housing area at Fort Lewis, Wash., in 2002.

Photograph by Michael P. Cullum. Courtesy of U.S. Department of Defense.

homes built in Oregon factories “could potentially 

hurt the local economy with a loss of up to 150-180 

jobs [in traditional home building] over a 5-7 year 

period and impact of $10M-$20M.” Fort Lewis Commander, Lieutenant General Edward Soriano, had the 

same concern. Although he had examined a model 

modular home and was “impressed with the quality 

of construction,” he wanted to make sure that there 

were no negative impacts on the economy. Washington’s U.S. Representative Norman Dicks expressed 

similar concerns.99 

However, EQR and the Office of the ASA, I&E 

were ready to move forward with the program, 

based on the quality of the model homes that they 

had examined and on experiences at Fort Hamilton. Principal Deputy Assistant Secretary Prosch 

talked with Dicks in August 2004 and got Dicks’ 

approval of the program. Prosch then conveyed 

to Lieutenant General Soriano his own and Dicks’ 

support and told EQR to go ahead with the modular construction. Yet Soriano still had doubts and 

told EQR that it could not build the modular 

houses until he gave his approval. This situation 

highlighted one of the issues that sometimes 

developed with RCI: Who had the final authority 

for RCI decisions? Was it the commanding general 

at the installation? Or was it those in RCI and the 

Office of the ASA, I&E? When these questions 

arose at installations, the partner sometimes got 

caught in the middle. In this case, although Armbruster declared that “giving the EQR the green 

light” was “not Soriano’s decision to make,” EQR 

was reluctant to go forward until the commanding general was on board. Fortunately, Soriano was 

soon convinced that modular housing was both 

appropriate and desirable, and EQR began implementing its modular construction plans.100 

For the most part, the modular home construction plan turned out well. Yet the quality 

of the homes sometimes posed a problem. Fort 

Lewis Garrison Commander Colonel Thomas L. 

Knight, for example, informed EQR in 2006 that 

random inspections of already constructed homes 

had uncovered “large cracks (not just hairline 

cracks) along walls and around doors; kitchen and 

bathroom counter tops pulled away from walls; 

and interior doors that would not close properly.” 

Inspectors then looked at modular homes just 

being assembled on the base and found cracks in 

the same places. Given these problems, Knight 

believed that the modular construction was not of 

sufficient quality for his soldiers, and he told EQR 

to stop construction “immediately.”101 

When EQR/Lincoln and the Army contacted 

Champion Homes, Champion informed them that 

the cracks were not due to any “structural deficiency or design issue.” Steve Leedom of Champion 

Homes insisted that “The homes are as strong 

and well engineered as any housing building at 

Fort Lewis.” He volunteered to have Champion 

train maintenance staff to fix the repairs so that 

they did not reoccur, and he also extended the 

warranty on the homes for an additional year “to 
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152 Privatizing Military Family Housing

express Champions [sic] confidence in the process and to help alleviate any concerns that RCO 

[Residential Communities Office] may have about 

the homes.”102 According to Kimberlee Schreiber, 

managing director of Fort Lewis Communities, 

these offers allayed the Army’s concerns and 

indeed Champion eliminated many of the cracking 

issues. Schreiber noted in 2007 that EQR/Lincoln 

generally had fewer work orders for the 360 modular homes than they did for stick-built homes. By 

2007, Fort Lewis modular housing was regarded as 

a success; RCI staff often gave tours of the housing 

to government representatives, Army installation 

commands, and even the private sector.103 

Disability access posed another difficult issue 

at Fort Lewis. In April of 2004, seven families, 

grouped together as Parents Against Disability 

Discrimination (PADD), filed suit against EQR/

Lincoln, charging it with violating the Fair Housing Act, the Rehabilitation Act, the Americans with 

Disabilities Act, and the Constitution, by discriminating against families with disabilities. The 

plaintiffs’ complaint, which did not name the Army 

as a defendant, stated that Fort Lewis housing, bus 

stops, playgrounds, and parks were inaccessible to 

those with disabilities, and that EQR/Lincoln had 

made it difficult for families to obtain modifications 

to their homes to accommodate disabled residents. 

In addition, the complaint alleged that EQR/Lincoln required families to disclose the disabilities of 

family members prior to receiving on-post housing, 

which they claimed violated federal law.104 

EQR/Lincoln defended itself against the 

allegations, pointing to a specific section of its 

CDMP devoted to the Exceptional Family Member 

Program, which aided families with special needs. 

Although Army policy called for only 5 percent of 

the housing stock to be adaptable for those with 

disabilities, EQR/Lincoln’s Exceptional Family 

Member Program had committed to making 10 

percent of the stock adaptable because it knew 

that the Madigan Army Medical Center on the 

base attracted families with disabled children.105 

RCI authorities supported EQR/Lincoln’s position, declaring that many of the allegations in the 

lawsuit were “without merit.” Fort Lewis’s own 

Residential Communities Office confirmed that it 

had received no complaints about housing discrimination by EQR/Lincoln.106 From these different positions, the two sides began negotiating in 

2004 to settle the case.

Negotiations bore fruit in 2005 when a settlement agreement was reached. According to the 

agreement, EQR/Lincoln would make 10 percent of 

the housing at Fort Lewis accessible for people with 

disabilities (something it had already pledged to do 

in the CDMP) and would also streamline processes 

related to modifications of on-post housing for 

disabled residents. EQR/Lincoln would also ensure 

that all new playgrounds, sidewalks, and parks were 

accessible to those with disabilities. In addition, 

the agreement put into place a grievance procedure 

overseen by a neutral party and required training of 

EQR/Lincoln staff on the rights of the disabled. The 

press release announcing the settlement stated that 

its terms would enable EQR/Lincoln “to enhance its 

already existing practices and procedures by adding 

measures to further improve accessibility to housing 

and public areas at Fort Lewis.” Summer Krook, one 

of the plaintiffs in the case, hoped that the settlement would “serve as a model for improving accessibility for people with disabilities at military bases 

around the country and abroad.”107

In addition to disability access, Fort Lewis, like 

Forts Hood and Meade and other installations, 

faced dissatisfaction from some of its residents 

over a variety of other issues. This dissatisfaction 

sometimes appeared in resident surveys;

Equity Residential (EQR) was a pioneer developer 

in partnering with the Army under the RCI program. 

At Fort Lewis, Washington (now Joint Base LewisMcChord), EQR has demonstrated flexibility and 

innovation to find the best means of providing more 

quality homes at a lower price. In 2000, the Army 

partnered with EQR/Lincoln Fort Lewis Communities, a joint venture between Equity Resident Properties (headquartered in Chicago, Illinois) and Lincoln 

Property (headquartered in Bethel Park, Pennsylvania). The primary goal at Fort Lewis was to provide 

soldiers and families with more and better quality 

housing, but housing development objectives also 

included improving energy efficiency through renovations, eliminating safety concerns, and enhancing 

neighborhoods as communities. The Army transferred the project to EQR/Lincoln in 2002, with Lincoln serving as general contractor and EQR—an S&P 

500 company with properties across the country—

heading management of the property and oversight 

of the project. In total, the installation includes 1,211 

new and 2,997 renovated family homes, in addition 

to a system of interconnected walking trails and a 

new community center.

As a pilot project for the RCI program, Fort Lewis 

became a proving ground for new relationships 

between the Army and its private partners. Not only 

was the development the first to feature renovated 

historic homes, but EQR also successfully responded 

to fluctuations in the number of new versus renovated houses and the standards to which they would 

be built. Confronted with an increase in the number 

of residents expected to arrive at Lewis due to the 

Army’s BRAC program, the company looked for creative ways to provide more homes at a lower cost, 

Equity Residential (EQR)

while also facing new Army construction standards 

issued in 2002 and 2003. In response, EQR offered an 

innovative solution: modular homes. These houses, 

manufactured off-site and shipped to their final destinations for assembly, enabled EQR to provide more 

homes while still controlling costs. The company also 

overturned perceptions about modular homes by 

delivering larger, sturdier, and higher-quality homes 

than skeptics expected, often ahead of schedule. 

At the same time, EQR responded to calls 

for greater access for residents with disabilities. 

Although 10 percent of housing at Fort Lewis was 

designed to be accessible to people with disabilities, the company went further after a 2004 lawsuit, 

streamlining its processes for modifying housing for 

residents with disabilities and ensuring that all new 

playgrounds, sidewalks, and parks were accessible. 

In addition, EQR introduced a new grievance procedure and required additional training for its staff 

members. The company also sought to improve connections among Fort Lewis’s several neighborhoods 

by using parks, connector streets, bicycle and walking trails, and open spaces. In 2008, the Army and 

Figure 6-18. EQR staff at a partner-sponsored event for Fort 

Lewis families.

Courtesy of RCI Office.
154 Privatizing Military Family Housing 155

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Implementing the RCI Pilot Projects, 2001–2005

Air Force combined the privatized housing projects at 

Fort Lewis and nearby McChord Air Force Base.

But current and future challenges remain for 

EQR, and they mirror the situation for many other RCI 

partners. Kimberlee Schreiber, managing director of 

Fort Lewis Communities, stated that one of the longstanding issues is the inevitable discrepancy in experiences between families who get new homes and 

those who receive renovated homes. She explained, 

“The fact is, when we’re done here, you’re still going 

to have a thousand families in new homes and 3,000 

families in older homes,” and soldiers of the same 

rank, paying their full BAH, could be in either one.108

The result is some dissatisfaction among residents, 

and it may be more difficult for EQR to maintain high 

occupancy rates.

In part because of the challenges, EQR’s work at 

Joint Base Lewis-McChord has proved the value of 

adaptability in privatized military housing. “We’ve 

built to the need,” said Schreiber. “We’ve responded 

quickly. We’ve adapted to the market.”109 With innovative approaches to providing less expensive housing 

while maintaining quality, EQR has made important 

contributions to the development of the RCI program.

Figure 6-19. Ribbon-cutting ceremony for opening of new 

homes at Joint Base Lewis-McChord.

Courtesy of RCI Office.

other times, it was voiced at public meetings. 

Still other residents approached installation 

leadership when they felt that a problem existed. 

In 2003, an Army-wide annual resident survey 

compared Fort Lewis results with earlier years 

and found that overall satisfaction had declined 

at the installation between 2001 and 2003, 

although the survey questions were different 

in 2003 from those used in 2001. The survey 

responses seemed to indicate that residents 

with larger families, of lower ranks, or living in 

renovated (as opposed to new) homes were the 

most dissatisfied. The survey results suggested 

that homes were not large enough for those 

with big families, that RCI had not yet benefited 

junior enlisted as much as other ranks, and that 

the same “have/have-not” syndrome that existed 

at Fort Hood was present at Fort Lewis.110 Specific 

complaints expressed by Fort Lewis residents 

ranged from soldiers not liking EQR’s decision to 

move a tot lot “because they would no longer be 

able to look out their window and see their kids 

playing,” to soldiers wanting to park on the street 

but not being allowed to do so. 

Despite the criticisms, occupancy did not 

appear to suffer at Fort Lewis, as indicated by its 

average occupancy rate of 96 percent through 

April 2006. But at times, the issues were raised to 

a higher level. In 2005, for example, Commanding General Lieutenant General James Dubik 

called for the Fort Lewis Inspector General to 

investigate EQR’s services to Fort Lewis residents 

after receiving complaints on his hotline. Dubik 

stated that he was generally pleased with EQR 

but that he wanted to ensure that the company 

was providing the service his soldiers required. 

The Inspector General polled 787 residents and 

tallied a resident satisfaction rating of 84 percent 

or higher. The Inspector General noted problems 

with work orders (which EQR/Lincoln disputed, 

stating that its maintenance crews were immediately responsive), but in general the inspection 

uncovered nothing out of the ordinary. As with 

the disagreement over modular house construction, however, the inspection irritated the ASA, 

I&E, who believed that the complaints were not 

in the Inspector General’s purview. Officials in 

the Secretariat wondered whether they needed 

to “go out and brief the CG on privatization at 

some point.”111 Just a year before, the Secretariat 

had issued a directive that, although “the Army 

must not shirk its responsibility to protect the 

morale and welfare of the soldier, ... intervention 

in day-to-day operations of housing or the typical 

landlord/tenant relationship is not conducive to 

best business practices.”112 

The relationship between the Army and the 

partner at Fort Lewis frayed in other ways too as 

RCI implementation continued. One area of difficulty was communication among the Residential 

Communities Office staff, the garrison commander, and the partner. According to RCI policy, 

the Residential Communities Office had the task 

of advising the installation or garrison commander 

Figure 6-20. Architect’s conception of proposed renovation of Hillside neighborhood, 

Fort Lewis, Wash.

Courtesy of Equity Residential.
156 Privatizing Military Family Housing 157

CHAPTER SIX

Implementing the RCI Pilot Projects, 2001–2005

about RCI, but for various reasons, including high 

turnover of Residential Communities Office staff 

and lack of confidence in the staff, the garrison 

commander generally interacted directly with 

EQR/Lincoln.113 In addition, EQR/Lincoln would 

sometimes disagree with the decisions made by 

the Residential Communities Office and take up its 

concerns directly with the RCI Portfolio Manager 

in the Army Secretariat, again removing the Residential Communities Office from decision making. 

In both cases, the exclusion of the office staff made 

it difficult for the partnership to function as a collaborative, cooperative effort.114 

At least in part because of these difficulties, 

animosity grew between the Residential Communities Office and EQR/Lincoln staff. It did not 

help that, contrary to the advice of Fort Hood personnel, the EQR/Lincoln office was located not in 

the same building as the Residential Communities Office but on the other side of the installation. While all installations experience regular 

changes in their staffing, the Residential Communities Office had substantial turnover, with 

five directors in as many years. Some of this was 

plain bad luck due to retirements, but it seemed 

that there was a general lack of planning regarding who would direct the Residential Communities Office. For several months in 2004 and 2005, 

there was no director—the position was filled by 

an acting director on a renewable 120-day contract. The office also at some points had difficulty 

maintaining even minimal staffing. In late 2004, 

for example, three out of five Residential Communities Office positions were vacant. This frequent 

turnover created a perception among EQR/Lincoln personnel that the Army lacked commitment 

to the RCI program, and it impeded the formation 

of lasting partner relationships. As Boyd Lucas 

of EQR/Lincoln put it, “We are one of the most 

successful projects in Privatization, yet we have 

one of the worst partnerships.”115 

It is true that for many of the RCI program’s 

initial years, conflict between the two sides 

prevented collaboration. Over time, however, 

the relationship between the Residential Communities Office and EQR/Lincoln, along with 

the relationship between the installation and the 

office, improved, thanks to concerted efforts on 

both sides. The hiring of Rob Boisvert in 2007 

as chief of the Residential Communities Office 

helped, as Boisvert reached out to both EQR/

Lincoln and the garrison commander. EQR/Lincoln also held sessions with Army representatives 

to try to identify ways to improve relationships. 

“It’s a 50-year partnership!” one lessons-learned 

document declared, and both sides committed to 

making the partnership last.116

In spite of periods of friction, EQR/Lincoln 

achieved significant success at Fort Lewis. By 

2003, just one year after the transfer of Fort Lewis’s 

housing stock, EQR/Lincoln had constructed 191 

new homes and redeveloped 163 existing homes, 

making it possible for the initial phase of development to be reduced from ten years to eight years.117

This faster construction, together with the addition 

of modular home construction and other changes, 

necessitated revisions to the CDMP. Discussions 

began in 2006, but the CDMP revision was put on 

hold in the autumn of 2007, due to the unresolved 

issue of merging McChord Air Force Base housing 

with Fort Lewis housing.118 

The RCI program at Fort Lewis, then, despite 

some challenges, was generally a success. With its 

modular construction program, Lewis provided 

an innovative way to supply less expensive housing that, in the minds of RCI officials, was as good 

as, if not better than, stick-built homes. Residents 

generally supported the RCI program, even though 

there were some criticisms and ideas for bettering 

the process. Perhaps most significant, the Lewis 

project provided some good “lessons learned”—

even through the example of mistakes—regarding 

the importance of partner relations. 

Fort Meade (Maryland)

Implementation of RCI proved more difficult 

at Fort Meade than at either Fort Hood or Fort 

Lewis. Meade’s housing had deteriorated for so 

long that many residents did not believe that RCI 

could actually improve it, and occupancy declined 

accordingly. Both the partner and the RCI team 

worked hard to devise and implement solutions to 

this and other problems.

Chapter 5 discussed Fort Meade’s award of its 

RCI project in March 2001 to MC Partners, LLC, 

a partnership of Picerne Real Estate Group and 

The IT Group. MC Partners then established a 

Property Management Program office, consisting 

of a central property management team. Meanwhile, the Army created its RCI Liaison Office, 

which initially consisted of 12 individuals, many 

of them administrative. The partnership between 

the Army and the developer, meanwhile, became 

known as Meade Communities.119 

The Fort Meade housing office—including 

George Barbee, a Military District of Washington 

(MDW) employee, and Caryn Washington, a 

contractor—worked with MC Partners in 2001 

to develop the CDMP, while three consultants 

from Jones Lang LaSalle (JLL) provided financial 

guidance. As development of the CDMP progressed, it became increasingly apparent to the 

parties involved that renovation of almost the 

entire stock of housing would be necessary. John 

Picerne, president of Picerne Real Estate Group, 

called the existing housing “deplorable” and 

pledged, according to one report, that his firm 

could “address [the] problems by applying market 

standards to military housing.”120 In May 2001, 

Picerne met with Fort Meade residents, telling 

them that MC Partners was committed to providing them with the kinds of homes available off 

post but in a way that would “maintain military 

traditions.” “You are the client,” Picerne assured 

the residents. “We have to make you happy.”121 

In May 2001, the Army officially kicked off 

the CDMP process by hosting a signing ceremony 

at Fort Meade, attended by Acting Secretary of 

the Army Joseph Westphal, MDW Commander 

Major General James T. Jackson, Garrison Commander Colonel Michael J. Stewart, John Picerne 

of Picerne Real Estate Group, U.S. Senator Paul 

Sarbanes (D-Maryland), U.S. Representative Benjamin Cardin (D-Maryland), and former Assistant 

Figure 6-21. Exterior view of new community center at Fort 

Lewis, Wash.

Courtesy of RCI Office.

Figure 6-22. Interior of new community center at Fort 

Lewis, Wash.

Courtesy of RCI Office.
158 Privatizing Military Family Housing 159

CHAPTER SIX

Implementing the RCI Pilot Projects, 2001–2005

Secretary of the Army (I&E) Mahlon “Sandy” 

Apgar, IV. The stature of the attendees demonstrated that RCI privatization at Fort Meade 

would fall under a spotlight due to the installation’s proximity to the Pentagon and Washington 

D.C. This level of attention was an additional 

burden for the Fort Meade RCI staff, and something to which their colleagues at the other pilot 

installations needed to pay little attention. In the 

ceremony, speakers noted that under the stilldeveloping CDMP, MC Partners would construct 

2,800 new or replacement houses, all of which 

would have at least three bedrooms. In addition 

to the housing, MC Partners would construct a 

community center and five neighborhood centers. As Major General Jackson explained, “In the 

future we expect you to live in high-caliber master 

plan communities—a community of neighborhood centers planned with each and everyone 

[sic] of you in mind.”122

Throughout the preparation of the CDMP, 

Fort Meade officials gave high priority to getting 

input from residents. A Joint Advisory Committee 

reviewed neighborhood layouts, proposed amenities, and examined samples of floor tiles, carpet, and 

countertops.123 This allowed residents to feel a part 

of the CDMP process, while also giving the partner 

valuable feedback on what residents wanted. 

In addition, preparation of the CDMP was 

a true collaboration between the Army and its 

partner. Caryn Washington, who was extensively 

involved with the CDMP, remembered working 

“very closely” with Lori Hanson of MC Partners 

to develop housing policies on “everything from 

waiting lists to assignment procedures as to the 

resident.” George Barbee acted as the intermediary 

between the Army and MC Partners and negotiated any disagreements. However, these were not 

frequent, and Washington recalled that the Army 

and MC Partners “had a really, really good working relationship” as a result of “working very long 

nights” together on the CDMP.124 

With that input, the partner completed the 

CDMP in the summer of 2001 and submitted it 

to the Army and the U.S. Department of Defense 

(DOD) for review.125 Originally, Meade’s transfer 

closing date was set for October 1, 2001, but since 

both Forts Hood and Lewis had selected their 

developers before Meade, the Army wanted those 

installations to transfer housing first.126 Then, 

in late 2001, The IT Group, Picerne Real Estate’s 

partner in the Meade venture, filed for bankruptcy. With the Army’s approval, John Picerne 

bought out The IT Group’s interest in the project, 

formed Picerne Military Housing as a branch of 

the Picerne Real Estate Group (with a focus on 

both construction and property management), 

and told the Army that he would “do everything 

in my power to uphold what we said we would do.” 

Picerne Military Housing was able to maintain its 

financing and, although the project was delayed, it 

continued unhindered.127 

As Fort Meade’s CDMP went through its various reviews, specific details about what Picerne 

would do emerged. In essence, the plan was for 

Picerne to demolish 2,440 of the existing 2,862 

homes, renovate and maintain the other 422 

homes (which included historic properties), and 

construct 2,748 new homes and five community centers. Picerne would also provide amenities, including swimming pools, parks, baseball 

diamonds, and jogging and biking trails. When 

completed, the installation would have 3,170 new 

or remodeled houses. For its part, the government 

would convey the housing to the partner and the 

partner would lease the land on which the homes 

would sit. Because these conveyances were the 

only government outlays on the project, no credit 

authorities were used and no OMB credit scoring 

costs applied.128 

In December 2001, the DOD submitted the 

CDMP to Congress for review. Congress provided 

its approval in the spring of 2002 and on May 1, 

2002, responsibility for 2,500 Fort Meade family 

housing units was transferred to Picerne. However, the transfer was not a smooth process for 

several reasons. 

After completing the CDMP, George Barbee, 

who was actually an employee of the Military 

District of Washington and not of Fort Meade, 

turned his attention to privatization at Fort Belvoir and Fort Hamilton, two other installations 

within the MDW. According to consultant Caryn 

Washington, their departure drew many of the 

experienced RCI administrative staff away from 

Fort Meade, resulting in gaps in coordination 

with the new partner when the Army formally 

transferred operations to Picerne. Until the May 1, 

2002, transfer, the installation had approximately 

four staff members working in the Army housing office with just a handful of contractors, and 

they had responsibility only for off-post housing 

assignments and terminations. In addition, for a 

period of more than six months during late 2001 

and early 2002, there were no maintenance crews 

working at Fort Meade. As a result, Picerne inherited a huge backlog of maintenance orders and a 

number of highly dissatisfied residents.129 

Communication problems between Fort 

Meade’s RCI Liaison Office and Picerne were 

highlighted when actual implementation of RCI 

began. The RCI staff felt that Picerne did not 

adequately inform the staff of its plans. Picerne, 

meanwhile, thought that RCI personnel were 

micromanagers. For example, the CDMP dictated 

that Picerne’s office would keep certain hours. 

Once the transfer occurred and Picerne became 

more familiar with the times that people needed 

the office, it altered those hours, but did so 

without informing the RCI staff. Though seemingly a small thing, it was emblematic of a deeper 

antagonism. “That’s where the negativity really 

truly began,” Washington explained. “It was basically butting heads.”130 

It took a couple of years, a changeover of staff 

on Picerne’s side, and the selection of Tom White 

as head of the Fort Meade RCI office in 2003 for 

things to begin to improve. The Army instructed 

White that his major task as head of the Meade 

RCI office was repairing the Picerne relationship, 

and he took it to heart. Essentially, he told his 

staff to stop looking at Picerne as a contractor and 

start looking at Picerne as a partner. “This relationship was not contractual but was a partnership,” White stated. “The Army was not in a controlling position nor a demanding position, but 

a cooperative and supporting position.” He also 

conducted informal conversations with Picerne 

personnel to let them know that he was willing to 

listen to them.131 

Although interactions between Picerne and 

the Meade RCI office gradually improved, Picerne 

also faced opposition from Fort Meade residents, 

despite a concerted public relations campaign 

waged in the installation newsletter. According to 

Aimee Stafford, who had started working as a contract communications specialist in the RCI office at 

Fort Meade in the latter part of 2001, the problem 

was that both Picerne and the RCI office had raised 

residents’ expectations too high about how RCI 

would work. Stafford remembered telling soldiers, 

“It was going to be great and it was going to be 

great tomorrow.” “The partner was going to come 

in on Monday,” she continued, and “Tuesday things 

were going to be different.” Instead, Picerne faced 

the huge maintenance backlog and its response 
160 Privatizing Military Family Housing 161

CHAPTER SIX

Implementing the RCI Pilot Projects, 2001–2005

time suffered. Picerne also had little experience 

with military families and, according to Stafford, 

“just getting used to that and getting it right took 

several months.”132 Because residents had unrealistic expectations about the transfer, they quickly 

became disappointed.

To resolve these concerns, Picerne and the 

Army took several steps. First, they addressed 

the issues in the Meade Communities Management Council meetings—the entity established 

by Meade Communities to execute the CDMP.135 

Minutes from a meeting that occurred on August 

22, 2002, for example, indicate that the council 

discussed inadequate responses to emergency 

work order calls, complaints about the completion of work orders, and mold issues in some of 

the houses.134 Second, the Fort Meade RCI office 

established a RCI hotline for residents to call to 

provide input on how housing services could be 

improved.135 Third, Garrison Commander Colonel 

John W. Ives held meetings with neighborhood 

“mayors” and counseled them to have patience 

as the changes occurred. “Keep everything in 

perspective,” he advised. “They (Picerne Military 

Housing) will have some shortcomings,” but it 

was important for the mayors to be “visionary” 

and to “bear with us.”136 Fourth, the RCI office 

published articles in the installation newsletter Soundoff!, explaining what RCI entailed 

and informing residents that Picerne was not a 

contractor but an Army partner committed to 

providing “the best possible quality of life for our 

military families.”137 These steps helped, but some 

soldiers were unwilling to give Picerne a second 

chance. As Stafford observed, “If they made a mistake once, that was it.... You were going to hold 

them up to winning back your trust.”138 

This element of distrust was something that 

developers fought against at almost every installation where RCI was implemented. Because the 

developers were private and not military entities, 

many soldiers thought that the partner was trying 

to make money at their expense. Ladye Blair, RCI 

director at Fort Irwin, noted, “The military mind 

... has an inherent distrust of private business.”139

One way that developers tried to ease those suspicions was by hiring former military personnel 

or spouses of military personnel to work in their 

offices, something that Actus Lend Lease did at 

Fort Hood to great effect. Picerne tried to build 

on this example by hiring individuals such as Bill 

Mulvey, who had formerly done public relations 

work for the Army, as senior managers. However, 

not until it had experienced numerous problems 

with residents did Picerne begin hiring retired 

military and military spouses for its on-theground help. According to Stafford, that “made a 

big difference in knowing what people wanted.”140

The central RCI office and the Headquarters of 

the Department of the Army (HQDA) also wanted 

to ensure that the housing projects would benefit 

from private-sector expertise.

Picerne struggled to keep its occupancy 

rates up after the transfer. According to one 

report, seven months after the transfer occurred, 

occupancy at Fort Meade stood at only 80 percent 

of the 2,500 transferred homes, less than the 85 

percent projected in the pro formas. By comparison, Fort Hood’s occupancy numbers never dipped 

much below 95 percent and were usually around 

97 or 98 percent.141 There were several reasons 

for the poor occupancy rate at Meade. One was 

generalized distrust. Another was Picerne’s and the 

Army’s inability to convince soldiers that privatized housing was of high quality. A third was that 

the houses were too small. 

While Meade had many vacant two-bedroom 

houses in its Argonne Hills North and South 

neighborhoods, most families required at least 

three bedrooms. Even singles wanted more 

space.142 In the 1950s and 1960s, most homes had 

just one bathroom and few bedrooms; having 

children share bedrooms was a normal thing. But 

by the twenty-first century, standards and expectations had changed dramatically. The average 

size of a home in the United States had increased 

from 983 square feet in 1950 to 1,695 square feet 

in 1974 to 2,349 square feet in 2004, and families 

were requiring more and larger bedrooms. If such 

housing was not available on post, they would 

look elsewhere.143 

According to Mulvey, another reason for the 

occupancy problem was that a large number of 

the houses that the Army had turned over to 

Picerne were uninhabitable. “These are houses 

that had had major fires, that had been gutted,” 

he remembered, “and now they’re on our books 

and we’re not getting any rent for that house.”144

Mulvey also thought that Fort Meade’s reputation 

for having poor housing affected occupancy. No 

matter how well Picerne renovated the houses, 

Mulvey declared, soldiers had a mentality of “Woe 

is us. We live in horrible housing, and no matter 

what Picerne does, we live in horrible housing.” 

Residents would tell new soldiers to go off post for 

housing, and occupancy suffered accordingly.145 

Fort Meade was not alone in its housing 

occupancy problems. A U.S. Government Accountability Office (GAO) report issued in 2006, for 

example, indicated that 16 DOD privatization 

projects had occupancy rates below 90 percent. 

The 16 included Army installations such as Fort 

Stewart, Fort Hamilton, and Fort Shafter/Schofield 

Barracks, all of which had occupancy rates below 

80 percent, and Fort Leonard Wood and Fort Bliss, 

which sat at 83 percent. According to the report, 

several reasons existed for low occupancy, including the fact that in 2005 the DOD had met its 

goal of increasing the BAH to levels that required 

no out-of-pocket expenses for service members’ 

housing. That meant that more people could afford 

off-post housing. Other causes included the “poor 

condition” of homes not yet renovated and inaccurate HMAs that called for more homes than were 

really necessary.146 

Fort Meade, however, was the first of the pilot 

projects to struggle with low occupancy, and that 

posed a problem for Picerne because it meant 

that the company was not getting the income it 

expected. In attempting to solve this problem, the 

Army and Picerne took several steps. In January 

2003, as the Army mobilized for invasion of Iraq, 

Fort Meade received an influx of unaccompanied reservists (those reporting without family 

members), which exceeded its barracks space. 

In response, Garrison Commander Colonel John 

W. Ives began assigning unaccompanied service 

members to two-bedroom houses and apartments. According to one newspaper account, 

this was only a temporary measure until Meade 

completed a new barracks complex in 2004, 

and it only applied to unaccompanied enlisted 

members at the Specialist E-4 level and above. By 

Figure 6-23. A duplex at Fort Meade, Md., before the 

implementation of RCI.

Courtesy of Picerne Military Housing.
162 Privatizing Military Family Housing 163

CHAPTER SIX

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April 2003, 60 single soldiers were living in family 

housing and this would later increase to 100. Even 

with this influx, though, occupancy continued to 

hover around 80 percent.147 

Privatization at Fort Meade also included the 

complexities of renovating historic structures. 

The original RFQ had mandated that the partner renovate and provide maintenance for Fort 

Meade’s 112 historic houses (which pre-dated 

Capehart and Wherry housing), but as work on 

the original CDMP had progressed, compliance 

issues arose in relation to the National Historic 

Preservation Act.

148 As required by the NHPA, 

Fort Meade conducted negotiations with the 

Maryland SHPO, which wanted assurances that 

Picerne, in the words of George Barbee, would 

maintain the homes “to historic standards” and 

in “their original condition.” The cost of doing 

this, in Barbee’s mind, was too high for the project, but neither the Army nor the SHPO would 

budge from their positions. No resolution had 

been reached when it was time for the transfer of houses to Picerne, and the RCI Program 

Office in Washington, D.C., recommended that 

the closing be postponed until the issue was 

resolved. Barbee did not want to see a delay, so 

he pushed for the closing to occur without the 

historic homes included. As he later recalled, 

“we convinced the leadership to just draw a 

line around those 112 houses and leave those 

alone.” Therefore, when the housing transferred 

to Picerne in May 2002, the historic homes 

were not included.149 Finally, the Army and the 

SHPO came to terms on a programmatic agreement that the SHPO would work closely with 

Picerne to review and approve any changes to 

the exterior appearance of the homes. With this 

agreement in place, the 112 historic homes were 

transferred to Fort Meade on March 31, 2003.150 

After transfer, maintenance work revealed that 

the historic homes contained lead-based paint, 

especially surrounding the windows. Since the 

housing was no longer under federal control, it 

became subject to Maryland Department of the 

Environment policies. According to those policies, 

residents could not occupy a vacant historic home 

until the department had certified that the developer had complied with lead abatement requirements.151 To take care of the problem, Picerne 

would have to remove the windows, strip away the 

paint, then reinstall the windows. However, the 

aged condition of the windows prevented this from 

being a realistic solution.152 Instead, the SHPO 

and Picerne decided that the windows should be 

replaced. Unfortunately, the windows that the 

SHPO wanted were too expensive for Picerne’s renovation budget. For a year, Picerne and the SHPO 

discussed how to resolve the problem.153 Because 

no new residents could move into a home until the 

Maryland Department of the Environment had 

verified that the lead paint was gone, occupancy 

of the historic homes dwindled, costing Picerne 

an estimated $80,000-$100,000 each month in 

lost rent. Finally, in November 2004, agreement 

came on cheaper windows that still retained the 

characteristics of the historic homes, and the 

replacement process began. By the fall of 2007, 

approximately 85 percent of the historic homes 

had undergone the necessary renovations.154 

Another privatization problem occurred at 

Fort Meade in February 2003, when construction 

of new housing was stopped because land clearing 

uncovered a half-acre dump site in Neighborhood 

One. Most of the buried trash consisted of 1940sera windows and typical household garbage.155

Work stopped until an investigation of the site 

could occur. It was unclear why the Environmental Assessment (EA), required before the housing 

transferred to Picerne, had not revealed the dump 

site, but the area was a problem for new housing 

construction. Therefore, Picerne returned the half 

acre to the Army, reconfigured where it would construct housing to avoid the dump site, and continued construction.156 

This solution seemed to resolve the issue, 

but in December 2004 it appeared that methane 

gas produced by the dump site was beginning 

to migrate underground into areas near some 

newly constructed townhomes and near Manor 

View Elementary School. Monitoring detected 

no methane gas in the area at that time, but in 

June 2005 investigations showed that the gas 

was migrating underground in the direction of 

the new development. The Corps of Engineers 

implemented a venting system to allow the gas 

to escape, but tests in December 2005 indicated 

that methane levels were rising and gas was still 

approaching the homes. To preserve the safety 

of its residents, Picerne and the Army decided 

to evacuate those in the path of the gas. Twelve 

families were moved, two of them on the evenings 

of December 22 and 23, 2005.157 

Because of the timing of the relocations, the 

event was a public relations nightmare for Fort 

Meade. The Baltimore Sun and other newspapers 

published stories about the gas, and some Environmental Protection Agency officials charged 

Army leaders with building homes before the site 

had been “thoroughly tested.” Fort Meade’s garrison commander and command sergeant major 

made personal door-to-door visits to the affected 

families, but resentment lingered. The houses 

remain vacant, and there is no indication of when 

residents will be permitted to return.158

Meanwhile, Picerne began constructing new 

housing at Fort Meade. Picerne’s plans called 

for building five new neighborhoods in 10 years, 

each with its own neighborhood center. In January 2003, before the dump site was discovered, 

Picerne broke ground for the building of Neighborhood One, consisting of 155 houses, 119 of 

which would be townhomes for enlisted soldier 

grades E-3 through E-5, while the rest would 

be homes for the higher officer grades O-4 and 

O-5.159 (Picerne also started demolishing some of 

the older homes and relocating the families, while 

performing first-turn renovations on vacated 

homes.) One newspaper account reported that, 

“The average size of the new homes in Neighborhood One is 1,740 square feet and will feature 

a minimum of two and-a-half baths, a separate dining room, family room, breakfast nook 

and porches.... All of the new homes will have 

between three to five bedrooms.”160

In September 2003, Fort Meade saw the 

completion of the first new construction, as well as 

the opening of Potomac Place, the neighborhood 

center for Neighborhood One. Potomac Place was 

a landmark in the RCI program, as it was the first 

neighborhood center completed on any installation. The official opening occurred on December 

18, 2003, when Principal Deputy Assistant Secretary Geoffrey Prosch gave a speech and cut the 

Figure 6-24. A historic home at Fort Meade, Md.

Courtesy of Picerne Military Housing.
164 Privatizing Military Family Housing 165

CHAPTER SIX

Implementing the RCI Pilot Projects, 2001–2005

ribbon. Envisioned as a place where neighbors 

could play games, exercise, swim, and rent space 

for small parties, Potomac Place provided amenities that installations did not previously have. 

Yet the construction of Potomac Place did not 

come easily. Bill Mulvey, Picerne’s vice president of 

communications, remembered that when the partner first proposed the center, “the Army was very put 

off,” thinking that it was merely “a waste of money.” 

Whenever Picerne had undertaken non-military 

development, it had included neighborhood centers 

in its plans. “That’s what we do,” Mulvey explained. 

The partner finally convinced Army officials of the 

viability and utility of the center, but even Meade 

residents had a hard time grasping it at first. Mulvey stated that one soldier saw the neighborhood 

center and thought it was “a new officer’s club.” But 

residents soon embraced the centers and, as RCI 

progressed at other installations, construction of 

such buildings became a part of many CDMPs.161 

The completion of new housing, renovated 

housing, and the Potomac Place neighborhood 

center provided opportunities for Picerne to address 

its occupancy problems. An occupancy improvement plan developed in September 2003, for 

example, outlined a new strategy: residents would 

receive a new home if they agreed to live in a house 

designated for demolition while the new unit was 

under construction. This measure, the plan stated, 

could increase occupancy by 2 percent.162 But along 

with these opportunities, the new construction and 

renovations reinforced the divisive “have/have-not” 

Figure 6-25. A new townhome for junior non-commissioned officers in Fort Meade’s Potomac 

Place neighborhood. Picerne Military Housing began construction of the neighborhood, which is 

now home to more than 500 families, in 2002.

Courtesy of RCI Office.

Figure 6-26. View of the Potomac Place Neighborhood Center at Fort Meade, Md. Potomac Place, 

which Picerne Military Housing and the Army officially opened in 2003, was the first neighborhood 

center completed on any of the RCI project installations.

Courtesy of Picerne Military Housing.

feeling, especially among residents in older homes, 

who wondered why they had to pay as much in BAH 

as those living in the new homes.163

Dissatisfaction was registered in resident 

surveys. The surveys, which the Army conducted 

quarterly (polling a different 25 percent of the 

residents each quarter), graded Picerne in three 

categories: maintenance, property management, 

and quality of life. The three were averaged to 

generate an overall score. In addition to providing justification for incentive fees, the surveys 

provided Picerne with valuable feedback on 

“trends” and “areas of improvement.” Just before 

Picerne assumed responsibility for the housing, 

Fort Meade came in dead last among 28 installations surveyed for resident satisfaction. In 

2003, after the transfer occurred, Picerne scored 

a 6.3 (out of 10) in maintenance, a 7.1 in property 

management, and a 6.2 in quality of life—still last 

among surveyed Army installations. The Army 

recognized that many of these problems stemmed 

from the poor condition of the housing that 

Picerne had inherited, so in the initial years of the 

project Picerne was given a pass on its quality-oflife scores, enabling it to receive 100 percent of 

its incentive fees. In many ways, such as the fact 

that Picerne received the National Association of 

Installation Developers’ 2003 Award for Excellence in Military Privatization, Picerne’s performance seemed admirable. Nevertheless, it was 

not until 2007 that Fort Meade attained a top 20 

ranking in terms of resident satisfaction.164 
167

Picerne Military Housing

166 Privatizing Military Family Housing

Picerne Military Housing was one of the first partners in the RCI program, winning the bidding in 

2001 for a pilot installation at Fort Meade, Maryland. 

John Picerne established Picerne Military Housing under the umbrella of the Picerne Real Estate 

Group, a Picerne family business founded in 1925. 

Picerne first made a bid for the contract to develop 

privatized family housing at Fort Carson before 

securing the development opportunity at Fort 

Meade. Since then, the company has successfully 

developed six other privatized family housing projects. Unlike many of the Army’s partners, Picerne is 

a fully integrated company, acting as owner, developer, builder, and property manager for each of the 

projects it oversees. In all, the company serves more 

than 20,000 service members and their families 

across the country and has built or renovated more 

than 15,000 homes nationwide.

In addition to its leadership in the early stages 

of the RCI program, Picerne has remained in the 

vanguard of development, making numerous innovations at its communities. At Fort Meade, the 

company constructed the Army’s first neighborhood center for an RCI project anywhere in the 

nation. Picerne followed its success at Fort Meade 

with a second contract at Fort Bragg/Pope Air Force 

Base (North Carolina), where the company implemented a Senior Unaccompanied Housing program, among the first of its kind. Later, also at Fort 

Bragg, Picerne added the Army’s first community 

center in a Senior Unaccompanied Housing Development. In 2007, the company successfully incorporated an additional 627 family homes into its 

Fort Bragg project to accommodate base closures 

and realignments elsewhere.

In addition to resident dissatisfaction at Fort 

Meade, Picerne employees believed that there 

were a number of other reasons for the occupancy 

problems. They agreed with the Army about the 

causative effect of the poor condition of the transferred homes, which meant that renovations took 

more time and money than expected. Other factors 

to which Picerne employees attributed low rates of 

occupancy at Fort Meade included a boom in Anne 

Arundel County’s housing construction, causing 

the rental market to be overbuilt; low interest rates 

that “created an exceptionally strong home buying 

market”; the DOD’s program in 2001 to increase the 

BAH, leading to a 26 percent elevation in BAH at 

Fort Meade and allowing more soldiers to live off 

post; and security measures implemented after 9/11 

that made it more difficult to access the installation.

These factors, coupled with Picerne’s higherthan-expected operating expenses (since it had 

assumed the 4,000 backlogged work orders after 

the transfer), prevented Picerne from reaching the 

financial goals necessary to keep RCI moving at 

Fort Meade. Interestingly, raising BAH levels hurt 

Fort Meade housing while it helped Fort Hood’s. 

The situation highlighted the contrasting urban 

and rural nature of Forts Meade and Hood, respectively. Because Fort Meade was situated between 

Washington, D.C., and Baltimore, soldiers had a 

much greater choice of places in which to live than 

did soldiers in Killeen, Texas.166 

At the end of the second quarter of 2004, 

occupancy fell below 80 percent, with residents 

living in only 2,040 out of 2,622 homes, or 77.8 

percent, considerably below the budgeted 86.1 

percent. A position paper prepared for the Meade 

Communities Management Council explained 

that this low occupancy would “seriously impair” 

Picerne’s execution of its initial development plan. 

Fortunately, Fort Meade’s CDMP had stipulations 

in it for moving down the “waterfall” of potential 

residents, should occupancy issues exist. According to the CDMP, family housing at the installation was to be assigned in the following order: 

(1) Accompanied military personnel assigned or 

Figure 6-28. Picerne Military Housing neighborhood office 

at Fort Riley, Kans.

Courtesy of RCI Office.

Figure 6-29. Ribbon-cutting ceremony at the opening of 

Fort Bragg’s Randolph Pointe neighborhood.

Courtesy of Picerne Military Housing.

Figure 6-27. Young resident at a Picerne-sponsored event.

Courtesy of Picerne Military Housing.

In 2003, Picerne partnered with the Army to build 

and renovate nearly 3,000 homes at Fort Polk (Louisiana), where the company housed displaced families during Hurricane Katrina and engaged in storm 

response activities during Hurricane Rita. The company also won contracts at Fort Rucker (Alabama) 

and Fort Riley (Kansas) in 2005, followed by Fort Sill 

(Oklahoma) in 2007 and Aberdeen Proving Ground 

(Maryland) in 2008. Throughout, Picerne has worked 

with local charities serving the communities surrounding its RCI installations and has obtained property tax waivers for all of its communities, enabling 

the company to channel additional funds into the 

communities it serves. Above all, the company has 

sought to provide quality housing and services to 

members of the armed forces and their families, in 

an approach that the company refers to as “Families 

First,” which one employee explained “means that 

every decision is made with the needs of [Army] 

families in mind.”165

CHAPTER SIX

Implementing the RCI Pilot Projects, 2001–2005
168 Privatizing Military Family Housing 169

CHAPTER SIX

Implementing the RCI Pilot Projects, 2001–2005

attached for duty at Fort Meade, (2) Accompanied 

military personnel assigned or attached for duty 

at other military installations within 50 miles of 

Fort Meade, (3) Unaccompanied family members 

of military personnel, (4) Unaccompanied military personnel (married or single) assigned or 

attached for duty at Fort Meade, (5) Accompanied 

retired military personnel and spouses or widowed 

spouses of retired military personnel, (6) Accompanied DOD and federal agency civilians, and 

(7) Non-military, non-DOD, or non-federal agency 

personnel. A memorandum dated May 29, 2001, 

from then-Garrison Commander Colonel Michael 

Stewart, noted that when occupancy dropped 

below 80 percent for 90 days, Picerne could 

request approval of priorities five through seven. 

In the summer of 2004, the Meade Communities 

Management Council proposed to allow priorities 

five and six into housing.

However, Garrison Commander Colonel John 

Ives did not approve that action at that time, asking instead that Picerne try to reduce its turnover 

time (the time it took Picerne to prepare a house 

for occupancy once a resident had moved out).167 

But by October 2004, although no real improvement had occurred, Ives and the rest of the 

Management Council at least authorized family 

housing to be extended in December 2004 to single 

(“unaccompanied”) soldiers at or above the Sergeant E-5 grade and to federal employees.168 

Realizing that some soldiers might have difficulties with this, Ives addressed the issue in 

Soundoff!. According to Ives, occupancy at Fort 

Meade suffered because of “the negative attitude 

by some about where we live.” He noted that many 

incoming families were choosing to live off post 

rather than in older homes on Fort Meade. The 

result was less income to the partner and a subsequent reduction in the number of new homes 

the partner could construct. Ives explained that 

Picerne was trying to improve the curb appeal, or 

external appearance, of the older homes so that 

people were more comfortable living in them. He 

then discussed the new policy of allowing federal 

employees and single soldiers above E-5 to live on 

post. But these classes would only be able to live in 

the older homes, not in newly constructed ones. 

Ives also let soldiers know that residents in older 

neighborhoods who wanted to move to homes in 

other older neighborhoods would no longer have 

that option. “These moves for personal preference 

cost the RCI program approximately $1 million a 

year to fix up the vacated home as well as the one 

the family chooses to move into,” Ives asserted. He 

reassured soldiers that although the new policies 

might seem “like a big shift,” they really were just 

“common sense” and would enable the partner to 

construct more new homes at Fort Meade.169 

Opening up “the waterfall,” along with improving curb appeal and marketing on-post homes, 

produced the desired effects and occupancy began 

to increase in 2005.170 However, the occupancy 

issues had the effect of causing the Management Council to wonder about the details of the 

original plan laid out by Picerne in the CDMP. As 

early as January 2005, the council held a meeting 

to discuss one of the issues: whether Fort Meade 

really needed 3,200 houses. That number, which 

the military had told Picerne it wanted, came from 

an HMA that was supposedly done before the RFQ 

was issued. However, it became unclear in 2005 

whether the analysis had really been performed 

and, if so, how accurate it was. Therefore, the Army 

agreed to conduct a new HMA in 2005 to ascertain 

the housing needs with greater accuracy.171 

Meanwhile, Picerne reviewed the CDMP and 

decided that “occupancy projections” used in the 

document were too aggressive. The original CDMP 

proposed replacing nearly every house on Fort 

Meade within the first 10 years. But because of the 

low occupancy rate, Picerne would not have the 

income to complete this ambitious program, nor 

was it clear that such extensive replacements were 

necessary. By May 2006 (four years after the transfer), Picerne had constructed only 497 houses—

fewer than a quarter of the 2,748 new homes it had 

proposed to construct in the CDMP. Moreover, 

when the HMA was completed in 2005, it showed 

that Fort Meade had a surplus of 670 homes and 

that the installation could actually only support 

approximately 2,600 homes, rather than 3,200.172 

Facing this situation, Picerne began restructuring its plan, which was not easy. As John Picerne 

later recalled, the housing market boom in the 

surrounding area and the loss of BAH from 670 

surplus homes meant that the project faced “a 

difficult rework.”173 To accomplish the task, Picerne 

representatives met with RCI staffers in the Pentagon throughout 2005 in an attempt to produce “a 

CDMP that makes sense.”174 

In 2006, Picerne produced a revised CDMP, 

based on a housing assessment that Fort Meade 

needed approximately 2,600 homes, rather than 

the original 3,200. The revision stipulated that 

Picerne would construct 724 new homes and 

renovate 1,641 others, ensuring that by December 

2011 (the end of the Initial Development Period) 

every family housing unit would either be new 

or renovated.175 The revised CDMP also included 

new provisions regarding the installation’s 

Figure 6-30. Celebrating the opening of the first new home in the Potomac Place neighborhood, 

Fort Meade, Md.

Courtesy of Picerne Military Housing.
170 Privatizing Military Family Housing 171

CHAPTER SIX

Implementing the RCI Pilot Projects, 2001–2005

historic houses. With this revised plan in place, 

occupancy continued to increase. In March 2007, 

the Army reported that families occupied 2,426 

houses and apartments at Fort Meade, which, in 

the words of Garrison Commander Colonel Kenneth McCreedy, “mean[t] that the Picerne team 

has met the occupancy floor that our lender uses 

to define success.” Likewise, McCreedy related, 

Picerne had “begun to turn the corner of taking 

old houses offline and putting new or renovated 

homes back online.” In summary, at Fort Meade, 

“We’re managing the turn of quarters better, 

getting them ready for new occupants faster, and 

improving occupancy rates.”176 

Picerne and RCI staff had to struggle to solve a 

wide range of problems during the first five years 

of privatization at Fort Meade, but they continued 

to make progress towards the goal of having all 

inadequate housing eliminated by 2011, while also 

improving the quality of life at the installation. 

Aimee Stafford, RCI communications specialist, 

explained, “We really have a community here that 

Fort Meade couldn’t offer before,” one characterized by “neighborhood events and neighborhood 

centers and all of these great things that help 

to build the community.”177 Clarke Howard, who 

worked for several years at Fort Meade before 

becoming its RCI Portfolio Manager, agreed: “In 

the last two and a half years, there are [several] 

new neighborhoods, not just homes but new 

neighborhoods that include community centers, 

swimming pools, everything.”178 

Development of PAM

As other installations prepared to implement RCI, the Army, with support from Jones 

Lang LaSalle consultants, developed the Portfolio 

and Asset Management (PAM) program to protect its assets and investments and to create and 

implement portfolio enhancements. Ian “Sandy” 

Clark, who had been involved in military housing for several years in Panama and at Fort Ord, 

California, and Timothy McGarrity, his JLL lead 

consultant on PAM, collaborated to conceive and 

develop the PAM program.179 PAM enabled the 

Army “to proactively and systematically manage the risks associated with the RCI portfolio, as 

well as the individual assets, to meet the Army’s 

housing privatization objectives.”180 In essence, it 

enabled the Army to ensure that RCI was succeeding financially and achieving the goal of providing quality housing to soldiers and their families. 

Clark joined the RCI Program Office in Washington, D.C., in June 2001 and realized, based on 

earlier experiences he had had with privatization 

in the U.S. Marines, that the Army would need an 

oversight program once procurement and CDMP 

preparation were accomplished. After receiving approval from Assistant Secretary Fiori and 

Principal Deputy Assistant Secretary Prosch to go 

forward with their ideas, Clark and McGarrity met 

with Ted Lipham and Don Spigelmyer to brainstorm about how to develop a program that would 

have a standard process.181 

JLL and the Army had been discussing oversight of the RCI program since the pilot project 

stage in 2000. At that time, the Army was primarily 

focused on the near-term goal of establishing the 

program and executing the transactions with the 

private sector. The Army had not yet focused on 

the portfolio or on sustaining long-term project 

functions such as the quality of life of soldiers and 

their families over the 50-year span of the housing 

contracts. PAM allowed the Army to provide timely 

input into certain key decisions made by the partnerships throughout the lives of the projects and to 

ensure program objectives were achieved over the 

long term.182

The RCI Office tapped Sandy Clark to be the 

lead in the design and implementation of the PAM 

program, while McGarrity led the JLL team in supporting Clark and the PAM program. In December 

2001, Clark and McGarrity also met with a tiger 

team of various stakeholders in the federal government and the Army to present what they called 

their “oversight” concept. Included on this team 

were representatives of the Office of the Assistant 

Chief of Staff for Installation Management, the 

Office of the Assistant Secretary of the Army for 

Financial Management and Comptroller, the Office 

of the Assistant Secretary of the Army for Manpower and Reserve Affairs, the U.S. Army Corps of 

Engineers, and select RCI installations. All agreed 

that an oversight program was necessary, but each 

of the HQDA offices and HQ USACE wanted to be 

the one responsible for it. Clark listened to their 

concerns and spent much of 2002 seeking authorization for the Office of the Assistant Secretary 

of the Army for Installations and Environment to 

administer the program, a battle that Clark and 

McGarrity eventually won.

Clark and McGarrity completed the design of 

PAM in 2002 and implemented the program at the 

initial sites in 2003. Today, the program continues 

in operation at all RCI sites and headquarters. 

PAM utilizes the best practices from the real estate 

investment/management industry, along with the 

tools of sound governmental program oversight. 

By blending private-sector knowledge and management incentives with partnership agreement 

compliance, the Army has been able to design a 

highly effective oversight program. Several General Accounting Office studies on military housing privatization, as well as independent studies 

performed by the United States Military Academy 

and Army’s Lean Six Sigma consultants, have recognized PAM’s effectiveness. In addition, PAM has 

been a primary factor in sustaining the early successes of the RCI program throughout the years.183

Clark and the JLL team also developed standard 

operating procedures for the program and implemented them at Fort Hood in March 2003. After 

testing the procedures at Fort Hood, they applied 

them at Forts Meade and Lewis as well.184 

In January 2003, Assistant Secretary Fiori 

issued a memorandum to all installations “to 

announce the Army’s RCI PAM program and to 

solicit your support in its continued development 

and implementation.”185 Fiori attached an executive summary of the program to the memo, which 

explained that PAM would measure RCI program 

performance at an installation based on “the service members’ satisfaction with family housing, 

minimal waiting lists, the continuous enhancement and preservation of the housing assets over 

the life of the project, the mitigation of project 

risk, and the successful completion of the housing development scope of work.”186 After PAM was 

successfully implemented at Forts Hood, Meade, 

and Lewis, Deputy Assistant Secretary for Privatization and Partnerships William Armbruster, 

in March 2003, approved implementation of the 

program “at all Army installations throughout the 

U.S. scheduled to undergo privatization of housing by 2007.”187 

In many ways, PAM sanctioned processes and 

techniques that were already in place in the pilots. 

When a developer was selected, the developer and 

the Army would form a limited liability company 

or limited partnership. A Board of Directors or 

Major Decisions Committee, consisting of the 

installation’s garrison commander and representatives from the developer, would run the firm. Each 

project would also have an RCI Asset Manager 

located on the installation, who would regularly 

interface with the partner. According to the PAM 
172 Privatizing Military Family Housing 173

CHAPTER SIX

Implementing the RCI Pilot Projects, 2001–2005

process, most of the Army’s day-to-day oversight 

would be conducted by the garrison commander, 

but “Major Decisions” (defined as “specific strategic decisions requir[ing] consent of the Project’s 

owners”) had to go to an RCI Portfolio Manager 

(assigned to each installation by the RCI Program 

Office in Washington, D.C.) and the Deputy ASA 

for Privatization and Partnerships for approval.188 

The RCI Portfolio Manager had various 

oversight duties. According to Clark, the portfolio 

manager was responsible for securing the project’s long-term success. The manager did not get 

involved in day-to-day details of an RCI project 

but did oversee the financial health of a project 

through monthly and quarterly PAM reports 

generated by the installations. Portfolio managers 

also had “information and network resources to 

spread success stories, techniques, approaches and 

solutions from one project to another as well as to 

higher echelons of Army leadership.”189 According 

to Mack Quinney, project director of Fort Hood 

Family Housing, the portfolio manager conducted 

an annual site visit to “look at the grounds, look 

at the production of construction and quality of 

homes and ... review our operations.” The portfolio 

manager also served as the installation’s point of 

contact for RCI.190 

To ensure project success, the portfolio 

manager could utilize specific PAM tools. These 

included a legal compliance checklist and ground 

lease inspection process; monthly, quarterly, 

semi-annual, and annual accounting and financial reports; transition planning and coordination 

with the RCI Asset Manager; annual project visits; 

special-purpose reviews to resolve potentially 

problematic issues; Army RCI training and professional development to ensure that project members had sufficient skill in and knowledge of PAM 

procedures; document management, as directed 

by the USACE Norfolk District Real Estate Office; 

and other tools, such as annual resident surveys, to 

measure how satisfied soldiers were with privatized 

housing. By establishing the use of these tools, 

Clark and the RCI Program Office hoped to receive 

“early indications of project or portfolio issues.”191

Don Spigelmyer, former head of RCI, commented 

that, “The private sector’s role is to make a profit 

and the government’s role is to spend taxpayer’s 

money wisely and this [the PAM program] accomplishes both objectives. In the words of President 

Ronald Reagan, ‘Trust but verify.’”192

Conclusion

The three RCI pilot projects provided many 

lessons from which other installations could learn. 

The pilots also gave the RCI Program Office in 

Washington, D.C., needed experience. A 2002 

report concluded, “Army civilians in the RCI Office 

are gaining knowledge from lessons learned in the 

pilot projects and are developing best practices 

and skill sets that will be used in the follow-on 

projects.”193 The most striking example of this was 

the development of the PAM program, which was 

created through the combined efforts of Sandy 

Clark and the JLL consulting team. Clark and JLL 

continually refined their ideas as they visited the 

pilot projects, including the pilot at Fort Carson, 

and saw how they were being managed—and 

especially as they noted that each pilot managed 

the program a little differently. “We had four different projects with four very similar but yet different 

oversight approaches,” Clark remembered. He concluded that “At the end of the day, we cannot have 

35 projects with 35 different, yet somewhat similar, 

oversight [practices].”194 Implementing PAM procedures at the pilots made it possible for “the program [to be] more successful when it offers valueadded support, minimizes duplication of effort and 

redundant reporting, and does not encroach on the 

partner’s responsibility and authority to manage 

the project on a day-to-day basis.”195 

Perhaps the most significant lesson that all 

four pilots taught was the need for an installation’s 

RCI office to maintain a good working relationship with the partner. Forts Hood and Carson had 

a good relationship, and RCI proceeded relatively 

smoothly there. The relationship was not as good 

at either Fort Lewis or Fort Meade, and their RCI 

programs suffered accordingly. Both of those pilots 

indicated that it was difficult for either side to 

acclimate to the culture of the other, even though 

the importance of doing so as quickly as possible, 

and of ensuring that each side was really committed to the partnership idea, was crucial.

Even when the transition was going relatively 

smoothly, unexpected problems could arise. Fort 

Carson faced the bankruptcy of the partner’s parent company, Fort Hood dealt with school district 

issues, Fort Lewis experienced a lawsuit, and Fort 

Meade faced low occupancy rates in its initial 

years. Other sources of pressure included the need 

to provide for historic homes and their maintenance; environmental issues such as methane gas, 

chlordane, or mold; educating residents about 

privatization and getting them to accept and trust 

the developer; downsizing installation housing 

offices because of privatization; and the “have” 

and “have-not” syndrome, as some families were 

moved into new houses while others were not. 

Fortunately, the hard work of both the Army and 

the partners resulted in satisfactory outcomes. 

As other installations implemented RCI, they too 

could expect to face both similar and unique problems along the way.

Each installation also had experiences that 

highlighted the flexibility of the RCI program and 

the ways in which flexibility could benefit military 

families. Fort Lewis’s implementation of modular 

housing as a way to fit more houses into its budget 

while still providing quality homes was one of the 

most striking examples of this flexibility, as was 

Picerne’s proposal to construct neighborhood centers at Fort Meade to benefit residents and enhance 

a neighborhood’s community feeling. Such flexibility was not possible before privatization. That, of 

course, was one of the main reasons for RCI.

Most significantly, the pilots demonstrated the 

ability of installations to dramatically improve the 

quality of life of its families. As residents moved 

into new and renovated homes, the vast majority 

expressed joy and amazement at the places they 

now called home, and that reaction made all of the 

hard work worth it. Bill Mulvey of Picerne Military Housing commented, “The most rewarding 

[part of RCI] is seeing the smile on the families’ 

[faces].”196 Pat Mikita, housing manager at Fort Carson, observed, “Some people had never had this ... 

nice of a house before in their life,” and that “made 

you feel proud.”197 Using the lessons of the pilots, 

the Army turned its focus to its other installations, 

hoping to have the same privatization success with 

them that it had achieved at Forts Carson, Hood, 

Lewis, and Meade.
174 Privatizing Military Family Housing 175

CHAPTER SIX

Implementing the RCI Pilot Projects, 2001–2005

Endnotes to Chapter 6

1. Untitled speech by William Armbruster, Folder: Lessons 

Learned-PM&PDC&KM, Subfolder: 2002b-Atlanta Apr 

02, Share Drive database, RCI Program Office, Crystal 

City, Va. Hereafter cited as RCI Office. See also Joyce 

VanSlyke interview by Matthew Godfrey, 27 June 2008, the 

Pentagon, Transcript, 5-6; William Armbruster interview 

by Matthew Godfrey, 13 February 2007, the Pentagon, 

Transcript, 2; “Statement of the Honorable Mario P. 

Fiori, Assistant Secretary of the Army (Installations 

and Environment), Before the Subcommittee on 

Military Readiness, Committee on Armed Services, on 

Outsourcing, Privatization, and A-76 Issues, March 13, 

2002,” http://sharea76.fedworx.org/ShareA76/docs/1%20

-%20Department%20of%20the%20Army/ASA%20I&E.

pdf; and “Mr. Geoffrey G. Prosch,” http://www.asaie.army/

mil/Public/IE/proschprint.html.

2. U.S. Department of the Army, “Army Family Housing 

Master Plan 2001, Amended October 2001,” v-vi, Box 3, 

Uncatalogued Housing Materials, Research Collections, 

Office of History U.S. Army Corps of Engineers 

Headquarters (HQUSACE), Alexandria, Va. Hereafter 

cited as USACE Office of History. Also “Army Family 

Housing Master Plan,” n.d., Folder: GSA Award Package 

2006, Subfolder: Previous RCI-ACSIM Submission, Share 

Drive database, RCI Office.

3. Dean Stefanides, telephone communication with Paul 

Sadin, 1 February 2011.

4. Quoted in “Installations as Flagships,” The Army 

Engineer (September/October 2004): 35.

5. U.S. Army, “Installation Management Agency History,” 

http://www.ima.army.mil/sites/about/history.asp.

6. Geoffrey G. Prosch, “Army Installations: Supporting 

the War and Transforming,” Army (March 2005): 41; and 

William Baldwin personal communication with Matthew 

Godfrey, 25 March 2009. 

7. The parent company of the developer went bankrupt, 

causing a sell-off of assets, one of which was the Carson 

project.

8. Pat Mikita, Dean Quaranta, and Harrison Cole 

interview by Matthew Godfrey and Paul Sadin, 4 June 

2007, Fort Carson, Colo., Transcript, 19-20; and Dru 

Brenner-Beck, MAJ, JA, Chief, Administrative & Civil Law, 

Memorandum for Record—Attorney Client Privilege, 28 

February 2001, Documentum database, RCI Office.

9. Russ Hamilton interview by Matthew Godfrey, 5 June 

2007, Fort Carson, Colo., Transcript, 10.

10. Hamilton interview, 10.

11. Hamilton interview, 10.

27. Hayes comments, 13 February 2011.

28. Ted Lipham, RCI Program Director, “Residential 

Communities Initiative (RCI), Fort Hood CDMP Pre-brief 

for DA/OSD/OMB Meeting,” PowerPoint, 2 April 2001, 5, 

document provided by Dean Stefanides.

29. Office of Management and Budget, “Ft. Hood CDMP 

Review & Approval Process,” 7 February 2001, 1, document 

provided by Dean Stefanides.

30. “Ft. Hood CDMP Review & Approval Process,” 1.

31. James T. Lipham, RCI Program Director, to Director, 

Competitive Sourcing and Privatization, memorandum, 14 

March 2001, 1, document provided by Dean Stefanides.

32. Per Stefanides’ comments, 3 February 2011, the Fort 

Hood and FORSCOM Commanding Generals approved 

the CDMP on 17 January 2001. Congress approved the Fort 

Hood CDMP on 31 May 2001. 

33. U.S. Army Audit Agency, “Privatization of Family 

Housing Fort Lewis, Washington,” 29 November 2002, 

Audit Report: A-2003-064-IMO, 9, Folder: Army 

Installations—Hood, Lewis, Meade, Subfolder: Fort 

Lewis, Share Drive database, RCI Office. According to one 

individual, the color of the housing was based on “the 

condition of major components (i.e., the site and grounds, 

building exterior, interior workspace, bathrooms, utilities, 

kitchens, and laundry rooms).” If a unit was inadequate, 

it meant that it “require[d] a major repair, component 

upgrade, component replacement, or total upgrade.” Larry 

W. Wright email to Rhonda Hayes, 30 August 2001, Folder: 

ISR-Facility Issues, Share Drive database, RCI Office.

34. Stefanides comments, 3 February 2011.

35. Fort Hood Family Housing LP, “Executive Summary: 

Community Development and Management Plan, 

Residential Communities Initiative, Fort Hood, Texas,” 

ca. 2001, 4, 11, Folder: Hood, Lewis, Meade, Subfolder: 

Fort Hood, Share Drive database, RCI Office. See also 

Michelynn Carellas, “Information Paper, SAIE-RCI, 

November 25, 2003, Subject: Fort Hood Residential 

Communities Initiative (RCI) Privatization Project,” 

Folder: Hood, Lewis, Meade, Subfolder: Fort Hood, Share 

Drive database, RCI Office.

36. “Chronology/Timelines, Fort Hood Chronology,” 

February 12, 2001, Documentum database, RCI Office.

37. Untitled document dated 25 March 2002, beginning, 

“Question. It took almost five months from contract 

award to close the Fort Hood housing initiative,” Folder: 

Congress (incl. sub-folders), Share Drive database, RCI 

Office; and “Information Paper, SAIE-RCI, January 27, 

2003, Subject: Fort Hood Residential Communities 

Initiative (RCI) Project,” Folder: Hood, Lewis, Meade, 

Subfolder: Fort Hood, Share Drive database, RCI Office.

38. Fort Hood Family Housing LP, “Executive Summary: 

Community Development and Management Plan,” 7.

39. Ian “Sandy” Clark, “Information Paper, SAIE-RCI, 

November 5, 2001, Subject: Fort Hood Residential 

Communities Initiative (RCI) Project, Folder: Hood, 

Lewis, Meade, Subfolder: Fort Hood, Share Drive 

database, RCI Office.

40. U.S. Army, “Army Family Housing Master Plan 

2001,” 3:2, stated stated that each installation needed 

“3.5 persons overhead and 1 person per 1,000 privatized 

housing units” for RCI support, as well as “1.5 persons 

management and community liaison, 1 CHRRS person for 

3,000 private sector families, 1 person for Deposit Waiver, 

and 1 person for all leased housing (Section 801) managed 

by the housing office” for its off-post housing support. 

41. U.S. Army Audit Agency, “Privatization of Family 

Housing: Fort Hood, Texas,” 8 May 2003, Audit Report 

A-2003-0252-IMO, 8, 22, copy provided by Thomas Kraeer. 

42. Carol Anderson and Michael Nix interview by Leigh 

Cutler, 18 September 2007, Fort Hood, Tex., Transcript, 13. 

See also U.S. Army Audit Agency, “Privatization of Family 

Housing: Fort Hood, Texas,” 8, 22.

43. U.S. Army Audit Agency, “Privatization of Family 

Housing: Fort Hood, Texas,” 8.

44. Robert Erwin interview by Leigh Cutler, 19 September 

2007, Fort Hood, Tex., Transcript, 4.

45. Anderson and Nix interview, 7; and U.S. Army Audit 

Agency, “Privatization of Family Housing: Fort Hood, 

Texas,” 10.

46. Erwin interview, 4.

47. Marvin Williams interview by Leigh Cutler, 19 

September 2007, Fort Hood, Tex., Transcript, 5-6.

48. Erwin interview, 9.

49. Barbara Sincere interview by Leigh Cutler, 17 July 2007, 

Crystal City, Va., Transcript, 9.

50. Mack Quinney and Jim Switzer interview by Leigh 

Cutler, 19 September 2007, Fort Hood, Tex., Transcript, 12.

51. Erwin interview, 4.

52. Quinney and Switzer interview, 8, 11.

53. Actus Lend Lease, “Actus Shares the Essence of Napa 

with Fort Hood Residents,” Hood Highlights 1 (June 

2004): 2. 

54. Actus Lend Lease, “FHFH Families Support National 

Night Out,” Hood Highlights 3 (August 2005): 1. 

55. Actus Lend Lease, “Spotlight on the Community,” 

Hood Highlights 2 (March 2005): 2. 

56. Kevin Dwyer, “Hood Optimizes Opportunities,” Killeen 

Daily Herald, April 28, 2001.

57. Jenifer Putnam, “Chamber Lays Foundation for 

Government Contracts,” Killeen Daily Herald, 

February 17, 2001.

12. Quoted in Assistant Secretary of the Army for 

Installations & Environment, RCI Office, “RCI Primer: An 

Introduction to the RCI Program,” 7, document provided 

by RCI Office. See also Mikita, Quaranta, and Cole 

interview, 25.

13. “MHPI Program Evaluation Plan (PEP), Fort Carson 

Project Summary Report, Period Ending: 30 June 2001,” ii, 

document provided by Dean Quaranta, Fort Carson, Colo.

14. Ron Hansen telephone interview by Paul Sadin, 11 April 

2008, Seattle, Wash., Transcript, 11.

15. Jerry Stafford interview by Paul Sadin, 5 June 2007, Fort 

Carson, Colo., Transcript, 12.

16. Don Spigelmyer, telephone communication with Paul 

Sadin, 1 February 2011.

17. “MHPI Program Evaluation Plan (PEP), Fort Carson 

Project Summary Report, Period Ending: 31 December 

2002,” ii, document provided by Dean Quaranta, Fort 

Carson, Colo.

18. “Statement of Mr. Philip W. Grone, Principal Assistant 

Deputy Under Secretary of Defense (Installations and 

Environment), Before the Subcommittee on Military 

Construction of the House Appropriations Committee,” 

3 March 2004, www.acq.osd.mil/housing/ct04_grone.

htm. See also “MHPI Program Evaluation Plan (PEP), 

Fort Carson, Project Summary Report, Period Ended: 

31 December 2003,” 1, 6, document provided by Dean 

Quaranta, Fort Carson, Colo.; and “Army Announces 

New Residential Communities Initiative Partner at Forts 

Carson, Story, and Eustis,” U.S. Army News Release, Army 

Public Affairs, 5 December 2003, http://www4.army.mil/

ocpa/print.php?story_id_key=5473.

19. Mikita, Quaranta, and Cole interview, 30-31.

20. “Statement of Mr. Philip W. Grone,” 3 March 2004.

21. Mikita, Quaranta, and Cole interview, 20, 23; and 

“MHPI Program Evaluation Plan (PEP), Fort Carson, 

Project Summary Report, Period: December 2005,” 4, 

document provided by Dean Quaranta, Fort Carson, Colo.

22. Dean Stefanides, written comments to authors, 3 

February 2011.

23. “MHPI Program Evaluation Plan (PEP), Fort Carson 

Project Summary Report, Period Ending: 30 June 2001,” iii. 

See also Mikita, Quaranta, and Cole interview, 26; “MHPI 

Program Evaluation Plan (PEP), Fort Carson, Project 

Summary Report, Period: December 2005,” 2; and “Army 

Leadership Notes, as of 9 April 2007,” document provided 

by William Baldwin, USACE Office of History.

24. Stefanides comments, 3 February 2011.

25. Stefanides comments, 3 February 2011.

26. Rhonda Hayes, written comments to authors, 13 

February 2011.
176 Privatizing Military Family Housing 177

CHAPTER SIX

Implementing the RCI Pilot Projects, 2001–2005

58. Geoffrey G. Prosch, Principal Deputy Secretary 

of the Army (Installations and Environment), to 

U.S. Representative Chet Edwards, undated letter, 

Documentum database, RCI Office; and “Memorandum 

for See Distribution, Subject: Residential Communities 

Initiatives (RCI) Policy for Major Decisions Authority,” 

June 8, 2005, Documentum database, RCI Office.

59. Jacqueline Rogers, “Providing High Quality School 

Facilities in Support of Military Family Housing 

Privatization,” Documentum database, RCI Office. 

See also table marked “Rough Draft-Dated 24, 2004,” 

document provided by RCI Office.

60. Fort Hood Garrison Commander William H. Parry 

and Department of the Army (DA)-RCI staff, email 

correspondence, March 31-April 1, 2002, in “Hood School 

Issue Apr 02.rtf,” Documentum database, RCI Office.

61. Rogers, “Providing High Quality School Facilities.”

62. Quinney and Switzer interview, 5-6.

63. Quinney and Switzer interview, 5-6.

64. Quinney and Switzer interview, 2.

65. Louis Bain telephone interview by Paul Sadin, 4 

December 2007, Seattle, Wash., Transcript, 17-18.

66. Rhonda Hayes, written comments to authors, 2 

February 2011.

67. “Lessons Learned, The NEW Housing Program, Fort 

Hood Family Housing, LP, February 2002,” Folder Lessons 

Learned-PM&PDC&KM, 2002a-Dallas PHMA PDS CD 

Subfolder, Share Drive database, RCI Office.

68. Erwin interview, 11.

69. Barbara Sincere, “Information Paper, SAIE-RCI, 30 

June 2006, Subject: Fort Hood Family Housing, LP,” 

Folder: Hood, Lewis, Meade, Subfolder: Fort Hood, Share 

Drive database, RCI Office. See also Michelynn Carellas, 

“Information Paper, SAIE-RCI, November 25, 2003, 

Subject: Fort Hood Residential Communities Initiative 

(RCI) Privatization Project,” Folder: Hood, Lewis, Meade, 

Subfolder: Fort Hood, Share Drive database, RCI Office.

70. Fort Lewis is now part of Joint Base Lewis-McChord. 

Because the installation was called Fort Lewis for most 

of the years discussed in this history, the authors have 

maintained the use of the original name throughout the 

book.

71. Lt. Gen. James T. Hill to Mario P. Fiori, n.d. (ca. 24 June 

2002), RCI Office, Fort Lewis, Wash.

72. Cindy Mills, Mike Greer, Boyd Lucas, and Kimberlee 

Schreiber (EQR staff), interview by Paul Sadin and Leigh 

Cutler, 27 August 2007, Fort Lewis, Wash., Transcript, 6. 

Hereafter referred to as Equity group interview.

73. Nancy Barnes interview by Paul Sadin and Leigh 

Cutler, 27 August 2007, Fort Lewis, Wash., Transcript, 18. 

See also Bain interview, 4.

74. “Fort Lewis, Community Development and 

Management Plan, Executive Summary,” 2-3, Folder: 

Hood, Lewis, Meade, Subfolder: Fort Lewis, Share Drive 

database, RCI Office.

75. “Fort Lewis, Community Development and 

Management Plan, Executive Summary,” 3.

76. “Plan for Release of Pierce County Reversionary 

Interest (In support of RCI),” RCI Office, Fort Lewis.

77. “Plan for Release of Pierce County Reversionary 

Interest.” See also Roy Masengale interview by Paul Sadin 

and Leigh Cutler, 30 August 2007, Fort Lewis, Wash., 

Transcript, 6-7.

78. “Army Treatment of RCI Environmental Issues,” 

Folder: Environmental Issues, Share Drive database, RCI 

Office.

79. Mahlon “Sandy” Apgar, IV, interview by Matthew 

Godfrey, 18 July 2007, Baltimore, Md., Transcript, 23.

80. Quoted in “Final Environmental Assessment of the 

Implementation of the Army Residential Communities 

Initiative at Fort Lewis, Washington,” Prepared for Forces 

Command, U.S. Army, by the Directorate of Public Works, 

Fort Lewis, Wash., with technical assistance from ENSR 

International, Redmond, Wash., February 2001, 2, RCI 

Office, Fort Lewis. See also Donald M. Conlon email to 

Suzanne M. Hunt, et al., 26 September 2000, Folder: Army 

Installations—Hood, Lewis, Meade, Subfolder: Fort Lewis, 

Share Drive database, RCI Office.

81. Don Spigelmyer in email to Ian Clark, Dean Stefanides, 

John Lonnquest, and Rhonda Hayes, 17 October 2011. 

82. “RCI Historical Input,” n.d. (ca. 2001), RCI Office, 

Fort Lewis; Information Paper, “Privatization of Army 

Family Housing – Residential Community Initiative 

(RCI),” 6 September 2001, RCI Office, Fort Lewis; 

Information Paper, “Fort Lewis Residential Communities 

Initiative (RCI) Project,” 21 August 2001, Folder: Army 

Installations—Hood, Lewis, Meade, Subfolder: Fort Lewis, 

Share Drive database, RCI Office; Mark J. Connor email 

to Geoffrey G. Prosch, et al., 3 October 2001, Folder: Army 

Installations—Hood, Lewis, Meade, Subfolder: Fort Lewis, 

Share Drive database, RCI Office; “Fort Lewis Military 

Housing Privatization Initiative: Program Description and 

Budget Scoring Analysis,” 21 September 2001, Folder: Army 

Installations—Hood, Lewis, Meade, Subfolder: Fort Lewis, 

Share Drive database, RCI Office; and Barnes interview, 5.

83. “Fort Lewis, Community Development and 

Management Plan, Executive Summary,” 4.

84. Bain interview, 12. See also U.S. Army Audit Agency, 

“Privatization of Family Housing,” 9.

85. “Fort Lewis, Community Development and 

Management Plan, Executive Summary,” 5.

86. Michael Burnham, “Soldiers Sign Leases for Base 

Housing,” Olympian, 8 January 2002; EQR/Lincoln 

Fort Lewis Communities LLC (unsigned) to Ft. Lewis 

Residents, 2 January 2002, RCI Office, Fort Lewis; and 

“Community Update – February 6, 2002: Questions for 

RCI,” RCI Office, Fort Lewis.

87. Michael P. Bissell, Managing Director, EQR/Lincoln 

Fort Lewis Communities LLC, to Louis F. Bain, Director, 

Residential Communities Office, 26 February 2002, 

Correspondence Files, RCI Office, Fort Lewis; Michael 

Gilbert, “Mold Delays Fort Lewis Upgrade,” News Tribune, 

16 February 2002; Rhonda Hayes email to ASA (I&E) 

RCI and ASA (I&E) OHP, 2 April 2002, Folder: Army 

Installations—Hood, Lewis, Meade, Subfolder: Fort Lewis, 

Share Drive database, RCI Office; Information Paper, 

“Residential Communities Initiative (RCI),” 22 May 2002, 

RCI Office, Fort Lewis; and Masengale interview, 8. 

88. “National Historic Preservation Act of 1966, as 

amended through 1992,” in U.S. Department of the 

Interior, Federal Historic Preservation Laws (Washington, 

D.C.: U.S. Department of the Interior, 1993), 7, 9-10, 22. 

See also Mike Wallace, Mickey Mouse History and Other 

Essays on American Memory (Philadelphia: Temple 

University Press, 1996), 190.

89. “Filename: 2-Historic Properties,” Folder: Congress 

(incl. sub-folders), Share Drive database, RCI Office. 

See also “Information Paper, DAIM-FD, 1 Mar 06, 

Subject: Army Capehart and Wherry Housing,” Folder: 

Congress (incl. sub-folders), Share Drive database, RCI 

Office; “Privatization and Partnerships, Questions and 

Answers,” 32, Folder: Congress (incl. sub-folders), Share 

Drive database, RCI Office; Maj. Gen. R. L. Van Antwerp, 

“Memorandum for SEE Distribution, Subject: Capehart 

and Wherry Era Family Housing Program Comments 

issued by Advisory Council on Historic Preservation,” 

11 June 2002, RCI Office, Fort Lewis; Apgar interview, 

32; “New U.S. Army Approach to Historic Preservation 

Requirements Approved,” U.S. Army News Release, 

Army Public Affairs, 5 June 2002, http://www4.army.mil/

ocpa/print.php?story_id_key=1324; and “Council Eases 

Privatization of Post-WWII Housing,” ARNEWS (Army 

News Service), 7 June 2002, http://www4.army.mil/ocpa/

print.php?story_id_key=844.

90. “Fort Lewis Community Development and 

Management Plan, Redevelopment, Renovation, 

Reinvestment, and Replacement Strategy,” Vol. 3, Sec. 

4, 10, Folder: Army Installations—Hood, Lewis, Meade, 

Subfolder: Fort Lewis, Share Drive database, RCI Office.

91. “Army Treatment of RCI Environmental Issues,” Folder: 

Environmental Issues, Share Drive database, RCI Office.

92. “First Amended Memorandum of Agreement Among 

the United States Army, the Washington State Historic 

Preservation Office, and the Advisory Council on Historic 

Preservation Regarding the Privatization of Family 

Housing Fort Lewis, Washington,” n.d. (ca. 2001), RCI 

Office, Fort Lewis; “Fort Lewis Historic District National 

Register of Historic Places Registration Form,” certified 29 

October 2001, RCI Office, Fort Lewis; and Paul T. Steucke, 

Jr., to Dr. Allyson Brooks, 31 January 2002, Correspondence 

Files, RCI Office, Fort Lewis.

93. “Fort Lewis Community Development and 

Management Plan, Historic Dwelling Units Executive 

Summary,” Vol. 1, Folder: Army Installations—Hood, 

Lewis, Meade, Subfolder: Fort Lewis, Share Drive 

database, RCI Office.

94. Headquarters, Department of the Army, “2005 

Housing Requirements Analysis Update, Fort Lewis, 

Washington,” 12 December 2005, Folder: FT Lewis, Share 

Drive database, RCI Office; Thomas R. Liedke email to 

Anton P. Tramp, 26 July 2005, Folder: FT Lewis, Share 

Drive database, RCI Office; Liedke email to Tramp, 3 

October 2005, Folder: FT Lewis, Share Drive database, RCI 

Office; Liedke email to Tramp, 9 December 2005, Folder: 

FT Lewis, Share Drive database, RCI Office; Liedke email 

to George F. McKimmie, 20 December 2005, Folder: FT 

Lewis, Share Drive database, RCI Office; Equity group 

interview, 12, 34; and Information Paper, “To provide an 

information update on the Fort Lewis RCI project,” 18 

August 2006, RCI Office, Fort Lewis.

95. Anton Tramp email to William Armbruster, 27 March 

2006, Folder: FT Lewis, Share Drive database, RCI Office. 

See also Anton Tramp, “Information Paper, SAIE-RCI, 

February 2, 2005, SUBJECT: Status of McChord AFB and 

Fort Lewis Possible Housing Merge,” Attachment to Tramp 

email to Armbruster, 2 February 2005, Folder: FT Lewis, 

Share Drive database, RCI Office; and Thomas Kraeer 

personal communication with Matthew Godfrey, 21 April 

2009.

96. Boyd Lucas, “Ft. Lewis Housing Goes Modular,” 

attachment to Boyd Lucas email to Kimberlee Schreiber 

and Anton Tramp, 21 March 2005, Folder: FT Lewis, Share 

Drive database, RCI Office.

97. “History of Modular Homes & Buildings,” http://www.

modulartoday.com/modular-history.html; and “Modular 

Home History,” http://www.modular-homes.us/history.

htm.

98. William Armbruster email string, 15 June 2004, Folder: 

FT Lewis, Share Drive database, RCI Office.

99. Both quotations in James (Randy) Robinson email 

string to BMG Anders Aadland, 30 June 2004, Folder: FT 

Lewis, Share Drive database, RCI Office.

100. William Armbruster email string, 13 August 2004, 

Folder: FT Lewis, Share Drive database, RCI Office.
178 Privatizing Military Family Housing 179

CHAPTER SIX

Implementing the RCI Pilot Projects, 2001–2005

101. Thomas L. Knight, Colonel, Special Forces, Garrison 

Commander, to Mr. Mark Tennison, Executive V.P. 

Development, Equity Residential, n.d., attachment to 

Mary A. Kellogg email to Mark Connor and Anton Tramp, 

18 May 2006, Folder: FT Lewis, Share Drive database, RCI 

Office.

102. Steve R. Leedom, Plant General Manager, Champion 

Homes of Oregon, to Kurt Vick, Project Manager, Lincoln 

Properties, 22 May 2006, Attachment to Boyd Lucas email 

to Anton Tramp, 23 May 2006, Folder: FT Lewis, Share 

Drive database, RCI Office.

103. Equity group interview, 10, 18. See also Steven 

Perrenot email to Anton Tramp, 5 June 2006, Fort: FT 

Lewis, Share Drive database, RCI Office.

104. Information Paper, “Disability Discrimination 

Lawsuit against Equity/Fort Lewis Communications LLC,” 

14 May 2004, Folder: Army Installations—Hood, Lewis, 

Meade, Subfolder: Fort Lewis, Share Drive database, RCI 

Office. See also “News Handout—Housing Discrimination 

Against Disabled Family Members at Fort Lewis: Factual 

Background,” 1-2, http://www.tlpj.org/briefs/fort_lewis_

handout.pdf; and Michael Gilbert, “Army Families Settle 

Suit,” Tacoma News-Tribune, 29 September 2005.

105. “Fort Lewis Community Development and 

Management Plan, Exceptional Family Member Program 

Executive Summary,” Vol. 1, Folder: Army Installations—

Hood, Lewis, Meade, Subfolder: Fort Lewis, Share Drive 

database, RCI Office.

106. Anton Tramp and Mark Connor, “Fort Lewis RCI 

Project Briefing to Mr. Ryan B. Vaart, HASC PSM,” 3 June 

2004, PowerPoint presentation, 8, 9, 11, Folder: Army 

Installations—Hood, Lewis, Meade, Subfolder: Fort Lewis, 

Share Drive database, RCI Office.

107. “Unique Settlement of Lawsuit Improves Housing and 

Access for Disabled Family Residents at Fort Lewis Army 

Base,” News Release, Attachment to Mark Connor email to 

Anton Tramp, 29 September 2005, Folder: FT Lewis, Share 

Drive database, RCI Office.

108. Equity group interview, 43.

109. Equity group interview, 39.

110. “Executive Summary of the RCI Resident Opinion 

Survey,” Summer 2003, 6, Correspondence Files, RCI 

Office, Fort Lewis.

111. Quoted in Anton Tramp email to Rhonda Hayes, 25 

August 2005, Folder: FT Lewis, Share Drive database, RCI 

Office. See also Anton Tramp, “Information Paper, SAIERCI, 13 April 2006, Purpose: To provide an information 

update on the Fort Lewis RCI Project,” Attachment to 

Michael McCarley to Anton Tramp, 17 April 2006, Folder: 

FT Lewis, Share Drive database, RCI Office.

112. Philip E. Sakowitz email to IMA Region Directors, 16 

July 2004, Folder: IMA HQ-Regions & MACOMS, Share 

Drive database, RCI Office.

113. Tramp and Connor, “Fort Lewis RCI Project Briefing,” 

5.

114. Equity group interview, 20-21; and Robert Boisvert 

interview by Paul Sadin and Leigh Cutler, 27 August 2007, 

Fort Lewis, Wash., Transcript, 10.

115. Boyd Lucas email to Anton Tramp, 29 June 2006, 

Folder: FT Lewis, Share Drive database, RCI Office. See 

also Mary Kellogg email to Anton Tramp, 8 February 

2005, Folder: FT Lewis, Share Drive database, RCI Office; 

Boisvert interview, 9; and Equity group interview, 26.

116. Mary Kellogg and Kimberlee Schreiber, “Residential 

Communities Initiative (RCI),” 15 December 2005, 

PowerPoint presentation, RCI Office, Fort Lewis.

117. RCI Office, “Information Paper, Army’s Residential 

Communities Initiative (RCI) Project at Fort Lewis,” 

October 22, 2003, 1, electronic document provided by RCI 

Office, Fort Lewis. 

118. “Family Housing Incentive Fee Award Board Minutes 

of August 24, 2007 Board Meeting,” 3, RCI Office, Fort 

Lewis; and “Partnership Meeting Minutes,” 13 October 

2006, RCI Office, Fort Lewis.

119. “Commander Gives Briefing on RIF,” Soundoff!, 8 

March 2001.

120. Quoted in “Private Partnership Takes Over Military 

Housing,” Baltimore Sun, 13 April 2001. See also George 

Barbee telephone interview by Paul Sadin, 2 and 4 

December 2008, Seattle, Wash., Transcript, 7.

121. Quoted in “Residents Meet Housing Developer,” 

Soundoff!, 10 May 2001.

122. “Officials, Partners Sign Housing Declaration,” 

Soundoff!, 10 May 2001.

123. “Partners Update Resident Advisory Committee on 

Future Communities Design,” Soundoff!, 14 June 2001.

124. Caryn Washington interview by Matthew Godfrey, 16 

October 2007, Fort Meade, Md., Transcript, 3.

125. See, for example, Mahlon Apgar, IV, to Honorable 

John Warner, Chairman, Committee on Armed Services, 

United States Senate, 22 August 2000, Folder: Hood, 

Lewis, Meade, Subfolder: Fort Meade, Share Drive 

database, RCI Office.

126. Bill Mulvey interview by Matthew Godfrey, 19 October 

2007, Fort Meade, Md., Transcript, 17.

127. John Picerne telephone interview by Matthew 

Godfrey, 5 May 2008, Missoula, Mont., Transcript, 5. See 

also Mulvey interview, 2.

128. See “Military Housing Privatization Initiative, Project 

Summary,” 12 December 2001, Folder: Hood, Lewis, 

Meade, Subfolder: Fort Meade, Share Drive database, 

RCI Office. See also U.S. Department of Defense, “Fort 

Meade Military Housing Privatization Initiative: Program 

Description and Budget Scoring Analysis,” 12 December 

2001, Folder: Hood, Lewis, Meade, Subfolder: Fort Meade, 

Share Drive database, RCI Office; and Lisa Tychsen 

email to Rhonda Q. Hayes et al., 13 May 2002, Folder: 

Hood, Lewis, Meade, Subfolder: Fort Meade, Share Drive 

database, RCI Office.

129. Washington interview, 3-4. See also Aimee Stafford 

interview by Matthew Godfrey and Paul Sadin, 15 October 

2007, Fort Meade, Md., Transcript, 10.

130. Washington interview, 3-4. See also “Fort Meade, 

Residential Communities Initiative (RCI) Transfers 

Operations to Partner, May 1, 2002,” Folder: Hood, Lewis, 

Meade, Subfolder: Fort Meade, Share Drive database, RCI 

Office.

131. Tom White interview by Matthew Godfrey, 15 

October 2007, Fort Meade, Md., Transcript, 1-2. See also 

Washington interview, 5.

132. A. Stafford interview, 3-4, 10.

133. “Meade Communities, LLC Board of Directors, 

Management Council Charter,” Binder: Meade 

Communities Management Council Meetings 2002 (Book 

11), RCI Office, Fort Meade, Md. Hereafter referred to as 

Meade RCI Office. See also “Ask Meade Communities,” 

Soundoff!, 19 July 2001; George Barbee, Program Manager, 

and Colonel Michael J. Stewart, Installation Commander, 

“Fort George G. Meade, Lessons Learned, 6 and 7 

January 2002,” PowerPoint presentation, Folder: Lessons 

Learned—PM & PDC, Share Drive database, RCI Office.

134. “Management Council Meeting, LLC, Operations 

Council, Meeting Minutes, 22 August 02,” Binder: Meade 

Communities Management Council Meetings 2002 (Book 

11), Meade RCI Office.

135. “RCI Offers a New Route of Communication,” 

Soundoff!, 29 August 2002.

136. Quoted in “Housing, Water Discussed at Meeting,” 

Soundoff!, 19 September 2002.

137. “Picerne Makes Changes for Better,” Soundoff!, 12 

December 2002.

138. A. Stafford interview, 4.

139. Ladye Blair interview by Paul Sadin, 8 October 2008, 

Fort Irwin, Calif., Transcript, 11.

140. A. Stafford interview, 5.

141. “Meade RCI In Progress Review, Trip Report,” Folder: 

Hood, Lewis, Meade, Subfolder: Fort Meade, Share 

Drive database, RCI Office; and “Notes from Executive 

Council Meeting of 1 November 2002,” Binder: Meade 

Communities Management Council Meetings 2002 

(Book II), Meade RCI Office. For example, “Monthly Key 

Statistics,” Hood Highlights 1 (July 2003): 1 showed Hood’s 

occupancy at 98.43 percent, while the March 2005 issue of 

Hood Highlights indicated Fort Hood Family Housing had 

a 98.25 percent occupancy rate.

142. “Single Service Members Sign Up for On-Post 

Houses,” Soundoff!, 6 February 2003.

143. Margot Adler, “Behind the Ever-Expanding American 

Dream House,” All Things Considered, July 4, 2006, 

National Public Radio, transcript, http://www.npr.org/

templates/story/story.php?storyId=5525283. See also 

“America’s Homes Get Bigger and Bigger,” ABC News 

Report, 27 December 2005, http://abcnews.go.com/GMA/

Moms/story?id=1445039.

144. Mulvey interview, 18-20.

145. Mulvey interview, 18-20.

146. United States Government Accountability Office, 

Military Housing: Management Issues Require Attention 

as the Privatization Program Matures, 28 April 2006, 19-21, 

http://www.gao.gov/products/GAO-06-438.

147. “Installation Commander Initiates Plan to Move 

Unaccompanied Service Members into Houses On Post,” 

Soundoff!, 23 January 2003; “Fort Meade Site Visit Notes,” 

Folder: Hood, Lewis, Meade, Subfolder: Fort Meade, Share 

Drive database, RCI Office; “Information Paper, SAIE-RCI, 

May 24, 2006,” Folder: Hood, Lewis, Meade, Subfolder: 

Fort Meade, Share Drive database, RCI Office; “Single 

Service Members Sign Up for On-Post Houses,” Soundoff!, 

6 February 2003; and “Single Service Members Move 

into Post Housing’s Argonne Hills North Neighborhood,” 

Soundoff!, April 2003.

148. “AEC Report,” Folder: Hood, Lewis, Meade, Subfolder: 

Fort Meade, Share Drive database, RCI Office.

149. Barbee interview, 19.

150. See “AEC Report”; Rhonda Hayes email string, 18 

September 2002, Folder: Hood, Lewis, Meade, Subfolder: 

Fort Meade, Share Drive, RCI Office; and “Fort Meade,” 24 

April 2007, http://www.dcmilitary.com/special_sections/

sw/042407/ss_112314_31939.shtml.

151. “Fort George G. Meade Residential Communities 

Initiative, Talking Points – Lead-Based Paint in Historic 

Housing,” Folder: Congress (incl. sub-folders), Share Drive 

database, RCI Office.

152. Angela French, “Picerne Preserves Heritage of Historic 

Homes,” Soundoff!, 3 March 2005.

153. A. Stafford interview, 17.
180 Privatizing Military Family Housing 181

CHAPTER SIX

Implementing the RCI Pilot Projects, 2001–2005

154. French, “Picerne Preserves Heritage of Historic 

Homes.” See also A. Stafford interview, 18.

155. Clarke Howard, “Information Paper, SAIE-RCI, 7 

April 2003, Fort Meade Newspaper Articles,” Folder: 

Information Papers-General Topics, Share Drive database, 

RCI Office.

156. Clarke Howard, “Information Paper, SAIE-RCI, 3 

January 2006,” Folder: Information Papers-General Topics, 

Share Drive database, RCI Office.

157. “Draft Trash Site/Methane Gas Chronology, July 

2001-Jan 2006,” document provided by Aimee Stafford, 

Meade RCI Office; “Update on Manor View Dump Site,” 

Soundoff!, 13 January 2006; and Howard, “Information 

Paper, SAIE-RCI, 3 January 2006.”

158. “Methane To Be Siphoned By Month’s End,” 13 January 

2006, http://www.nbc4.com/print/6053369/detail.htm. 

See also A. Stafford interview, 19-20.

159. “Work Begins on 10-Year Housing Project,” Soundoff!, 

6 February 2003; and “Picerne Straight Talk: Construction 

Questions Answered,” Soundoff!, 27 March 2003.

160. “Privatized Housing Marks Military Milestone,” 

Soundoff!, 18 September 2003.

161. Mulvey interview, 24-25. See also see also Program 

for Meade Communities, LLC, Grand Opening of the 

Potomac Place Neighborhood Center, 18 December 2003, 

Binder: Meade Communities Management Council 

Meetings 2003 (Book 3-B), Meade RCI Office; “Mr. 

Prosch’s Remarks, Fort Meade Neighborhood Center 

Grand Opening, 18 December 2003,” Folder: Hood, Lewis, 

Meade, Subfolder: Fort Meade, Share Drive database, 

RCI Office; and “Fort Meade Opens Doors to First 

Neighborhood Center,” Soundoff!, 1 January 2004.

162. “Occupancy Improvement Plan, Fort Meade, 

September 03,” Binder: Meade Communities Management 

Council Meetings 2003 (Book 3-B), Meade RCI Office.

163. Mulvey interview, 19-20.

164. Angela French Marcum, “The Importance of Resident 

Feedback,” Soundoff!, 1 June 2006. See also Mulvey 

interview, 18; “Management Council, LLC, Operations 

Council, Meeting Minutes, 04 February 03, Binder: Meade 

Communities Management Council Meetings 2003 (Book 

3A), Meade RCI Office; Educational Benchmarking, Inc. 

and Military Housing and Lodging Institute, “Results 

and Analysis of The Resident Opinion Survey,” Shelved 

Reports, Meade RCI Office; Clark Howard, “Fort Meade, 

Picerne Military Housing Share NAID Award,” Defense 

Communities 15 (November/December 2003): 16; and 

“Position Paper: Modifications to Incentive Metrics,” 

Binder: Executive Management Council Meeting Minutes 

2004, Meade RCI Office.

165. Picerne Military Housing, written comments to 

authors, 17 February 2011.

166. Picerne Military Housing, “Residential Communities 

Initiative (RCI), Fort Meade, Maryland: Revision to 

Community Development and Management Plan 

(CDMP),” September 2006, 18-19, Meade RCI Office.

167. “Draft Position Paper, Priorities for Assignment” 

(with attachments), Binder: Executive Management 

Council Meeting Minutes 2004, Meade RCI Office. See 

also Executive Council Meeting Minutes, 16 August 2004, 

Binder: Executive Management Council Meeting Minutes 

2004, Meade RCI Office.

168. Col. John W. Ives, “Housing Occupancy Will Facilitate 

New Home Construction,” Soundoff!, 2 December 2004. 

See also John W. Ives and John Picerne Memo, 28 October 

2004, Binder: Executive Council Minutes 2005, Meade RCI 

Office; and “Minutes of the Executive Council of Meade 

Communities, LLC,” 28 October 2004, Binder: Executive 

Management Council Meeting Minutes 2004, Meade RCI 

Office.

169. Ives, “Housing Occupancy Will Facilitate New Home 

Construction.”

170. “Executive Council Meeting Minutes, 28 June 2005,” 

Binder: Executive Council Minutes 2005, Meade RCI 

Office.

171. Tom White email string, 20 January 2005, Binder: 

Executive Council Minutes 2005, Meade RCI Office.

172. Tom White email string, 20 January 2005; and 

“Information Paper, SAIE-RCI, 31 May 2006,” Folder: 

Hood, Lewis, Meade, Subfolder: Fort Meade, Share Drive 

database, RCI Office.

173. Picerne interview, 14. See also Mulvey interview, 21.

174. “Executive Council Meeting, 1500 Hours, 27 January 

2006,” Binder: Executive Council Meeting Minutes 2006, 

Meade RCI Office.

175. Picerne Military Housing, “Revision to Community 

Development and Management Plan (CDMP),” 1-4; and 

“Colonel Kenneth O. McCreedy, “Transformation of 

Fort Meade Housing – Thoughts from the Commander,” 

Soundoff!, 8 December 2006.

176. Colonel Kenneth O. McCreedy, “Some Good News 

– Thoughts from the Commander,” Soundoff!, 8 March 

2007.

177. A. Stafford interview, 28-29.

178. Clarke Howard interview by Matthew Godfrey, 15 

February 2007, Crystal City, Va., Transcript, 9.

179. Stefanides comments, 3 February 2011.

180. Residential Communities Initiative (Assistant 

Secretary of the Army for Installations & Environment), 

“Portfolio and Asset Management Handbook, Version 3.0 

Revised June 2007,” Section 1-1, document provided by Ian 

“Sandy” Clark. Hereafter referred to as PAM Handbook.

181. Ian “Sandy” Clark telephone interview by Paul Sadin, 

1 December 2008, Seattle, Wash., Transcript, 1-2, 4. 

Hereafter referred to as Clark telephone interview. See also 

interview with Ian “Sandy” Clark by Leigh Cutler, 18 July 

2007, Washington, D.C., Transcript, 1-2.

182. Stefanides comments, 3 February 2011.

183. Stefanides comments, 3 February 2011.

184. Clark telephone interview, 2-3; and “Office, Assistant 

Secretary of the Army Summary of Action, 21 August 

2003, Subject: Residential Communities Initiative (RCI) 

Portfolio and Asset Management (PAM) Standard 

Operating Procedures (SOP) and Implementation Plan,” 

Documentum database, RCI Office. For an example of 

a pilot project visit, see “Meade RCI in Progress Review, 

Trip Report,” Folder: Hood, Lewis, Meade, Subfolder: Fort 

Meade, Share Drive database, RCI Office.

185. Mario P. Fiori, Assistant Secretary of the Army, 

Memorandum for See Distribution (with attachment), 29 

January 2003, document provided by Ian “Sandy” Clark.

186. Fiori Memorandum, 29 January 2003.

187. Ian Clark, “Information Paper, 1 October 2003, Top 

Five DASA (P&P) – Portfolio and Asset Management 

(PAM),” Folder: Information Papers—General Topics, 

Share Drive database, RCI Office.

188. PAM Handbook, Section 1-2. See also Major General 

Larry J. Lust, Assistant Chief of Staff for Installation 

Management, Memorandum for Director, Installation 

Management Agency, 28 May 2003, Documentum 

database, RCI Office.

189. Clark, “Information Paper, 1 October 2003.” See also 

Ian A. Clark email string, 28 July 2004, Folder: IMA HQ 

Regions & MACOMs, Share Drive database, RCI Office.

190. Quinney and Switzer interview, 10-11.

191. PAM Handbook, Sections 1-3 to 1-11.

192. Don Spigelmyer in email to Ian Clark, Dean 

Stefanides, John Lonnquest, and Rhonda Hayes, 17 

October 2011. 

193. House Subcommittee on Military Construction 

Appropriations of the Committee on Appropriations, 

Military Construction Appropriations for 2002: 

Hearings Before a Subcommittee of the Committee on 

Appropriations, House of Representatives, 107th Cong., 1st 

sess., 2001, 668. 

194. Clark telephone interview, 5.

195. U.S. Army, “MHPI Program Evaluation Plan (PEP), 

United States Army, Program Executive Summary, Period 

Ending: 30 June 2003,” 3, Documentum database, RCI 

Office.

196. Mulvey interview, 26.

197. Mikita, Quaranta, and Cole interview, 26.
183

CHAPTER se v en

Consolidating the RCI Program,

2002–2005

Figure 7-1. The Campbell Crossing project at Fort Campbell, Ky.

Courtesy of Lend Lease.

When the U.S. Army designated four 

pilot projects for housing privatization, it chose carefully, ensuring that 

they were installations with the best prospects of 

achieving financial stability and garnering strong 

political support. The Army’s success with the pilot 

projects boosted support for the Residential Communities Initiative (RCI) program and provided 

Army staff and developers with a wealth of experience and lessons learned. As the Army moved 

to privatize a greater number and a more diverse 

group of installations from 2002 through 2005, 

new issues and challenges came to light, particularly at installations that varied the most from a 

“typical” Army base model. Army RCI personnel 

and developers set out to blaze new privatization 

paths that included development of family housing 

at isolated locations such as Fort Irwin, California, creation of dual-service housing projects at 

installations such as the Presidio of Monterey, and 

initiation of RCI projects that combined multiple 

small installations with limited housing stocks. 

Other new privatization efforts during this period 

were precedent-setting because of unique project 

characteristics, such as the hundreds of historic 

homes to be renovated at Fort Sam Houston and 

the inclusion of a town center at Fort Belvoir.

Accelerating the Program

At the same time that RCI anticipated privatizing installations beyond the pilot projects, it 

faced leadership changes. On July 1, 2002, Ted 

Lipham retired from his post as RCI Director 

and Don Spigelmyer, who had been serving as 

Lipham’s deputy director, became acting director, keeping that title until the Army appointed 

him senior executive director of RCI in February 2003.1

 Assisting Spigelmyer in his duties was 

Rhonda Hayes, Deputy Director of RCI. Hayes 

had previously worked in several positions within 

Army housing at the installation level, including as housing division chief at both Darmstadt, 
184 Privatizing Military Family Housing 185

CHAPTER S E V E N

Consolidating the RCI Program, 2002–2005

Figure 7-2. Construction work at a new Army family housing neighborhood in Hawaii.

Courtesy of Lend Lease.

Figure 7-3. Rhonda Hayes, Deputy Director of RCI and later 

Director of Capital Ventures (ASA, IE&E).

Courtesy of Rhonda Hayes.

Germany, and Fort Meade. She had worked as a 

program manager in the RCI office of the Assistant Secretary of the Army, Installations and 

Environment (ASA, I&E) since 1999, overseeing 

source selection and interfacing with the U.S. 

Army Corps of Engineers (USACE) RCI procurement, real estate, and environmental teams. Her 

responsibilities as deputy director included “strategic planning, project scheduling, and overall 

RCI program execution,” including transaction 

management.2

 Upon completion of her duties on 

the Fort Meade Source Selection Evaluation Board 

(SSEB), Hayes realized that no milestones were 

in place to guide future installations through the 

RCI process. Accordingly, she developed the “RCI 

Timeline,” which she had originally intended to 

be an internal planning document. Subsequently, 

however, it expanded in scope to become “the 

drumbeat of the program.”3 The timeline, updated 

quarterly, identified the dates when the Army 

would issue solicitations, award projects, assign 

the Basic Allowance for Housing (BAH) funding, and require the operational funding for due 

diligence, real estate, and environmental studies. The timeline also ensured that the fiscal year 

of transfer would match the fiscal year of Army 

equity contributions. Hayes made certain that all 

participants were accountable to her for meeting 

the established milestones and, as a result, very 

few were missed during the remaining years of 

the program. In fact, the Army was the only one 

of the services to meet the Office of the Secretary 

of Defense (OSD) goal of completing its housing 

privatization program by 2010.4

Assistant Secretary Mario Fiori was formally in 

charge of RCI from August 2001 until his retirement in December 2003. After Fiori retired, his 

position remained vacant until August 2005, when 

the U.S. Senate confirmed Keith Eastin as the new 

Assistant Secretary of the Army. Eastin had both 

a legal and business background and had previously served as Principal Deputy Assistant Secretary of the Navy and as Deputy Undersecretary of 

the U.S. Department of the Interior. Eastin’s forte 

was environmental law and leadership and, like 

Assistant Secretary Fiori before him, he did not 

involve himself as closely with the RCI program as 

Sandy Apgar had done. He left most of the program’s oversight to Deputy Assistant Secretary of 

the Army for Privatizations and Partnerships William Armbruster. Both Fiori and Eastin recruited 

key allies, such as General Jack Keane, who worked 

with Fiori to garner strong support for the RCI 

program from the Army leadership.

General Keane, Vice Chief of Staff of the Army 

from 1999 to 2003, was a key booster of the entire 

privatization effort. Ted Lipham recalled that soon 

after Apgar departed, Keane pulled him aside and 

said, “I know Sandy’s gone so if you need any help, 

all you’ve got to do is call me on this program.”5

Keane, who referred to himself as a “champion” of 

RCI, was committed “to help see it [RCI] through ... 

I took that on as one of my top priority tasks as the 

Vice Chief.” He secured support for RCI that went 

several administrative layers deep, as he got Major 

Army Command (MACOM) commanders, the U.S. 

Army Forces Command (FORSCOM) commander, 

and Chief of Staff of the Army General Eric Shinseki “lined up behind it.”6

Support from senior Army leaders, in combination with some early successes in the pilot 

projects, put the program as a whole on a solid 

footing. With the pilots largely succeeding and 

with administrative program aids such as the RCI 

Timeline and Portfolio and Asset Management 

(PAM) in place, RCI had the necessary structure 

to quicken its pace. When Apgar left office, the 

original plan was to privatize four installations in 

FY 2002: Fort Bragg in North Carolina, Fort Stewart in Georgia, Fort Campbell in Kentucky, and the 

Presidio of Monterey in California. However, Army 

leadership was so impressed with the RCI pilots 

that they wanted to see the same kind of housing 

construction and management at other installations. At a January 2001 meeting of the Integrated 

Process Team (IPT), co-chair and FORSCOM Commander General John Hendrix proposed a “much 

more aggressive RCI program ... [and] urged Army 

to submit a proposal this year to convince Congress 
186 Privatizing Military Family Housing 187

CHAPTER S E V E N

Consolidating the RCI Program, 2002–2005

Residential Communities Initiative

Assistant Secretary of the Army (Installations and Environment)

STREAMLINED PROCUREMENT

Step 1, Part A — MERs

Step 1 – 5 Factors

1 Experience

2 Financial Capabilities

3 Organizational Capabilities

 (Corporate Level)

4 Past Performance

5 Small Business Utilization

 (General History)

Step 2 – 4 Factors

1 Project Finance

2 Preliminary Project Concept Statement

3 Organizational Capabilities

 (On-Site, Project Specific)

4 Small Business Utilization Plan

 (On-Site, Project Specific)

Step 1, Part B — SOQ Step 2 — Installation Oral Presentations

A Establish HQCG

B

C

D

E

F

G

H

A

B

D

F

H

Greely/Wainwright (D Day)

Bidders

B, F, H

Winner

H

Bidders

A, B, D, G

Winner

A

Huachuca/Yuma (D + 60)

Bidders

B, D, F, H

Winner

B

Aberdeen Proving

Ground (D + 90)

Step 1 Evaluation

Factors (5)

Step 2 Evaluation Factors (4)

Figure7-4. A summary of the two-step RFQ process.

Courtesy of RCI Office.

Figure 7-5. The cover of the RCI Primer, issued in 2001. 

Courtesy of RCI Office.

to: (1) lift existing constraints and allow more 

projects, (2) fund additional projects, and (3) start 

development of RCI for all FORSCOM installations.”7

 General Keane agreed that the privatization 

program should become more aggressive in selecting sites and procuring private partners, although 

the Army, the OSD, and Congress first had to agree 

to the accelerated program. 

The Army succeeded in accelerating RCI by 

streamlining the Request for Qualifications (RFQ) 

process that it used to solicit proposals for RCI 

projects. Although the RCI Program Office had 

developed a workable RFQ for the pilot projects, 

RCI leaders looked for ways to make the RFQ even 

less onerous for both developers and Army review 

boards. After serving on three successive SSEBs, 

Rhonda Hayes determined that it was unnecessary 

to re-evaluate the factors pertaining to experience, 

financial capability, and organizational capability 

during the relatively short period of time between 

proposal reviews. Accordingly, the RCI Program 

Office developed a two-step process for bidders 

to follow. In the first step, developers submitted 

a list of previous projects they had conducted in 

order to demonstrate their minimum experience 

requirements (MERs) in the realms of housing 

development, property management, and capital 

formation. If a company failed to meet or clearly 

demonstrate the minimum requirements, the 

selection board culled the company from the group 

of offerors, while the other firms (usually the large 

majority) were considered to have “prequalified.” 

In Step One, Part B, the offerors had to submit a 

statement of qualifications regarding their “experience, financial capabilities, organizational capabilities, past performance,” and their history of 

utilizing small businesses as subcontractors. Based 

on these statements, the SSEB, in Step Two, would 

decide which offerors would constitute the more 

selective “Highly Qualified Competitive Group.” 

This process helped the Army identify firms that 

showed the most potential to become effective 

long-term business partners.8

During Step Two, the companies in the “Highly 

Qualified Competitive Group” had the opportunity 

to make oral presentations detailing their privatized housing vision for the projects/installations 

with which they wanted to partner. At a minimum, 

the Army wanted these presentations to include 

discussions of a company’s “project finance, preliminary project concept statement, organizational 

capabilities (on-site, project specific), [and] small 

business utilization plan.” 9 After the SSEB evaluated the presentations and provided its findings to 

the Source Selection Advisory Council (SSAC), the 

SSAC would validate the findings of the SSEB and 

forward its report to the Source Selection Authority (SSA), who then selected the most qualified 

developer as the partner. 

In addition to creating the two-step process, 

the RCI Program Office began issuing RFQs that 

allowed bidders, during Step 1 of the solicitation, 

to make offers on a group of projects/installations, rather than bidding on one project at a time. 

Prospective developers and property managers 

could respond to the call for minimum requirements in an RFQ without specifying which of the 

projects they hoped to win. This allowed contractors to save time and money in their bid preparation because they could prepare one response 

for several projects. If developers made it to Step 

Two, then they had to specify the project on which 

they planned to bid and prepare a more detailed 

response tailored to the specific installation(s). 

RCI officials hoped that this would “encourage 
188 Privatizing Military Family Housing 189

CHAPTER S E V E N

Consolidating the RCI Program, 2002–2005

Figure 7-6. Completing construction of a new home in the Doe Park development at 

the Presidio of Monterey, Calif.

Courtesy of RCI Office.

industry participation and maximum competition” for Army privatization projects.10

The RCI Program Office also developed a more 

aggressive approach to privatization projects by 

creating uniform guidelines for establishing new 

RCI offices at installations and by training personnel at those posts about the Community Development and Management Plan (CDMP) process. 

Drawing on lessons learned from the pilots, 

Rhonda Hayes developed the guidelines in 2001 

and issued them in the form of an “RCI Primer.” 

The primer emphasized that new or incoming RCI 

staff could achieve the best results if they communicated with and visited established RCI offices at 

other installations, selected an office location that 

was easily accessible to soldiers’ families, obtained 

sufficient space for the partner to operate out of the 

same building, and allocated an adequate number 

of staff (15 was suggested) to run RCI through the 

CDMP phase. Moreover, the Army should select 

as the RCI Program Manager “a strategic thinker 

who is motivated, mission-oriented, and capable 

of providing purpose, direction, and motivation to 

others who may not be totally sold on the project.”11

The guidelines also suggested that new RCI 

staff should receive training in how the private sector managed and developed real estate, in order to 

work effectively with the private partner during the 

CDMP and initial development period.12 Early in his 

term as acting director of RCI, Spigelmyer assigned 

new RCI staff to attend a three-week Military Family Housing Privatization class at the University of 

Maryland, set up by the OSD. The university was a 

close partner with the U.S. Department of Defense 

(DOD) in privatization training, eventually offering 

a master’s degree in real estate development that 

focused on privatization programs.13 Spigelmyer 

also had RCI personnel take advantage of financial certification courses offered by the National 

Development Council that focused on community and residential development. Topics of these 

courses included Housing Development Finance: 

Problem Solving and Deal Structuring, Real Estate 

Finance, and Computer Spreadsheet Analysis for 

Housing.14 In addition to these formal training programs, Spigelmyer and his staff developed an “RCI 

Program Overview” PowerPoint presentation that 

was used to orient new RCI team members to the 

program. This PowerPoint presentation included 

information on the background of RCI, the RFQ 

process, and examples of project successes.15

Because of these programs, Spigelmyer 

observed, “We were able to increase training and 

provide greater assistance to the field RCI elements.”16 According to Patrick Kelly, who became 

the RCI Program Manager at the Presidio of Monterey, these training programs were essential, especially since installation staffs would be dealing with 

partners who had strong business and financial 

backgrounds. “If you’re going to be enlisted in this,” 

Kelly explained, “you need to have some training 

in order to be able to successfully negotiate” with 

the partner.17 Spigelmyer and Michael McCarley, 

Financial Manager for the RCI program, agreed. 

“Privatization [requires] a totally different shift as 

far as what [housing personnel] at the installation 

do,” they explained. “They are no longer housing 

managers; they’re asset managers.” RCI on-site staff 

therefore required training in finance, monitoring budgets, and legal agreements, among other 

things, to supervise the RCI process effectively.18

Spigelmyer, other Army officials, and their 

Jones Lang LaSalle (JLL) consultants also looked 

for ways to standardize the RCI process in order to 

increase efficiencies. Their efforts included developing a standard ground lease (first tested at Fort 

Benning, Georgia, then implemented in 2006), 

consolidating and clarifying all RCI policies, and 

creating Standard Operating Procedures (SOPs) 

for various aspects of RCI, such as PAM. The RCI 

Program Office set “the process, deliverables, roles 

and responsibilities required of Portfolio and Asset 

managers,” including, for example, what kinds of 

training managers needed to have, when and how 

audits and project visits would occur, and what 

reports needed to be provided, as well as how. “The 

SOP tools and processes,” Armbruster reported, 

“will assist HQDA [Headquarters, Department of 

the Army] in assessing the health of its housing 

portfolio, while facilitating problem solving and 

support to the Asset Managers.”19

In addition, the Office of the ASA, I&E issued 

construction standards for RCI housing to ensure 

that installations received quality new housing and 

renovations that fit the needs of soldiers and their 

families. In November 2000, the IPT had issued 

a set of general construction guidelines, stating 

that RCI would follow the standards of the local 

area, although developers could recommend other 

standards during preparation of the CDMP. In 

November 2002, Assistant Secretary Fiori noted that 

revised construction standards were necessary, in 

part so that the Army could “ensure delivery of an 

equitable housing product at all RCI sites.” To meet 

the demands of the modern family in the United 

States, these standards had extensive details about 

site and grounds; building exterior and foundation; building interior; living, family, and dining 

rooms; bathrooms, kitchens, and bedrooms; utility 

systems; laundry rooms; and closets. Under “site” 

and “grounds,” for example, the standards stated 

that each unit needed “two off-street, paved parking spaces of no less than 9 feet in width and 20 

feet in length.” Under bathrooms, it required “a 

minimum of two full bathrooms ... for each dwelling 

unit.” Kitchens had to have “design considerations” 

that “incorporated an efficient work triangle,” while 

bedrooms had to have closets at least 24 inches 

deep. “These standards are applicable to all new or 

replacement family housing constructed under the 

Army’s RCI,” the Assistant Secretary declared, and 

would be “reviewed and updated annually.”20
190 Privatizing Military Family Housing 191

CHAPTER S E V E N

Consolidating the RCI Program, 2002–2005

Another important step in preparing RCI 

to accelerate the privatization schedule was to 

establish a template for CDMP development. 

Based on the experiences of the pilot projects, 

the Army established standard guidelines for 

CDMPs to delineate “the developer’s long-term 

relationship with the Army.” The revised CDMP 

consisted of three primary pieces: the Development Plan, the Financial Plan and Transactional 

Instruments, and the Operations, Maintenance, 

and Property Management Plan. Installation 

staff and the private partner, assisted by an 

RCI Program Office representative and real 

estate and financial advisor JLL, would collaborate to create the plan. Based on the pilot 

projects, CDMP development was expected to 

take approximately six months. It would then 

go for approval to the Department of the Army, 

the OSD, the Office of Management and Budget 

(OMB), and finally to Congress. Once Congress 

had authorized the project plan, the Army would 

pay $350,000 to the private partner for its CDMP 

work, in exchange for which the Army would 

obtain “full and unlimited rights” to the document.21 Project implementation would usually 

commence three months later, when the government transferred the housing assets and operation to the Army/private industry partnership.22

Standardization of RCI projects was also 

extended to environmental sustainability. The 

“greening” of the construction industry had been 

moving forward in the United States since the late 

1990s. In 2000, an organization of architects and 

others within the construction industry known 

as the U.S. Green Building Council had unveiled 

environmentally friendly standards for large commercial construction. The council also began to 

rate construction projects as part of its Leadership in Energy and Environmental Design (LEED) 

program, which provided silver, gold, or platinum 

ratings based on various environmental factors.

The RCI program followed these “greening” 

trends, developing an overall philosophy of sustainability that came from the Assistant Secretary 

of the Army for Installations and Environment’s 

Sustainable Design and Development policy for 

all Army construction, first issued in November 

2003. As part of this policy, the RCI Program Office 

required 100 percent of its new homes to be EnergyStar compliant, meaning that they used good 

insulation and had energy efficient windows, appliances, and lighting to reduce the amount of energy 

that a home used. It also mandated that every new 

home have earned a gold rating in the Sustainable Project Rating Tool (SPiRiT) measurement.23

SPiRiT was a measuring device used by the Army 

to ensure that its facilities were “sustainable, costeffective, [and] environmentally friendly.” A gold 

rating meant that a building was meeting those 

goals.24 Because of the SPiRiT system, according 

to Casey Nolan, project director for Clark Realty at 

Fort Belvoir, the Army was ahead of other military 

services in its promotion of sustainability in residential housing.25

As RCI’s acting director and senior executive 

director, Don Spigelmyer was a major advocate of 

sustainability and environmental protection. He 

established sustainability seminars and sessions at 

the Professional Housing Management Association’s (PHMA) worldwide conferences and spoke 

frequently at international, national, and local 

conferences on the RCI program’s efforts in these 

areas. He encouraged the RCI staff and the development partners to come up with new and creative 

ideas on sustainability, and they delivered. He 

wanted the Army to be a leader in creating sustainable communities and housing design, and the 

Army achieved that during his years as director.26

Installation partners and the Army explored 

innovative ways to achieve the environmental 

standards. In Hawaii, for example, the Army partnered with Actus Lend Lease in August 2003 to 

build 5,388 new homes and renovate 2,506 homes 

at Fort Shafter/Schofield Barracks. As part of the 

CDMP, Actus proposed “integrating renewable 

energy sources and sustainable design solutions” to 

“create a greener environment and a better quality of life for more than 20,000 soldiers and their 

families.” In addition, Actus recycled hard demolition waste into asphalt and building materials 

and, before disposing of used appliances and other 

items from demolished homes in landfills, offered 

them to community and family aid organizations. 

The Army estimated that these operations prevented approximately one million tons of waste 

from entering landfills. Because of these efforts, 

Actus and the Army received the Crystal Hibiscus 

Corporate Award in 2005 from The Outdoor Circle, 

an environmental organization in Hawaii.27

Hawaii was not the only place where RCI 

embraced sustainability. At Fort Hood, Actus Lend 

Lease “recycle[d] entire homes instead of demolishing them,” thereby “prevent[ing] 4,000 tons of 

waste from entering area landfills.” GMH Military 

Housing, meanwhile, filled the landscapes of its RCI 

projects with native plants, vegetation that could 

survive without irrigation. Picerne Military Housing 

recycled concrete and asphalt in its construction of 

new driveways and temporary access roads, while 

also using parts and other features from old homes 

in its renovations and maintenance of existing 

homes. Finally, Clark Realty Builders landscaped its 

homes in Fort Irwin, California, “to embrace the sun 

and to minimize water use,” in accordance with the 

desert climate of the installation.28

However, although Army leaders regarded sustainability requirements, construction standards, 

and other procedures as essential to enhancing 

efficiency, others saw them as stifling. Was not 

specifying the number of bedrooms, the depth of 

closets, and the size of parking spaces, they asked, 

akin to the rigid parameters and specifications the 

Army used in traditional military construction? 

Did not RCI have the goal to get away from such 

rigid standards? Russ Hamilton, an attorney with 

the Office of Staff Judge Advocate at Fort Carson, 

noted that increasing standardization suppressed 

“some of the benefits we might have accrued ... if 

we had given more latitude to the developers.”29

Others disagreed, claiming that creating standards 

was merely a way of ensuring that soldiers and 

their families had comfortable and modern housing at a relatively consistent level across all RCI 

projects. They also argued that private developers 

had a great deal of latitude to work within these 

standards, pointing to some of the sustainability 

features that developers implemented according to 

the unique needs of the installation.

As Army leaders continued to standardize 

processes, the RCI Program Office expanded the 

number of installations designated for privatization in Fiscal Year (FY) 2002. In the fall of 2001, 

the Army issued three RFQs for three different 

regional groups. The Southeast Group consisted 

of Fort Bragg (North Carolina), Fort Campbell 

(Kentucky), Fort Stewart and Hunter Army 

Airfield (Georgia), and Fort Polk (Louisiana). 

The California group was comprised of Fort 

Irwin, Moffett Federal Airfield, Parks Reserve 

Forces Training Area (RFTA), and the Presidio 

of Monterey. The Northeast Group consisted of 

Fort Hamilton (New York), Walter Reed Army 

Medical Center (Washington, D.C.), Fort Detrick (Maryland), and Picatinny Arsenal (New 

Jersey).30 As the Army had hoped, the use of 

the two-step RFQ process and the geographic 
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Integrated Limited Liability Companies (LLCs)

192 Privatizing Military Family Housing

groupings prompted a strong response from private companies interested in partnering. Sixteen 

firms submitted offers for the Southeast Group 

RFQ, while 22 companies bid on the California 

Group RFQ. Because of the high response, 

selecting the partner became more difficult 

in some ways, as proposals were increasingly 

sophisticated and on target.31

As the program continued to grow, RCI staff and JLL 

consultants advanced the financing of housing projects of greater utility and complexity. The MHPI Act 

allowed the military services to make contributions 

to defray the cost of projects, as long as the contributions did not exceed a designated percentage of the 

total cost of a project. The contribution thresholds 

became known as the “33 percent rule” and the “45 

percent rule.”32 As the name suggests, the 33 percent 

rule required that government cash contributions to 

RCI projects not amount to more than 33 percent of 

the overall development cost of a project. Likewise, 

the 45 percent rule required the cash contributions 

to RCI projects to stay below “a ceiling of 45 percent 

plus the value of the conveyed assets when compared to the overall scope of the project.”33

In order to meet the 33 percent and 45 percent 

threshold requirements, the RCI program employed 

the strategy of combining installation projects, 

either before privatization took place or, as needed, 

post-privatization, when preexistent projects would 

be combined with new projects. The combination 

led to the use of the term “Integrated Limited Liability Companies (LLCs)” to denote projects that 

were combined in order to meet threshold requirements. Unlike RCI projects that merged installations 

into a single project—for example, the RCI project 

encompassing housing at Fort Detrick and Walter 

Reed Army Medical Center—an Integrated LLC did 

not share project resources, liabilities, or project 

governance. The Integrated LLC structure created a 

link between projects solely in order to have their 

combined value assessed and thus enable them to 

meet the required threshold levels. This Integrated 

LLC structure would also facilitate movement of 

reinvestment account assets between the projects if 

the Army deemed this necessary during the projects’ 

out-year development periods.34

At Fort Sill, the Army proposed the establishment of the Picerne Military Housing Integrated 

LLC that included the Fort Sill and the Fort Meade 

housing privatization projects. Operating in a way 

that was similar in effect to combining installation 

projects to gain efficiencies at project closing, the 

Picerne Military Housing Integrated LLC created 

potential benefits by integrating these two projects 

for purposes of the projects’ “out-years,” or secondary development periods.

The integrated structure also helped when project investment involved land and facilities, since the 

total value of the investment could not exceed 45 

percent of the total capital cost of the project or projects. Moreover, the government’s cash contribution 

had to be less than 33 percent of the total capital 

cost of the project or projects. The Picerne Military 

Housing Integrated LLC satisfied both the 33 percent and 45 percent limits as defined by Title X, Section 2875 requirements.35

At the same time, the RCI Program Office 

felt the pressures of an accelerated program. Don 

Spigelmyer explained that as “the program grew 

exponentially ... it was impossible to stay in touch 

with all the details of the projects.” Spigelmyer was 

“used to having a firm grasp on every project and 

doing a lot of analytical work,” but as the director 

of RCI he could no longer afford to spend that kind 

of time on a single project. Although he trusted his 

staff to do much of the detail work, he had difficulty making sure that they had enough expertise to oversee effectively the RCI programs at the 

individual installations, even with the increased 

emphasis on and opportunities for training. Spigelmyer later reflected that this oversight deficit 

“hurt the program.”36

The implementation of RCI at an increasing 

number of installations presented new problems 

for the program, problems that the pilot projects 

had not experienced. Several of the posts included 

in the 2001 RFQs, such as Walter Reed Army Medical Center, Picatinny Arsenal, Fort Detrick, and 

Fort Hamilton, were small installations, and the 

RCI program grappled with ways to make projects 

at these bases attractive to developers. The Army 

added these installations to the RCI program 

in response to a congressional request, as Congress wanted to determine whether the early RCI 

successes could be replicated at a small site.37 In 

other cases, such as at the Presidio of Monterey, 

the Army worked with another service, the U.S. 

Navy, in its implementation of privatization. These 

two circumstances—small installations and the 

involvement of other services—forced RCI officials 

to become even more innovative in implementing 

the program. 

At the same time, some of the problems that 

the Army faced at new RCI projects were similar 

to those experienced at the pilots, for example, 

environmental issues and the inclusion of historic 

homes in privatization. To explain how the RCI 

program addressed these problems, the following 

section explores five different RCI projects as case 

studies: Fort Irwin/Moffett Airfield/Parks Reserve 

Forces Training Area in California; the Presidio of 

Monterey in California; Walter Reed Army Medical Center/Fort Detrick in the Washington, D.C./

Maryland area; Fort Belvoir in Virginia; and Fort 

Sam Houston in Texas. Each installation’s story 

highlights the continued evolution of the RCI program in the first decade of the twenty-first century.

Fort Irwin/Moffett Airfield/Parks 

Reserve Forces Training Area

(California)

Following the Congressional request to investigate how RCI would work at smaller installations, 

Army officials realized that some posts were not 

viable candidates for privatization by themselves, 

either because the housing stock was too small or 

the BAH income was too low to induce a private 

company to participate. The Army responded by 

clustering smaller installations together and issuing 

each cluster as a single RCI project. The solicitation 

for the California group of installations marked the 

first time that RCI introduced the strategy of combining several small bases into a single project. The 

California RFQ included four installations: Presidio 

of Monterey, Fort Irwin, Moffett Federal Airfield, 

and Parks Reserve Forces Training Area (RFTA). 

One of the installations, the Presidio of Monterey, 

became the first project to privatize housing for two 

services concurrently when the Naval Postgraduate 

School was included in the privatization project. 

The Army combined the other three installations 

into a single family housing project with one private 

developer/partner. Both projects were precedentsetting for the RCI program.
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Separately, Fort Irwin, Moffett, and Parks 

would have struggled to present financial packages strong enough to attract interest from outside developers. The housing stock at Moffett and 

Parks was too small, while Irwin’s isolated desert 

location burdened it with low BAH rates and high 

numbers of married soldiers who had decided 

that their families should stay at their previous 

residence or live with relatives rather than move 

to such a remote outpost. However, the combined 

housing of the three installations created the 

economic scale necessary for a successful RCI 

project, while the high BAH rates at Moffett and 

Parks (due to their location in the San Francisco 

Bay area) helped “carry” the low BAH rates at 

Fort Irwin. To illustrate the contrast, at the time 

that the CDMP was completed, the $2,622 BAH 

rate at Moffett represented more than three times 

the $813 BAH rate at Irwin, and the $2,007 BAH 

at Parks represented more than twice the Irwin 

rate.38 But the total number of 2,616 homes at 

Irwin dwarfed the 316 homes at Moffett and the 

114 homes at Parks. 

In addition to the family housing project, 

during 2002 the Army received OSD approval to 

add 200 Senior Unaccompanied Housing (SUH) 

apartments to the Fort Irwin project for Sergeants 

First Class (pay grade E-7) and above, apartments 

available to officers as well because there were no 

adequate accommodations off post within a reasonable commute. This initiative marked the start 

of the national RCI Office’s plan to add Unaccompanied Personnel Housing (UPH) to the RCI 

program.39 The Army’s strategy for balancing the 

differences in its California family housing procurement, together with the other qualities that 

set these installations apart from the “typical” 

Army bases, made the combined project a test of 

how well the RCI program would respond to new 

issues not encountered in the earlier phases of 

Army privatization.

The California RFQ brought responses from 

22 firms. Using the two-step RFQ process, the 

SSEB established which of the applicant firms 

were qualified to carry out the housing development at any or all of the installations. The Army 

would make two awards: one for the Presidio 

of Monterey and the other for the combination 

of Fort Irwin, Parks RFTA, and Moffett Federal 

Airfield. The SSA eventually chose Clark Pinnacle, one of three companies remaining in the 

competitive range, as the partner for both California projects. Clark Pinnacle was a joint venture 

between Pinnacle Realty Management Company, 

a national property management firm that had 

a portfolio of 110,000 apartments, and Clark 

Construction Company, a nationwide leader in 

residential as well as commercial construction. 

Although there was an obvious geographic link 

between them, Clark Pinnacle planned to develop 

and manage the Presidio of Monterey project 

separately from its operations at Irwin/Moffett/

Parks, since they were two separate projects.40

Each of the installations in the Irwin/Moffett/

Parks project differed widely from those in earlier 

Figure 7-7. View to the Pacific Ocean from neighborhood at 

the Presidio of Monterey, Calif.

Courtesy of RCI Office.

Figure7-8. Rendering of a new duplex unit proposed for Fort Irwin, Calif.

Courtesy of Clark Realty Capital.

RCI programs. Originally established in 1940 as 

the Mojave Anti-Aircraft Range, Fort Irwin was 

a large installation located in the Mojave Desert 

in San Bernardino County, California. The nearest town, Barstow, was almost 40 miles away and, 

before reaching that town, one encountered only 

desert and a historically dangerous strip of twolane highway. It was a setting highly unusual for a 

U.S. military facility, in that there were no amenities of any kind immediately “outside the gate.” 

Residents who needed anything—ranging from 

housing to a carton of milk—had to either settle 

for what was available on the installation or drive 

to Barstow or the nearest large city, Victorville, 

72 miles away. Irwin’s isolation tended to create a 

feeling of “hardship” among the spouses and families of soldiers assigned to the installation, leading 

some families to stay with relatives or remain 

at their home at a prior installation while the 

uniformed members of families took up residence 

as unaccompanied personnel.41

Fort Irwin was also home to the National 

Training Center (NTC), a critical training site for 

all branches of the military. The NTC was essential to training in that it used force-on-force and 

live-fire scenarios that simulated combat situations.42 With the new needs generated by the 

increased ferocity of fighting and the growing 

U.S. participation in the Global War on Terrorism, 

Fort Irwin was an ideal practice site. Its desert 

surroundings were perfect for preparing troops to 

fight in the desert conditions of Iraq and Afghanistan.43 However, the NTC’s operations at Fort 

Irwin—which involved rapid deployments, quick 

housing turnover, and increased need for family support activities—complicated the picture 

for housing privatization. Soldiers were often 

assigned to two-week training periods during 
196 Privatizing Military Family Housing 197

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Consolidating the RCI Program, 2002–2005

their time home from deployment, so that even 

though they were home, they had no easy way to 

take part in community.44

In stark contrast to Irwin, Moffett and Parks 

were small installations located in suburban areas 

of the San Francisco Bay area. Moffett Federal 

Airfield/Moffett Community Housing Area covered roughly 140 acres in nearby Silicon Valley, 

a computer/technology “boom” area in Santa 

Clara County, California. Prior to privatization, 

USACE held operational control over the installation, while the National Aeronautics and Space 

Administration (NASA) was the primary occupant 

of the airfield and its facilities. Moffett was a true 

“purple suit,” or joint, installation in that it was 

home to six different military tenants and many 

more civilian organizations. In fact, the civilian employees (1,600) outnumbered the military 

staff (445) by almost four to one.45 In 2001, the 

base housed 168 Army, 180 U.S. Air Force, 60 U.S. 

Navy, 43 U.S. Marines, and 25 U.S. Coast Guard 

families, in addition to 105 civilian families. Of 

the preexisting 620 family homes, 70 were already 

scheduled for demolition to create room for the 

construction of a new Army Reserve Center, a 

non-RCI undertaking.46

Parks RFTA, formerly Camp Parks, the smallest of the three installations, was located in 

suburban Alameda County in San Francisco’s East 

Bay region. Camp Parks first opened in 1943 as 

a Navy construction facility. It was then transferred to the Air Force, which held jurisdiction 

Figure 7-9. View of new neighborhood under construction at Fort Irwin, Calif., with the bleak 

landscape of the Mojave Desert in the distance.

Courtesy of Clark Realty Capital.

Figure 7-10. Site plan for neighborhood development at Moffett Field, Calif.

Courtesy of Clark Realty Capital.

over the base from 1951 to 1959. Camp Parks was 

a “sub-installation” for the Presidio of Monterey 

until December 1980, when it was redesignated 

Parks RFTA. The installation was home to the 

91st Division Headquarters, the Western Army 

Reserve, the Intelligence Center, the 4th Brigade 

Headquarters, Company B of the 319th Signal Battalion, the Bay Area Training Support Center, and 

the California National Guard.47 Prior to transfer, 

there were only 13 family homes, but the Army’s 

Housing Market Analysis (HMA) indicated a 

need for 114 homes. As at Moffett, Parks’ civilian 

employees outnumbered military service members, but only slightly.48

In December 2002, the RCI team and Clark 

Pinnacle began CDMP development of the project 

with an “intense” four-day planning charette. In 

the course of the charette, the diverse nature of the 

three bases, individually and in relation to each 

other, alerted the participants to the challenges 

they would face in creating a CDMP that could 

be successfully executed and closed.49 By the end 

of the development process, the plans for each 

installation were similar, except for the way that 

they dealt with key and essential personnel and the 

waiting list waterfall.50 But the problems encountered in the course of preparing the CDMP were 

far from minor, primarily due to property issues at 

both Moffett and Parks.

Although the original project scope called for 

spending nearly $360 million on new housing construction and renovations, the CDMP preparation 
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CHAPTER S E V E N

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198 Privatizing Military Family Housing

team soon discovered that this amount of money 

would leave a deficit of 246 homes at Fort Irwin. In 

other words, the total housing allowance income 

from all three installations would not cover all of 

the new construction called for in the HMA. To 

solve this problem, the partners proposed selling 

a parcel of surplus land in the Orion Park neighborhood at Moffett and using the proceeds of this 

sale to finance the additional construction. This 

planned sale illustrated the flexibility that the 

Army gained from having multiple installations 

included in one RCI project.51

Yet the sale of the land did not proceed 

smoothly, endangering Clark Pinnacle’s ability to 

address Irwin’s housing deficit. The Army knew 

from earlier testing by the Navy that trichloroethylene (TCE), a toxic solvent used for degreasing engine parts, was present in the soil at Orion 

Park, but Army officials assumed that adequate 

environmental remediation had been completed. 

However, as CDMP preparation occurred, Clark 

Pinnacle’s environmental consultant, the SI 

Group, conducted its own analysis and reported 

that “the TCE concentrations in ambient and 

indoor air exceed EPA [Environmental Protection Agency] Preliminary Remediation Goals.”52

Because the parcel did not meet the EPA’s standards (which would affect Clark Pinnacle’s ability 

to sell the land) and because cleanup would be 

expensive, Clark Pinnacle insisted on the removal 

of the entire Orion Park neighborhood from the 

ground lease before the Army transferred the 

housing.53 Transferring Orion Park in the future 

remained an option, but any action had to wait 

for adequate site cleanup.

Because of the Orion situation, Clark Pinnacle faced the prospect of a substantial funding 

shortfall just as it completed the CDMP in early 

2003. To assess the severity of the shortfall, Sarah 

White, the RCI program manager at the time, and 

Clark Pinnacle “scrubbed [the Army’s] numbers 

on the Irwin project to determine if all of Orion 

is needed.” They verified that “Irwin needs all 

of Orion Park in order to build out the 246 unit 

deficit.” White concluded that without the sale of 

the Orion parcel, “the project would require scoring dollars in the amount of the loss of acreage.”54

The environmental issues thus prevented the Army 

from including Orion Park in the ground lease, 

and the partnership had to look elsewhere to make 

the project’s finances work.

To address these financial problems, the 

partnership chose to revise downward the charette 

plan for new construction at Moffett. It would 

also dispose of 536 existing Moffett homes, thus 

eliminating the need to renovate them. The RCI 

team believed this alternative gave the project “the 

greatest probability of completing timely financial 

close of the CDMP.”55 However, the revised plan 

for Moffett significantly affected the project as a 

whole. Not only were just 181 new homes to be constructed at Moffett instead of the anticipated 307, 

but the final version of the CDMP had the partnership constructing only 715 new homes at Fort 

Irwin instead of the planned 1,506. Moreover, the 

time frame for the initial development period was 

extended from seven to eight years, during which 

time there would be no renovation of existing 

houses.56 Whether Clark Pinnacle could construct 

and renovate the additional housing after the initial development period remained to be seen, but 

that was the partnership’s hope.

Even while RCI and Clark Pinnacle staff tried 

to solve the Orion Park problem, another financial 

issue developed at Parks RFTA. In the spring of 

2003, the tax assessor for Alameda County asserted 

the county’s right to assess property tax on the 

Parks RCI development.

Clark Pinnacle Family Communities oversees some 

of the highest-profile installations in the RCI program, including Fort Belvoir, Virginia, just outside 

the nation’s capital. The company is a partnership 

between Clark Realty Capital, based in the Washington, D.C., area, and Pinnacle Property Management 

of Seattle. In collaboration with the Army, Clark Pinnacle has spearheaded development of four projects 

in six locations, totaling more than 11,000 homes at 

a value of $2 billion.

In 2002, Clark Pinnacle won three RCI contracts 

in quick succession. It began with a project combining the Presidio of Monterey and the Naval Postgraduate School, both in Monterey Bay, California. 

Featuring 2,209 homes across the two sites, the 

project was the first joint-service MHPI project for 

the Army and Navy. In 2005, the project won a Multifamily Executive Grand Award for its wireless networking platform. 

Shortly after winning its first bid, the company 

also began development at Fort Irwin/Moffett Federal Airfield/Parks Reserve Forces Training Area 

Clark Pinnacle Communities

(California), where it rose to the challenge of establishing communities in harsh environments. At Fort 

Irwin in the Mojave Desert, for example, Clark Pinnacle installed a cooling tower to counteract the desert 

heat and redesigned street plans around parks and 

neighborhood centers to make the community more 

pedestrian-friendly. Ultimately, the project included 

more than 1,000 new and renovated homes. 

In 2004, the company started its largest development project at Fort Benning (Georgia). The 

project was customized to suit the needs of its 

residents, including features such as garage wash 

stations for muddy boots and combat gear and 

increased storage space to accommodate souvenirs and memorabilia collected on tours of duty. 

In total, the development consisted of nearly 4,000 

new and renovated homes.

At Fort Belvoir, Clark Pinnacle took on its most 

prestigious project, consisting of 2,070 homes—

including 1,180 new homes, 450 renovations, and 

170 historic houses—all just south of Washington, 

D.C., on grounds where George Washington once 

Figure 7-11. Clark Pinnacle’s 1000th home completed at Fort 

Belvoir, Va.

Courtesy of Clark Realty Capital.

Figure 7-12. New home and residents at Moffett Federal 

Airfield, Calif.

Courtesy of Clark Realty Capital.
201

CHAPTER S E V E N

Consolidating the RCI Program, 2002–2005

hunted foxes. Throughout the development process, which began in 2002, Clark Pinnacle worked 

closely with the Virginia State Historic Preservation 

Office to maintain the integrity of renovated homes. 

The company also utilized the design principles of 

New Urbanism by constructing multiple villages 

surrounding a walkable town center, with 25 homes 

nestled above retail spaces such as a coffeehouse, 

barbershop, dry cleaners, grocery store, and even a 

furniture rental shop. The result was the first mixed 

retail-residential development on DOD property. In 

addition, the architecture for each village was purposefully distinct: the community’s three- to fivebedroom homes included Georgian Colonial style 

townhouses, Colonial Revival style officers’ quarters, 

and single-story bungalows specially designed for 

people with physical disabilities. Fort Belvoir Communities has won more than 25 awards, including 

the Congress of New Urbanism award for superior 

community planning, making Clark Pinnacle a leader 

in privatized family housing developments.

At all Clark Pinnacle housing projects, the 

company has sought to provide spacious homes 

for service members and their families, whether 

the home is located in one of the country’s most 

expensive housing markets (Fort Belvoir) or in the 

vast expanses of the Mojave Desert (Fort Irwin). A 

representative of Clark Pinnacle explained, “We 

believe that the most important element of community design is the opportunity to foster relationships and promote cohesiveness among families 

whose parents and loved ones are abroad. This 

neighbor-to-neighbor interaction thrives within 

our new RCI developments, with each installation 

carefully focused on creating a network of support 

for Army service members and their families. We 

understand that it is the Soldier who enlists, but 

the family who re-enlists.”57

Figure 7-13. Ribbon-cutting ceremony at Fort 

Belvoir, Va.

Courtesy of Clark Realty Capital.

Figure 7-14. Swimming pool in resident common area at 

Fort Benning, Georgia.

Courtesy of Clark Realty Capital.

Taxes had not been a major hurdle during 

planning and implementation of the pilot projects, but the RCI Program Office was aware of 

the possibility that property taxes could become 

an issue, which would create additional costs 

for the private partner. The August 2000 Fort 

Carson Lessons Learned Conference had specifically addressed the subject of taxation, and 

participants had decided that it was a battle that 

each project would have to fight on a case-by-case 

basis. The pilot projects were able to get property 

tax waivers from state governments before the 

projects were transferred, but in October 2002 

the RCI Program Office identified three potential taxation trouble spots: California, Virginia, 

and North Carolina. Army officials initiated 

“low-level” meetings between the OSD Office of 

General Counsel, the RCI Program Office, the 

Corps of Engineers’ Norfolk District Real Estate 

200 Privatizing Military Family Housing

Division, and installation RCI staff in these states 

to address the potential taxation problems.58

During the discussions, the Office of General Counsel insisted that “the developer partner 

should get in front of this action and NOT the 

Army” because “if the Army raises the issue, 

then it heightens the chance of the project being 

viewed as ‘governmental’” and being scored by 

OMB accordingly.59 More specifically, “OMB could 

use a prior government-to-government negotiation as grounds to support a 100% scoring requirement.”60 The scoring concerns led the Army to 

stop writing “papers or fact sheets to leave with 

taxing authorities.” The conclusion, instead, was 

that the installation command team and the 

partner needed to become well versed in the local 

tax code and be prepared to educate community 

members about the Army’s role and objectives in 

the RCI partnerships.61

Figure 7-15. Interior of new community center at Fort Irwin, Calif.

Courtesy of Clark Realty Capital.
202 Privatizing Military Family Housing 203

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At the Presidio of Monterey, the partner—

Monterey Bay Military Housing, LLC—had negotiated a favorable agreement with the state of 

California. In particular, Shirley Johnson, the tax 

counsel for the State Board of Equalization, determined that “an agency relationship exists between 

the federal government and the LLC.” As such, 

“the LLC lacks the independence necessary to have 

taxable possessory interest in the military housing 

it administers.” In addition, “the substance of the 

underlying transaction guarantees that at all times 

the federal government has full control, possession, and ownership of the property.”62

But the state board’s decision about the Presidio 

project appeared to have little effect on the Alameda 

County assessor’s position that Parks RFTA should 

be subject to taxation. The assessor’s office confirmed its opinion after a meeting with Clark Pinnacle staff on August 28, 2003, where it “dismiss[ed] 

the State Board of Equalization position for the 

Presidio of Monterey project” and asserted that the 

private partner for Parks RFTA did have a “possessory interest” in the property.63 Because the 

assessor’s opinion seemed unlikely to change, the 

partnership had to decide whether to eliminate the 

Parks portion of the housing project or find some 

other means of obtaining relief from the county’s 

decision. The partnership ultimately decided to 

keep Parks as a part of the project and to search 

for a legislative solution. Through the workings of 

California’s congressional delegation, especially U.S. 

Representative Ellen Tauscher (D-California), the 

partnership finally got the Alameda County Assessor’s office to agree in October 2003 not to tax family 

housing at Parks, thereby eliminating that obstacle 

to the Irwin/Moffett/Parks project.64

Having overcome the taxation hurdle at Parks, 

the partnership was able to begin implementation 

Figure 7-16. Construction of new RCI housing in the Village at Parks neighborhood at 

Camp Parks, Calif.

Courtesy of Clark Realty Capital.

of the CDMP at all three installations. Although 

the problems with Orion Park pushed back some 

planned construction and altered the project’s 

scope, Clark Pinnacle was able to begin development of the Crackerjack Flats family housing community at Fort Irwin as its first new construction 

effort. With 241 single-family houses and duplex 

apartments, the neighborhood became the first 

completed piece of the combined Irwin/Moffett/

Parks project in September 2006.65

With the successful completion of Crackerjack 

Flats, the Irwin/Moffett/Parks project demonstrated that combining installations could succeed 

and that issues such as taxation were not insurmountable. Yet the Orion Park situation showed 

the problems that environmental issues could 

cause and ways in which unforeseen circumstances 

could force changes in original CDMP plans. The 

flexibility of the RCI program was essential in 

enabling the Army to continue with the housing 

program, notwithstanding the financial issues. 

Instead of halting all construction, the Army was 

able to postpone certain plans while proceeding 

with others, a flexibility that is the hallmark of a 

program that has come to maturity. 

Presidio of Monterey (California)

While the Irwin/Moffett/Parks project overcame many hurdles to become the first multipleinstallation RCI project, another California site, the 

Presidio of Monterey, was also precedent-setting 

in becoming the first dual-service privatization 

project. The Presidio of Monterey is located within 

the city of Monterey, California, but it also has 

jurisdiction over operational and family housing 

facilities on the nearby Ord Military Community in 

Seaside. The Presidio is home to multiple military 

and civilian organizations, including the Defense 

Language Institute. Monterey and the surrounding 

communities of Pacific Grove, Seaside, and Sand 

City were and are highly prized residential areas 

along the Pacific Coast about 100 miles south of San 

Francisco.

Originally, the Presidio was a sub-installation of nearby Fort Ord. When the Army’s Base 

Realignment and Closure (BRAC) process closed 

Fort Ord on September 30, 1994, the Presidio 

became a separate installation under the U.S. Army 

Training and Doctrine Command (TRADOC). Fort 

Ord had possessed the larger housing stock of the 

two installations and had provided most of the 

support services for the Presidio. Between the Presidio and Fort Ord, the Army owned 1,676 housing 

units, although an Interservice Support Agreement gave the Navy “assignment rights” to 600 of 

those homes. The Navy also owned 620 homes in 

the La Mesa Village family housing community 

at the Naval Postgraduate School (NPS), also in 

Monterey. In addition, Fort Ord had supplied the 

Presidio with services, including fire protection, 

police, and utilities. When Fort Ord closed, the 

Presidio contracted these services out to neighboring communities.66

In the fall of 1997, the Capital Venture Initiatives (CVI) program staff approached the Navy 

regarding the possibility of collaborating on a 

privatization project at the Presidio. Of all the 

services, the Navy was the first to embrace MHPI 

privatization, getting authority from Congress in 

1995 to pursue two projects, one in Corpus Christi, 

Texas, and the other in Everett, Washington. But 

after those first forays, the Navy took much longer 

than the Army to move into large-scale privatization projects and, according to the staff at NPS, 

the Navy was still lagging behind when the idea 

of collaborating on the Presidio project arose.67 As 

a result, the NPS was receptive to Army plans for 

a CVI project. In September 1997, Army Colonel 
204 Privatizing Military Family Housing 205

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Consolidating the RCI Program, 2002–2005

David Gross, garrison commander of the Presidio, 

announced that the installation wanted to take 

advantage of the CVI program and that it also 

wanted to include the Navy in its planning.68 A CVI 

team visited the Presidio in October 1997, after 

which Gross requested that Army officials conduct 

a feasibility study for implementing CVI at the 

Presidio and at the Ord Military Community.69

In early 1998, NPS and Presidio representatives 

met to discuss the practicality of a collaborative 

privatization project. Rear Admiral Robert Chaplin, NPS superintendent, wrote that “utilization 

of knowledge and resources [at] both the D.C. 

and local levels from both services will allow us 

to collectively provide optimal solutions.”70 Early 

deliberations produced a non-binding decision that 

the Army should be the lead agency because the 

Army’s RCI program was moving more quickly than 

the Navy’s public-private housing ventures.71 Under 

the developing plans, the Army would work with 

the Navy to conduct a joint privatization project for 

the Presidio and the NPS. In May 1998, Navy Base 

Commander Tim Smith reported that the Navy 

“fully support[ed] a joint privatization program as 

the best long term approach to family housing.” In 

order to push the project forward, Smith assigned 

Navy personnel to work fulltime with the Army’s 

CVI staff on details of a joint program.72

Several roadblocks slowed the collaborative 

process, however, and revealed the problems that 

could arise as two separate services worked towards 

joint privatization. When Sandy Apgar, who 

became Assistant Secretary of the Army for Installations and Environment in 1998, began to redirect 

Army privatization from CVI to RCI, delays were 

inevitable. But Navy staff at the NPS interpreted 

the delays to mean that the Army had lost interest. 

Their thinking was that the Army had either put a 

“freeze” on privatization projects or had decided 

to abandon privatization altogether (given the end 

of CVI). For example, Penny Sinclair of the Navy 

emailed Army staff, “The Navy is concerned that 

the Army has put CVI on hold. It looks like the 

Navy may change its mind about the Army holding the lead position for this joint project because 

of the freeze the Army is under.”73 Larry Wright, 

a member of the staff in the Office of the Assistant Chief of Staff for Installation Management, 

responded quickly, asking, “Where does ANYBODY 

get that the Army’s program is frozen? In fact, the 

Army has received criticism from both OSD and 

Congress for moving too fast.”74 Wright emphasized 

that the Presidio solicitation was still scheduled for 

release in the second quarter of FY 2000.

Despite Wright’s assurances, however, the 

Navy became less enthusiastic about participating with the Army in privatizing military homes. 

But luckily, Colonel Peter Dausen, who had 

become garrison commander of the Presidio in 

1998, fully supported using privatization authorities to increase housing on the base. Dausen 

first investigated the legal authorities regarding out-leasing in Section 2667 of the U.S. Code, 

which the Army had utilized originally at Fort 

Ord and Fort Hunter Liggitt to privatize housing 

at the Presidio. But RCI also intrigued Dausen. 

The problem, he later remembered, was that 

after Assistant Secretary Apgar announced the 

RCI program, Apgar had his staff “prioritize all 

the Army posts from one to the bottom in rank 

order of how he intended to ... privatize them.”75

The Presidio appeared at the bottom of the list. 

Dausen took Apgar on a tour of the installation in 

1998, but the Assistant Secretary still seemed less 

than enamored with its prospects. According to 

Dausen, he then told Apgar, “Well, sir, if you don’t 

see this as being valuable for your project, then 

I’ll just go ahead and do a 2667 on my own.” Soon 

after, Dausen related, “We were up to number six 

or seven on the priority list.”76

Before the Army had proceeded much further, 

however, Dausen retired from the Army and began 

a Civil Service career as NPS base director. One 

of the first things he did was to discuss with Rear 

Admiral David Ellison, who had become superintendent of the NPS in 1998, how the Army’s RCI 

program would benefit the Navy. After hearing 

presentations from both the Naval Facilities Command on its privatization program and from the 

Army on RCI, Admiral Ellison decided that the 

Navy should consider fulfilling its needs through 

the Presidio’s RCI project.77

Accordingly, the Army went forward with its 

planning and issued an RFQ for the California 

group on December 11, 2001, including the joint 

Presidio/NPS project. In June 2002, the Army 

selected Clark Pinnacle as the developer and work 

on the CDMP began. According to one RCI report, 

Clark Pinnacle would receive 1,675 homes, including 37 historic houses, at the Presidio of Monterey 

and renovate or replace 1,669 of those homes.78 It 

would also construct 1,434 new homes at the Ord 

Military Community and another 589 homes at the 

Navy’s La Mesa Village, where students of the NPS 

lived. Clark Pinnacle also proposed renovating the 

new homes every 10 years and replacing them after 

36 years.79 In October 2003, transfer of the housing 

units to Clark Pinnacle occurred.

Although the Presidio was the first joint-service RCI project, communication and relationships 

between the Army and the Navy proceeded relatively smoothly, in part because of the willingness 

Figure 7-17. Young residents and renovated homes at the Presidio of Monterey, Calif.

Courtesy of Clark Realty Capital.
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of leaders on both sides to cooperate. One of 

the issues that the program faced was whether 

an Army or a Navy leader would be the service 

representative on the Major Decisions Committee. 

According to Patrick Kelly, the RCI manager at the 

Presidio, Admiral Ellison “decided it was in the 

Navy’s best interest ... for the Army to ... lead [the 

project], even though he [Admiral Ellison] was a 

two-star and my garrison commander is a colonel.”80 Ellison thus consented to having the Presidio garrison commander serve on the committee, 

with the hope that the Army would look out for 

the Navy’s interests. Not only did this evince trust 

between the parties, but it also facilitated communication, as the Army tried to ensure that it 

understood the Navy’s position on issues requiring 

action by the Major Decisions Committee.

In addition, the particular nature of the facilities located at both the Presidio and NPS sparked 

some innovations in RCI. Since both the NPS and 

the Defense Language Institute were learning 

institutions, both bases had a considerable number 

of students involved in intensive educational programs. Recognizing this, Clark Pinnacle discussed 

housing requirements with school officials and 

with residents, asking them, “If we were going to 

build the dream home ... what would it include?” 

Based on these discussions, Clark Pinnacle decided 

to equip housing units with high speed wireless internet service, one of the first RCI projects 

to do so. In 2007, Patrick Kelly reported that 70 

percent of the residents in RCI housing had taken 

advantage of the wireless service, showing that 

it was a desirable amenity. Likewise, Clark Pinnacle included a “true study” in each home where 

students could sequester themselves to do their 

homework. Such creativity produced homes that 

fit the needs of residents on both installations.81

Notwithstanding these successes, not everything worked perfectly with the Presidio RCI 

project. In 2007, for example, the project faced 

funding shortfalls because of the rising costs of 

construction materials and interest rate problems. 

This meant that the project could not construct 

as many homes in its initial development period 

as planned. Instead, Clark Pinnacle had to turn 

to renovating more homes, rather than demolishing them and building anew.82 It took some time 

to get the Navy on board with this project change, 

but thanks to steady communication between the 

parties, the project went forward with a minimum 

of complication. Overall, in terms of being the 

first joint-service project, the Presidio succeeded 

remarkably well. It clearly demonstrated the feasibility of including other services in RCI projects.

Walter Reed Army Medical Center/

Fort Detrick (Washington, DC, and 

Maryland)

The program flexibility that RCI staff and the 

private partner demonstrated in working out the 

complexities of multiple installation projects at the 

Presidio of Monterey and at Irwin/Moffett/Parks 

Figure 7-18. “Spooktacklar” event sponsored by Monterey 

Bay Military Housing, the public-private partner at Presidio of 

Monterey/Naval Postgraduate School, Calif.

Courtesy of RCI Office.

Figure 7-19. New RCI housing at La Mesa Village, Presidio of 

Monterey/Naval Postgraduate School, Calif.

Courtesy of RCI Office.

was also evident as the Army launched the Walter 

Reed Army Medical Center/Fort Detrick privatization project in the Washington D.C. area. The 

project experienced problems similar to those at 

Irwin/Moffett/Parks, related to combining smaller 

installations into one RCI project.

Fort Detrick is a small installation in Frederick, 

Maryland, approximately one hour northwest of 

Washington D.C. The diversity of the federal presence was clear from the base population. When 

RCI initiated housing privatization plans, the post 

was home to 38 different military and civilian 

agencies, among them the National Cancer Institute, the National Institute of Health, the National 

Security Agency, the U.S. Air Force, and NASA, 

in addition to the Army. A November 2001 census 

showed that there were four times more federal 

civilian employees at Fort Detrick than military 

members stationed there. In the family housing 

community, retired military personnel outnumbered active military by four to one.83

Walter Reed Army Medical Center, meanwhile, 

is located in the Northwest quadrant of the District 

of Columbia (D.C.), and its location within the 

D.C. city limits made it the first truly urban RCI 

project. At the time of the RFQ, Walter Reed’s 

housing footprint was in two separate areas: the 

main area, containing the hospital and research 

facilities as well as 10 historic houses; and the Glen 

Haven Housing Area in Maryland, roughly four 

miles north of the main area, containing 211 housing units spread over 20 acres.84

Both installations were included in the 

November 2001 Northeast RFQ. Unlike the Irwin/

Moffett/Parks cluster, though, Walter Reed, Fort 

Detrick, Fort Hamilton, and Picatinny Arsenal 

were proposed as separate projects. The Army had 

broached the idea of combining Walter Reed and 

Fort Detrick into a single project during one of the 

industry forums at the outset of the solicitation, 

but after industry representatives explained that 

they would rather treat the two as separate entities, 

RCI officials decided to include each installation as 

a distinct project.85

The Army selected GMH as the partner for 

Walter Reed in April 2003 but did not immediately 

make an award for Fort Detrick. Instead, the RCI 

Program Office approached GMH regarding the 

possibility of combining the two installations into 

one project, although it emphasized that all such 

discussions were “informal” because the project 

was “still procurement sensitive and close[ly] 

held due to Congressional notification requirements.”86 In mid-June, the RCI program staff, the 

Army procurement attorney, and the Office of the 

General Counsel met at Fort Detrick to discuss 
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Figure 7-20. Housing at Fort Detrick, Md., before implementation of RCI.

Courtesy of Balfour Beatty Communities.

Figure 7-21. Family housing at Walter Reed Army Medical 

Center, Washington, D.C., prior to RCI privatization.

Courtesy of Balfour Beatty.

further a combined project. In a subsequent review 

document, the Army identified three “key drivers” 

underpinning the project proposal: “efficiency for 

the project as a whole,” “efficiency for the ongoing 

project manager,” and a desire to create the best 

possible financial package.87 After a month of discussions with GMH, the Army formally combined 

the two projects and announced on July 1, 2003, 

that it had selected GMH Military Housing, LLC, as 

the partner for both installations.88

At the time, GMH was a joint venture among 

GMH Associates, Inc. of Philadelphia; The Benham 

Companies, LLC, an architectural/engineering/development firm based in Oklahoma City; and Centex 

Construction Company of Dallas.89 (In 2008, GMH 

was acquired by Balfour Beatty Capital, a British 

engineering and construction company, as discussed 

in Chapter 9.) GMH had already been selected as the 

development partner for the Fort Stewart/Hunter 

Army Airfield RCI project in Georgia.

As GMH began its work on the Walter Reed/

Fort Detrick CDMP, the Army had to decide who 

would have overall executive authority for the 

project. In the Irwin/Moffett/Parks project, this 

was not a significant issue because Fort Irwin was 

substantially larger and more central to national 

defense efforts than the other two bases. Therefore, 

it made sense to make the installation commander 

at Irwin the executive commander for the entire 

project. But Walter Reed and Detrick were not 

far apart in size or importance (although Walter 

Reed certainly had more public name recognition), and the two installations were difficult to 

compare in terms of functions. Eventually the 

two installations, the RCI staff, and the partner’s 

team worked out a Memorandum of Agreement, 

finalized on March 10, 2004, that established the 

“Military Project Executive” position to vote on 

behalf of the Army on major decisions. Each garrison commander would fill the post for one year 

on a rotating basis, with Fort Detrick’s Colonel 

John Ball assuming the position for the first year.90

Robert Shepko, Project Director for GMH Military 

Family Housing, explained that establishing the 

agreement and “trying to balance the needs of two 

particular locations” was a significant achievement 

for the privatization of Walter Reed/Detrick family 

housing. “It could have been difficult because they 

were giving up control” of some of their installation command authority, Shepko added, but both 

“Colonel John Ball and Colonel Jeff Davies ‘got it’ 

[the concept of partnering] early on.”91

Once the Memorandum of Agreement was 

signed, the remaining privatization issues involved 

installation-specific problems or challenges that 

the partnership and installation teams worked 

together to solve. Walter Reed, for instance, lacked 

sufficient land for the number of new homes 

needed to eliminate its housing deficit. The Army’s 

2001 Housing Market Analysis (HMA) called for a 

total of 609 housing units for Walter Reed, nearly 

400 more than the existing total, and hundreds 

more than the two housing areas of the installation 

could accommodate.92 Although the adoption of 

D.C. standards allowed a higher per acre housing 

density than was typical of most RCI projects, the 

lack of available space at Walter Reed, which could 

accommodate only 23 new homes, meant that the 

project still required an additional housing area. 

To solve this problem, the CDMP proposed a twophase project development plan.93

During the first phase of the development, 

GMH would receive housing units in the Glen 

Haven area of Walter Reed, as well as three historic homes on the main post.94 GMH would renovate and replace houses within the Glen Haven 

area, providing 234 homes, and would renovate 

the historic structures as well. In addition, GMH 

would construct new townhouse units and some 

larger apartment buildings to produce more housing. But the partnership would still be left with 

the task of finding additional land for 609 homes, 

something that would occur in the second phase 

of development. Because that second phase could 

not begin until the partnership identified and 

acquired more land, RCI staff began working on 

the real estate acquisition even before the partnership had completed the CDMP.95 It looked originally at Forest Glen, another Walter Reed parcel, 

but this land proved unsuitable when environmental testing discovered contamination from a 

nearby landfill. Another tract of government land, 

known as White Oak, also failed to meet environmental standards.96

Uncertainty about the availability of an appropriate parcel for the Phase II build-out strained 

project planning and financing. Walter Reed’s 

location created additional complication, as the 
210 Privatizing Military Family Housing 211

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Consolidating the RCI Program, 2002–2005

partnership had to work through different jurisdictional issues in Washington, D.C., where the main 

post was located, and in Montgomery County and 

Prince George’s County, Maryland, where the other 

parcels were scattered. However, before the partnership could identify another suitable piece of land, 

the Army designated Walter Reed for closure under 

its 2005 BRAC program. At that point, according 

to Shepko, “the need for that additional parcel and 

everything else kind of fell by the wayside.”97

The 2005 BRAC process was the fifth round of 

military installation closures and reductions, the 

others having taken place in 1988, 1991, 1993, and 

1995. Under BRAC, the DOD determined whether 

to close, realign (which often meant downsize), 

or expand installations, based on a process that 

“evaluate[d] its current stationing plan against multiple variables: the changes in threat, force structure, technologies, doctrine, organization, business 

practices, and plant inventory.”98 The RCI Program 

Office worked closely with the Norfolk District of 

the Corps of Engineers and its real estate team to 

mitigate the effects of BRAC. In general, closing 

a base meant that the RCI program would either 

liquidate the LLC or conduct a major restructuring to ensure that the LLC could still succeed. The 

Army had inserted provisions into many CDMPs 

providing options if an installation faced closure. 

The CDMPs for Forts Hood, Lewis, Meade, Bragg, 

and the Presidio of Monterey, for example, all had 

“a ‘fair market value’ purchase option for the developer in case of base closure.” In other instances, 

installations might only see a reduction in soldiers, 

meaning that the family housing requirement 

would decrease. In that scenario, the Army would 

consider altering the CDMP. Whatever the solution, 

all stakeholders—including the Army, the partner, 

and the financier—needed to concur.99

After the DOD released its final 2005 Defense 

Base Closure and Realignment Report, the RCI 

Figure 7-22. New RCI homes at Fort Detrick, Md.

Courtesy of Balfour Beatty Communities.

Figure 7-23. RCI housing constructed at Walter Reed Army Medical Center, D.C.

Courtesy of Balfour Beatty Communities.

project partners learned that the main Walter Reed 

installation would close but that the majority of 

the housing, located four miles to the north, would 

remain open. The Army would shift a number of 

Walter Reed’s major programs either to the former National Naval Medical Center in Bethesda, 

Maryland, which was renamed the Walter Reed 

National Military Medical Center, or to Fort Belvoir, Virginia.100 Other programs were moved to the 

Forest Glen Annex, the site where the Army had 

originally wanted to place some of the new housing development. Altogether, BRAC realignment at 

Walter Reed resulted in a loss or relocation of 5,630 

civilian and military positions.101

Once the Army announced the final BRAC 

decision, RCI staff determined that Walter Reed no 

longer required the extra parcel to expand family 

housing and the partnership removed that element 

of the CDMP from the project.102 In a somewhat 

ironic turn, BRAC transferred the Forest Glen 

property to Fort Detrick just at the point when the 

project had no need for the additional land. BRAC 

did not affect Walter Reed’s Glen Haven Family 

Housing Area and, on October 1, 2008, the Army 

transferred all of Glen Haven’s land to Fort Detrick, 

as this lease too belonged to the GMH project.103

As far as Fort Detrick was concerned, the 

CDMP outlined an initial development period that 

included construction of 251 new homes and renovation of another 103 housing units. The number of 

houses slated for renovation was roughly twice that 

of the original project scope, which had called for 

more new construction and less renovation. Without the larger financial package that the pre-BRAC 
212 Privatizing Military Family Housing 213

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development plan for Walter Reed would have commanded, there was less money in the project for 

new housing at Fort Detrick.104 Because GMH had 

to retain more of the older housing units at Fort 

Detrick, the occupancy rate at the post dropped to 

84 percent in 2006. According to a PAM site visit 

report, the low occupancy was directly related to 

“the varying quality of housing available to renters.” 

Soldiers and their families found the older homes 

unattractive compared to the new homes, which 

were, however, close to fully occupied. The “have/

have-not” sentiment was an issue that the RCI program faced on nearly every installation, but it was 

especially intense at Fort Detrick, where the new 

housing inventory was so low. 

There was one other reason, in addition to 

dissatisfaction with the older housing, for the 

low occupancy rate at Fort Detrick. That other 

reason, according to the PAM report, was that the 

original HMA had “overestimated the number of 

potential renters.”105

The combined-installation projects and the 

privatization of small bases were two of the biggest 

concerns for the RCI program between 2002 and 

2005. All of the combined projects discussed in 

this chapter—Walter Reed/Detrick, Irwin/Moffett/Parks, and the joint Army/Navy Presidio of 

Monterey—experienced problems in trying to fold 

construction, property, taxation, and BAH issues 

at multiple installations into a single financial 

package and development plan. In many cases, the 

result was less new construction than originally 

desired and more renovation. Yet even with these 

difficulties, the projects demonstrated that effective teamwork between the private partner, the RCI 

office, and the installation commanders, coupled 

with the flexibility of the RCI program, could 

establish successful family housing communities. 

At the same time, the RCI program also launched 

new projects at other installations, such as Fort 

Belvoir and Fort Sam Houston, which opened up 

new directions for the privatization program and 

led to new challenges.

Fort Belvoir (Virginia)

Before becoming the family housing partner 

for the Irwin/Moffett/Parks project, Clark Pinnacle had won the solicitation for the RCI project 

at Fort Belvoir, Virginia. One of the major issues 

at Belvoir was how to implement aspects of New 

Urbanism architecture. New Urbanism, an urban 

design movement that arose in the early 1980s, 

favors walkable neighborhoods over automobileoriented city planning, as well as the integration 

of residential and work space, rather than their 

location in separate parts of the city. In the case of 

Fort Belvoir, New Urbanism meant the inclusion of 

a community town center complete with apartments and retail space. The question was how to 

do this without upsetting the Army and Air Force 

Exchange Service (AAFES), which had long been 

the sole provider of retail shopping on installations. In addition, as with other installations, Fort 

Belvoir encountered environmental problems that 

delayed the RCI process. But the project overcame 

these obstacles and became a model development 

for the RCI program.

First used by the Army as an engineer training 

facility in 1915, Fort Belvoir was originally known as 

Camp A. A. Humphreys. In 1935, the name changed 

to Fort Belvoir, although it continued to be an 

important training ground for Army engineers. By 

2002, Fort Belvoir was a midsized but expanding 

installation covering 9,239 acres along the west 

bank of the Potomac River. It consisted of three 

segments: North Post, South Post, and Southwest 

Post. Almost all of the operational, administrative, and housing facilities sat on either the north 

or south post; the southwest post was primarily 

undeveloped land. Fort Belvoir housed a number 

of different DOD organizations and had long been 

the home installation for the Corps of Engineers. 

The Corps’ Humphreys Engineer Center was 

immediately adjacent to the base, and the Engineer 

Proving Ground was only two miles away. After the 

September 11, 2001, terrorist attacks, a number of 

organizations that the DOD believed were vulnerable to possible attacks in the future were relocated 

to Fort Belvoir.106

In addition, Fort Belvoir was often highly 

visible on the public, military, and congressional 

radar because of its close proximity to the nation’s 

capital, the Pentagon, and neighborhoods along 

the Potomac River that were highly vocal about 

quality of life issues. Located just 18 miles from the 

Pentagon, Fort Belvoir was, in the words of former 

Army Chief of Staff General Eric Shinseki, the 

Army’s “flagship installation.”107 Because it was in 

such a high-profile location, Fort Belvoir experienced considerable external community involvement in many aspects of its RCI project.

In 2002, the Army issued its RFQ for Fort 

Belvoir, including Forts Eustis, Story, and Monroe in the solicitation. On September 24, 2002, it 

awarded the Fort Belvoir project to Clark Pinnacle. Under the original plan, Clark Pinnacle would 

renovate 178 of the installation’s historic homes 

and build 2,890 homes—1,892 as replacements 

Figure 7-24. Historic-era duplex family housing at Fort Belvoir prior to RCI renovation.

Courtesy of Clark Realty Capital.
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CHAPTER S E V E N

Consolidating the RCI Program, 2002–2005

and 998 as new construction.108 Because the project proposed the development of nearly 1,000 new 

homes, the surrounding community of Fairfax 

County, Virginia, became concerned about the 

potential impact on its quality of life.

After hearing the Army’s announcement of 

its RCI plans, the community raised a number of 

concerns. One was commuter car traffic around 

the base and the project’s impact on the regional 

transportation grid. Donald Carr, public relations specialist at Fort Belvoir, described the 

installation as a “bedroom community,” where 

“a large percentage of housing residents do not 

work on the post,” but instead “drive out the 

gate and get on [Interstate] 95 and Richmond 

Highway and these other already very seriously 

over-clogged, underdeveloped roads.”109 Local 

residents feared that expanding the amount of 

housing at Fort Belvoir would increase traffic, 

lengthen commute times, and decrease vehicle 

safety for them throughout the area. In addition, the Army and the DOD were adding more 

headquarters buildings at Belvoir, increasing the 

number of people driving to the base each day. 

Alarmed by the threat of ever-worsening traffic conditions, community advocates contacted 

their representatives in Congress, U.S. Representatives Jim Moran (D-Virginia) and Tom Davis 

(R-Virginia), who responded immediately that 

the Department of Army needed to take measures to alleviate community fears.

The involvement of Moran and Davis spurred 

RCI officials to increase their communication with 

the local community, and OSD representatives 

became involved as well. Eventually, the Army 

decided that it would not increase the number 

of homes at Fort Belvoir but would work with the 

existing housing inventory. This appeased community members, but other issues soon arose.

One of the most prominent problems involved 

Little League baseball fields located on a parcel 

targeted to become one of the new family housing 

neighborhoods under RCI. The ball fields were a 

key part of the CDMP for the new housing buildout because they were already zoned for residential 

construction.110 Although soldiers used the fields 

for informal sports and for family events, the Army 

also allowed the Woodlawn Little League to play 

their games there under a three-year “revocable at 

will” license issued to the league for “nonexclusive 

use.” Despite the fact that Woodlawn was only leasing the tract, the Little League had, in a certain 

sense, appropriated the fields as its own. In fact, 

the organization built some of its own facilities 

and named the diamonds the “John McNaughton 

Memorial Fields.”111

In 2003, according to Belvoir’s public relations specialist Donald Carr, the Army sent Little 

League officials “a very cold, terse, straightforward 

e-mail telling them go find somewhere else to play” 

because the land was needed for RCI. Numerous 

protests followed.112 One Washington Post editorial 

questioned whether the situation was a part of the 

“unraveling of the once-close but now fraying ties 

between Fort Belvoir and its neighbor.” With the 

Army still insisting that it needed the property for 

RCI, U.S. Senator George Allen (R-Virginia), a friend 

of a member of the Woodlawn Little League Executive Council, involved himself in the cause. According to a 2003 article in the Washington Post, Allen 

announced that he would “introduce an amendment requiring the Army to locate the housing 

elsewhere on the post.”113 At that juncture, William 

Armbruster, Deputy Assistant Secretary of the Army 

for Privatization and Partnerships, became involved, 

writing to Allen to explain the need for the parcel 

and urging negotiation of a solution acceptable to 

all.114 Through negotiation, the Army and Fairfax 

County agreed that, in exchange for the ball fields, 

Fairfax County Parks and Recreation would provide 

Fort Belvoir with another piece of land. The agreement gave the little league the fields it needed and 

allowed the RCI program to go forward.115

Yet soon, as at other installations, environmental issues emerged. Instead of toxic contamination 

of the soil, as at Moffett in California, the potential 

roadblock involved a rare species of crustacean 

found near one of the many seeps leading to 

streams flowing down to the Potomac River. In 

1996, on Belvoir’s South Post, a state zoologist discovered a live member of the species Northern Well 

Amphipod, a crustacean so rare that individuals of 

the species had been found only twice before, the 

last nearly 50 years earlier. The crustacean had, for 

all intents and purposes, been ruled extinct until 

the 1996 discovery.116 But because of that find, the 

Environmental Assessment (EA) for the RCI project 

included field surveys to determine whether other 

members of the species were present.

In March 2003, scientists of the Virginia 

Department of Conservation and Recreation Division of Natural Heritage conducted a field survey 

at 44 locations, including the 1996 discovery site. 

The survey discovered two more specimens at the 

same seep where the zoologist found the 1996 

specimen. According to the survey report, the 

results, “coupled with the ground water hydrology 

information gathered at Fort Belvoir, strongly suggest that there is something geologically or biologically significant” about the particular seep where 

all three individuals were found, particularly since 

surveys at the other 43 sites turned up no members 

of the species.117 This finding raised the question of 

whether the Fort Belvoir seep was the only location 

of this crustacean species worldwide and whether 

sufficient testing had ever been done at other 

sites beyond the boundaries of the installation. To 

perform the required testing would take several 

years, leading Patrick McLaughlin, Fort Belvoir’s 

Chief of Environment and Natural Resources, to 

announce that building RCI housing on or near the 

site would “slow the process by 3-3 1⁄2 years.”118 At a 

minimum, the presence of the endangered species 

would extend the date for the completion of the 

final EA, which was needed for making final housing footprint decisions.

Because of the projected delays in completing the EA, Clark Pinnacle decided to go forward 

with a shrunken RCI housing footprint, in part to 

avoid the endangered species issue and in part to 

alleviate local concerns about increased traffic. 

This, in turn, affected the amount of development 

that could occur during the initial development 

period. Clark Pinnacle had to scale back its plans 

so that the initial development period would focus 

primarily on the renovation of the existing 2,070 

homes. To mitigate some of the shortfall, RCI staff 

and Clark Pinnacle agreed to alter the makeup of 

the homes. Instead of providing all “single-family 

detached homes,” as originally called for in the 

RFQ, the final CDMP stated that Clark Pinnacle 

would produce “60 percent single family, 20 percent town homes, and 20 percent duplexes.”119

Don Spigelmyer, who was then director of RCI, 

recalled discussing the unusual Fort Belvoir issues 

with William Armbruster and Ivan Bolden: “We all 

agreed that the little leaguers had taken our knees 

out with their bats and the microscopic shrimp 

had eaten our lunch. We had fought a lot of battles 

to make the RCI program successful, but we never 

thought we would have to fight little leaguers and 

invisible shrimp—and then lose!”120

The project also explored the option of creating a greater per-acre housing density and a 

resulting stronger sense of community to make the 

best of the shrinking footprint.121 Using modern 
216 Privatizing Military Family Housing 217

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Consolidating the RCI Program, 2002–2005

urban design principles for creating a more livable 

community, Clark Pinnacle and Torti Gallas (the 

architect Clark Pinnacle was using) developed a 

plan to create 15 villages containing “Colonial- and 

Federal-style homes clustered around playgrounds, 

narrow streets and communal mailboxes.” In addition, Clark Pinnacle would construct a town center 

on the installation’s Main Street, consisting of 11 

retail shops situated beneath 24 two-story townhouses open to all ranks on the base.122 The apartments in the town center would increase housing 

density, while the center itself would serve as a 

community gathering place. 

These proposals were in keeping with the 

overall New Urbanist emphasis of the Fort Belvoir 

CDMP, which recommended transforming Fort 

Belvoir family housing from “a collection of sprawling, outdated houses into a vibrant community 

with a sense of place, cohesion and extensive 

recreational and community amenities.” The town 

center, however, had not been part of the RFQ for 

Fort Belvoir, and no other RCI project to that point 

had developed concrete plans to build a center that 

had both housing and retail.123

Although there was no precedent for it in the 

RCI program, Clark Pinnacle team members had 

expressed interest in incorporating mixed-use 

retail early in their involvement in the project. 

The town center concept actually surfaced in the 

CDMP in the spring of 2003, but Cleve Johnson, 

Managing Director of Clark Realty, first broached 

the idea of developing some sort of retail as part 

of RCI during Clark Pinnacle’s preparation of its 

RFQ response. The concept, however, was controversial for RCI because of the earlier battles that 

Assistant Secretary of the Army for Installations 

and Environment Sandy Apgar and others had 

had with AAFES over the definition of ancillary 

facilities in the Military Housing Privatization 

Initiative (MHPI) legislation.124

When Apgar originally proposed RCI to Congress in 1998, he saw “retail, entertainment, and 

related community services as essential components 

of a vibrant Army family community.”125 But supporters of AAFES saw Apgar’s plans for the Army’s 

housing as threats to that organization, which led 

Congress to insist that retail elements be eliminated 

from RCI projects. Nevertheless, in the preparation 

of the CDMP at Fort Meade, the RCI office, Picerne 

Military Housing, and the installation’s AAFES 

manager attempted to negotiate a Memorandum 

of Agreement that would allow inclusion of a small 

“shopette” in each of the new neighborhood centers 

within the family housing neighborhoods. Still, 

other AAFES officials quashed the agreement, saying that the plan was “not economically feasible.”126

This earlier attempt to coordinate with AAFES 

alerted Clark Pinnacle to the opposition that the 

town center concept might face. Yet collaborating 

with AAFES was unavoidable because that entity 

held the legal authority to establish and run retail 

operations on installations, and it was accustomed 

to determining where and what kind of retail 

establishments belonged on posts. Clark Pinnacle 

decided to approach AAFES with the town center 

idea to see if the organization was willing to partner with the developer.127

When Clark Pinnacle first contacted AAFES, 

the service was interested but expressed concern 

about a number of roadblocks that might make it 

difficult to become involved with an RCI project. 

For one thing, the MHPI legislation prohibited 

using RCI money for “non-housing associated 

amenities such as retail.” Eventually, the two sides 

agreed on a plan. Clark Pinnacle “would produce a 

raw building shell which AAFES would fund and fit 

out.” AAFES would repay Clark the cost of construction over a period of six years. After that time, 

AAFES would pay Clark $1 annually for rent.128

With this arrangement in place, Clark Pinnacle 

constructed its Village Commons in Herryford Village. More than 67,000 square feet in the commons 

was devoted to residential homes, while 13,600 

square feet was used for retail establishments (such 

as a Starbucks cafe, a convenience store, and a laundromat) and 5,000 square feet was designated for 

office space. According to Apgar, the Village Commons was “a pioneering example of an alternative 

for providing retail on military installations.”129

Utilization of the town center design at Fort 

Belvoir reflected a progression within the RCI program in which partnerships produced an increasing number of ancillary features. Housing development at Fort Carson, for example, focused almost 

entirely on getting the houses built. The focus 

shifted in the RCI pilots at Forts Hood, Lewis, 

and Meade to include sidewalks, running trails, 

community centers, and playgrounds, among 

other things. Lieutenant General Edward Soriano, 

who served as the commanding general during 

CVI implementation at Fort Carson and then was 

a commander at Fort Lewis during RCI development, pointed to these community enhancements 

as one of the biggest differences between the CVI 

and RCI programs. In contrast to Fort Carson, 

Soriano observed, “Fort Lewis did a great job of 

establishing villages and communities up there. 

And each one had sort of a distinct flavor.”130 As 

Figure 7-25. Village Green neighborhood at Fort Belvoir, Va.

Courtesy of Clark Realty Capital.
218 Privatizing Military Family Housing 219

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more private companies gained experience with 

RCI, they looked forward to including additional 

innovative facilities in the presentation package.

In incorporating New Urbanism principles in 

the Fort Belvoir CDMP, the Army and Clark Pinnacle also focused on connected neighborhoods 

and ancillary features that fostered better communities. The town center was but one part of the 

overall design for Herryford Village, the centerpiece of Fort Belvoir’s RCI program. Other proposed features included an open green space and 

streets conducive to pedestrian travel.131 All were 

elements of the New Urbanism that James Rouse 

interpreted and helped popularize. 

Completed in July 2007, Herryford Village 

included 171 family housing units of various sizes, 

with the town center at the heart of the community. 

Army staff, design professionals, and the media all 

took note of this precedent-setting construction. 

In 2005, Clark Pinnacle received the Best in American Living Award from the National Association of 

Home Builders for its work on Herryford Village. 

This award from the “foremost residential design 

competition in the country” recognized “communities that illustrate design quality, success in the 

marketplace, and exemplify the best in American 

living.” It highlighted the “pedestrian-friendly 

streetscapes and generous open spaces” of Herryford Village, as well as its environmental sensitivity 

and its “state of the art program” to furnish each 

new home with “high-speed fiber-optic communication lines.”132 The Congress for the New Urbanism 

(CNU), a nonprofit organization that supports, 

educates, and sponsors planners and other professionals in development of neighborhoods that are 

walkable, sustainable, and that promote healthy 

lifestyles, presented Fort Belvoir and Clark Pinnacle with one of their 2006 CNU Charter Awards, 

making it the only military project to receive the 

internationally recognized award. The New York 

Times, meanwhile, reported that Herryford’s 

“mixed-use district at Belvoir, including a large 

Starbucks, was a new experiment of the Army.” 

The article emphasized that the rental apartments 

above the retail spaces were highly desirable and 

that they were open to varying ranks, revealing 

“New Urbanist philosophy and a severe departure 

from the Army’s policy of ‘no fraternization.’”133

The success of the Herryford Village town center—and its acceptance by AAFES—made it a model 

for other RCI projects and provided a template for 

incorporating retail space into other CDMPs. Casey 

Nolan, Clark Pinnacle Project Director at Fort Belvoir, explained that “the Air Force, the Navy, other 

Army installations, everybody that comes here, 

comes [to] see how did this work—what worked, 

what didn’t work, what would you do differently, 

but, really, just to check it out.” It was so influential 

that “AAFES is now rolling out town center schemes 

on other installations.”134 In fact, Fort Irwin, the 

next installation to propose a town center, based its 

design on Fort Belvoir’s. It would include 200 unaccompanied personnel housing (UPH) apartments 

and retail spaces on the ground level.135

Don Spigelmyer, a former director of the RCI 

program, holds a very fond spot in his heart for 

the Fort Belvoir project. He grew up several miles 

from the base, was a lifeguard at the Officers Club 

as a teenager, and had his wedding reception at 

the Officers Club. He returned to Fort Belvoir as 

an Army 2nd lieutenant, and later as a captain, 

to attend Engineer Officers Basic and Advanced 

courses. He recalls that “I lived in the [pre-RCI] 

housing in the mid-seventies and it couldn’t hold a 

candle to the new housing. I am so proud of what 

the Army and Clark accomplished at Fort Belvoir.”136

As more installations altered their CDMPs 

to include AAFES stores, the RCI Program Office 

Figure 7-26. Soldiers in front of Starbucks, built as part of the town center at 

Herryford Village, Fort Belvoir, Va.

Courtesy of Clark Realty Capital.
220 Privatizing Military Family Housing 221

CHAPTER S E V E N

Consolidating the RCI Program, 2002–2005

and AAFES began to negotiate a program-wide 

agreement related to “our mutual initiative to 

provide services and facilities in support of the 

RCI program and its residents.”137 In 2006, the two 

sides concluded a Memorandum of Understanding, stating that “opportunities exist to provide 

enhanced services to ... military families by coordinating and integrating AAFES’ service delivery 

with the planning and execution of Army RCI 

projects.” The agreement sought to “foster more 

effective coordination between AAFES and RCI as 

we work toward our mutual objective of supporting quality communities for military families.” The 

agreement provided that when a possible project 

arose, it would be “reviewed and coordinated 

with AAFES, RCI, the specific Army installation, 

and the installation’s RCI developer partner.” The 

agreement demonstrated that both sides were 

committed to working together to provide services 

for military families.138

Figure 7-27. Residents walking in front of Herryford Village town center at Fort Belvoir, Va.

Courtesy of Clark Realty Capital.

Figure 7-28. New RCI homes in Fort Belvoir’s Park Village. Clark Pinnacle constructed 

the Park Village homes in craftsman style to match the original architectural style of the 

neighborhood. The design team also preserved the original “loop” street network in order 

to shorten blocks and reduce the amount of area under construction.

Courtesy of Clark Realty Capital.

While development of the town center and 

Herryford Village proceeded smoothly, finding 

the best way to deal with Fort Belvoir historic 

homes that needed renovation or removal proved 

challenging, as it had at Forts Meade and Lewis. 

As an older installation, Fort Belvoir was home 

to a large number of historic properties, which 

became a central point of discussion during the 

solicitation and CDMP process. According to the 

Washington Post, “With its stately three-story 

brick Colonials on either side, the tree-lined 

street bordering the Potomac River looks like 

some old-money Millionaires Row.”139 Historic 

homes gave the installation much of its admired 

character, but they also posed difficulties for the 

RCI program. Not only was renovating historic 

homes more costly, it also entailed working with 

the Virginia State Historic Preservation Office 

(SHPO) and local officials to ensure compliance 

with the National Historic Preservation Act. Most 

of the homes were older than Wherry or Capehart 

homes and thus did not fall within the Programmatic Agreement already developed with the 

Advisory Council on Historic Preservation.

Historic preservation concerns at Fort Belvoir 

focused mainly on Park Village, a neighborhood 
222 Privatizing Military Family Housing 223

CHAPTER S E V E N

Consolidating the RCI Program, 2002–2005

consisting of what Casey Nolan of Clark Pinnacle 

described as “Sears kit homes ... that were intended 

to be temporary homes.”140 The initial CDMP 

proposed demolishing and replacing all existing 

structures, but the SHPO rejected that plan. In an 

attempt to compromise, the partnership suggested 

a plan similar to that proposed for another Fort 

Belvoir neighborhood, Jadwin Loop. There, Clark 

Pinnacle planned to demolish and replace most 

historic houses with new homes that would have a 

similar look and “feel,” while keeping and renovating a few of the remaining World War I-era craftsman homes.141

However, the Virginia SHPO, Fairfax County, 

and local preservation organizations all opposed 

Clark Pinnacle’s taking this approach in Park 

Village. The SHPO wanted the houses renovated 

rather than removed. The Fairfax County Department of Planning and Zoning, the National Trust 

for Historic Preservation, and the Alexandria 

Meeting of the Society of Friends expressed even 

greater opposition. After reviewing the draft 

Programmatic Agreement, James Zook, Fairfax 

County’s Director of Planning and Zoning, raised 

several major objections, noting that the demolition of a total of 56 historic structures “will greatly 

and forever alter the character of the Fort Belvoir 

Historic District.” Demolishing the homes was “not 

a viable option,” Zook explained, because of Park 

Village’s “historic resources with settings, cultural 

significances and uniqueness.”142

Likewise, the county preservation office 

believed that the Park Village structures deserved 

more attention than the homes at Jadwin Loop. 

Their historic importance derived from three 

attributes: a unique architectural/engineering 

style, a design by a famous architect (Horace Peaslee, who also designed the Marine Memorial in 

Arlington), and the fact that they were an intact 

Army village representing the World War I period 

of Army history. Zook warned that the 1920–1921 

“temporary” homes “appear to be unique to Fort 

Belvoir as no similar housing units have been 

found on other army posts.”143 Elizabeth Merritt, 

deputy general counsel for the National Trust for 

Historic Preservation, “strongly agree[d] with” 

these observations, suggesting that “the Army has 

not provided adequate justification of the demolition of all 56 historic properties.”144 Despite the 

concerns raised by the county and the National 

Trust, however, the SHPO and the partnership 

ultimately agreed on the original plan in the 

CDMP for Park Village, which involved restoring two historic homes and demolishing and 

replacing the remainder.145 However, the agreement with the SHPO represented a reprieve for 

the historically significant Colonial Revival-style 

homes along the Potomac River, which were to be 

renovated. Clark Pinnacle began the renovation 

work in December 2004 and had renovated 47 of 

the 61 historic homes by April 2008.146

The resolution to the historic homes issue 

allowed Clark Pinnacle to progress with construction at Fort Belvoir within its initial development 

period, including the renovations of the historic 

homes. By 2006, Fort Belvoir was well on its way 

to providing better housing for its soldiers and 

their families, while also becoming one of the 

brightest examples of RCI success. The project 

overcame early problems with the surrounding 

community and with environmental issues to win 

awards for its innovative Village Commons town 

center in Herryford Village, and this spurred the 

RCI program to look at partnering with AAFES at 

other installations. The innovations of the Fort 

Belvoir project clearly showcased new ways in 

which RCI could improve the quality of life for 

military families.

Fort Sam Houston (Texas)

While historic structures constituted just one of 

the challenges for RCI at Fort Belvoir, they were the 

main challenge at Fort Sam Houston in San Antonio, 

Texas. With more than 380 historic structures within 

the cantonment area, Fort Sam Houston was considered “the Army’s most significant historic installation.”147 Although RCI partnerships had dealt with 

historic homes at other installations such as Forts 

Belvoir, Meade, and Lewis, the Army had not tried 

to tackle the evaluation, privatization, and renovation of an entire stock of historic homes on the scale 

encountered at Fort Sam Houston. Fort Belvoir, for 

example, had 170 historic homes, but the inventory 

at Fort Sam Houston more than doubled that.

Fort Sam Houston had its origins in 1876 

as a 92-acre post. It gradually expanded, and 

between 1910 and 1941 it was bigger than any 

other Army installation in the United States. 

In 1975, the Advisory Council on Historic Preservation designated the entire post a National 

Historic Landmark. One report explained, “As 

one of the Army’s oldest installations, Fort Sam 

Houston boasts the largest collection of historic 

structures.” The historic housing was scattered 

throughout seven different neighborhoods on 

the post, five of which were considered historic 

and each of which “represent[ed] different eras 

of construction and reflect[ed] Army concepts in 

planning and design.”148

Figure 7-29. Historic home at Fort Belvoir, VA.

Courtesy of Clark Realty Capital.
224 Privatizing Military Family Housing

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The RCI Program Office began planning for 

RCI implementation at Fort Sam Houston in 2002. 

In 2003, the Army conducted an HMA that initially 

called for the construction of 409 new homes. 

After further discussions, though, RCI and DOD 

officials decided that such an expansion could not 

be supported financially during the initial development period. It thus reduced the requirements 

to construction of 181 new homes and renovation 

of 434 others. Given the historic character of the 

installation, the RFQ for the Fort Sam Houston 

project, issued in 2003, emphasized the need for 

bidders to demonstrate experience in developing and renovating historic homes.149 In February 

2004, the Army chose Lincoln Military Housing, 

LLC, a subsidiary of Lincoln Property Company, 

a worldwide property development and management firm headquartered in Dallas, Texas, as the 

partner for the project. In March 2005 it transferred its family homes to Lincoln, including the 

historic structures.150

In dealing with the historic homes, the Army 

had to follow stringent preservation guidelines 

because of the post’s designation as a National 

Historic Landmark. To address the historic features as a whole and to streamline the evaluation 

process, RCI staff at Fort Sam Houston negotiated 

a programmatic agreement with the Texas SHPO 

and the Advisory Council on Historic Preservation 

that called for the installation to exert “cultural 

resource stewardship” of its historic housing.151 The 

agreement was a key document because it provided 

guidelines for renovating or replacing historic 

homes and neighborhoods. Fort Sam Houston also 

compiled a Historic Properties Component (HPC) 

plan for the long-term monitoring and protection 

of the historic homes. The Advisory Council on 

Historic Preservation certified this HPC in 2006, 

meaning that for the next five years the Army could 

use the standard operating procedures without 

needing to consult with the Advisory Council and 

the Texas SHPO about every home.152

Figure 7-30. Historic home at Fort Sam Houston, Tex.

Courtesy of Fort Sam Houston RCI Office.

225

Lincoln Military Housing

Lincoln Military Housing’s first RCI partnership with 

the Army dates to 2004, when the company won 

a contract to oversee military housing at Fort Sam 

Houston in San Antonio, Texas, one of the Army’s 

oldest installations. Acting as both developer and 

property manager, the company worked closely with 

the Army, design subcontractors, and local organizations to develop viable budgets, plans, and schedules within the context of the community’s historic 

status. Named for the hero of the Texas Revolution of 

1836, “Fort Sam” included some of the oldest structures on any Army base in the United States. With 

these concerns in mind, Lincoln built and renovated 

615 installation homes, each with two to five bedrooms, in villages with community centers, pools, 

playgrounds, and fitness centers.

The renovation of historic homes at Fort Sam 

Houston posed a formidable challenge. The sheer 

number of historic structures present on the base, 

386 in all, more than doubled the total on any 

other RCI project. Scattered throughout seven different neighborhoods on the post, some historic 

homes had been constructed as early as 1881, 

while others dated from the 1930s. Moreover, the 

entire post had been designated a National Historic Landmark. Working within these constraints, 

Lincoln personnel performed a delicate balancing 

act between providing livable homes and preserving historical authenticity. Because of the variety 

of these historic homes, no single approach could 

effectively address every issue encountered by 

planners and designers. Allyson McKay, Executive Director of Lincoln Military Housing, described 

what her staff often encountered in Fort Sam Houston’s older homes: “It’s funny—we can go into the 

same type units and the remodels were completely 

different in [one] house [than another] so our basic 

design has to be tweaked to some degree to match 

sometimes what’s already existed.”153 From replacing old plumbing and wiring to reproducing stylistically accurate staircase spindles, the project 

continually tested the flexibility and creativity of 

Lincoln’s team.

In the end, the company’s exemplary work at 

Fort Sam Houston provided an illustration of how to 

approach historic homes on an RCI project. Lincoln’s 

accomplishments included navigating tight preservation guidelines while preserving the post’s historic 

character, not only for older homes but also for new 

construction, which followed architectural styles and 

designs that complemented the older surrounding 

villages. In addition, in providing homes for soldiers 
227

CHAPTER S E V E N

Consolidating the RCI Program, 2002–2005

226 Privatizing Military Family Housing

and family members with disabilities—already an 

important component of the project—Lincoln went 

beyond its requirements, converting 10 two-bedroom homes for use by “wounded warriors” returning from deployments. 

Overall, while the project’s historic structures 

posed challenges unprecedented in the Army’s RCI 

program, it also offered Lincoln Military Housing an 

opportunity to achieve high-profile success in its service to members of the nation’s armed forces. “As a 

result of a combination of circumstance and effort by 

the Fort Sam Houston staff,” commented Fort Sam 

Houston’s cultural resource management specialist 

David Brigham, “Fort Sam Houston’s RCI program 

can serve as a model for successful historic preservation of Army housing.”154

Lincoln Military Housing has also been the 

developer and general contractor for RCI housing 

construction at Joint Base Lewis-McChord, Washington, in a joint venture with Equity Residential.

Figure 7-31. New RCI home in a block of Garden Avenue, 

Fort Sam Houston, Tex.

Courtesy of Lincoln Military Housing.

Figure 7-32. Renovated Officers Club and grounds, Fort Sam 

Houston, Tex.

Courtesy of Lincoln Military Housing.

address all of the issues posed by 386 homes 

ranging in age from 60 to 125 years old. In the 

end, the CDMP listed 22 separate design plans for 

privatized housing. Many included that bedrock 

preservation principal of a “front/back” approach. 

This approach meant that all work on the exterior 

and the front portion of the interior of the houses 

would focus on restoration rather than renovation, 

with the objective of leaving the historical integrity 

of the home intact. The back areas of the home—

bedrooms, bathrooms, kitchens—would undergo 

renovations that would include replacement of old 

counters, plumbing, and facilities with modern 

appliances and other contemporary household 

amenities.156 Because the age of so many of the 

homes showed itself in deteriorating exteriors or 

outdated interiors (particularly in terms of wiring 

and plumbing), the partnership recognized that 

“continual reinvestment in the villages will play a 

critical part in the success of the Fort Sam Houston 

project.” Above all, though, the Army needed to 

ensure that the homes had a standard of “livability” that would entice soldiers and their families to 

move into them.157

Making family housing “livable” went beyond 

the houses themselves. In the Patch Chaffee 

Figure 7-33. Design framework for neighborhood developments at Fort Sam Houston, Tex.

Courtesy of Urban Design Associates and Lincoln Military Housing.

To manage the large stock of historic housing at Fort Sam Houston, the CDMP created three 

categories of historic homes (based on work to be 

performed) and assigned each of the 386 historic 

homes to one of those categories. The first category 

encompassed the oldest and largest houses on the 

installation (dating from 1881 to 1908) that were 

already registered as part of the National Historic 

Landmark District. The second category covered 

the Great Depression-era homes (built between 

1931 and 1934) in the Gorgas and Wheaton-Graham 

neighborhoods. The third category included the 

Patch Chaffee homes, also built between 1931 and 

1934, which were eligible for registration as part of 

the National Historic Landmark District. The first 

two categories consisted of houses that were “well 

constructed and ... in generally good condition,” 

therefore requiring only minor renovation. Patch 

Chaffee houses, on the other hand, had been considerably altered in the past and would need major 

renovations to restore them to something closer to 

their original structure.155

The CDMP outlined specific strategies for 

achieving balance between livability and historic 

authenticity in these three categories of housing. 

Of course, no single approach could effectively 
228 Privatizing Military Family Housing 229

CHAPTER S E V E N

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neighborhood, Lincoln Military Housing and its 

landscape architects promoted a sense of livable community, in keeping with New Urbanism 

principles, by designing the neighborhood for 

“safety and social interaction” and ensuring that 

every home was within easy walking distance of 

a community park. Some of these parks already 

existed, especially in the Staff Post, Infantry Post, 

and Artillery Post neighborhoods. But Lincoln 

constructed others, including those in the Harris 

Heights and Watkins Terrace neighborhoods.158

The emphasis on livability also extended to those 

households in which one or more members were 

disabled. As the length and casualties of the wars in 

Iraq and Afghanistan increased, and as more soldiers 

returned to Fort Sam Houston with significant 

injuries and disabilities, the partners adjusted the 

CDMP to convert more homes for use by “Warriors 

in Transition.”159 The initial CDMP had directed that 

10 percent of Fort Sam Houston housing be accessible for soldiers or family members with disabilities, 

double the amount set aside in the majority of RCI 

projects. But going one step further, Lincoln took the 

lead in arranging to convert 10 two-bedroom historic 

homes in Patch-Chaffee for the “wounded warriors” 

returning from their deployments.160

Lincoln worked with its project architectural 

firm, Fisher Heck, on striking a balance between 

meeting the needs of modern families and maintaining the historic features of the homes. Expanding on that point, Fisher Heck’s project manager 

Charles John asserted, “These are absolutely not 

house museums.... They are houses for contemporary military families to live in.”161 Even when 

the project did build brand new homes in the 

Harris Heights neighborhood, the designs followed “architectural styles that complement[ed] 

the historic character of villages like Artillery Post 

or Patch-Chaffee.”162 As David Brigham, Fort Sam 

Houston’s cultural resource management specialist, saw it, “The success of the RCI program at Fort 

Sam Houston is ... attributed to the selection of a 

developer/partner with the resources and experience necessary for a project of this magnitude.” 

Lincoln Military Housing demonstrated that it had 

“a vision for improving housing for the Fort Sam 

Houston soldiers and their families” and “an appreciation and understanding for preservation of the 

installation’s historic properties.”163

Among the challenges of renovating the 

historic homes, Ron Bennett of Lincoln Military 

Figure 7-34. Renovated home adapted for disabled access, Patch-Chaffee neighborhood, 

Fort Sam Houston, Tex. 

Courtesy of Lincoln Military Housing.

Figure 7-35. A historic home with wrap-around porches in the Infantry Post neighborhood, 

Fort Sam Houston, Tex. 

Courtesy of Fort Sam Houston RCI Office.

Housing said that old wiring in the homes was 

the biggest issue: “We’ve found some houses were 

totally rewired and you go next door and they’ve 

never touched it.” Allyson McKay of Lincoln 

thought that the “most time-consuming” challenge 

with regard to the historic homes was replacing 

some of the historic features, such as wooden 

spindles for staircase banisters. Lincoln eventually 

had to lathe the spindles on site because it could 

not find suitable replacements elsewhere.164

A problem of a different kind was partly a 

product of the project’s success. As more of the 

historic home restorations were completed, RCI 

staff began to see competition develop among the 

officers for the grand historic homes that dated 

to the 1880s. On most installations, senior military personnel—designated as key and essential 
230 Privatizing Military Family Housing 231

CHAPTER S E V E N

Consolidating the RCI Program, 2002–2005

persons—had first choice and generally chose the 

larger and more spacious historic homes. Fort Sam 

Houston’s designation as the home of the Army 

Medical Command and the headquarters for other 

military forces meant that many key and essential 

personnel sought housing on the base, and they all 

wanted the best historic homes. If such homes were 

not available and RCI staff had to assign officers 

to other neighborhoods, problems developed. As 

Pat Baker, RCI Program Management Specialist, 

reported, “Because we have an overlap, there’s seven 

to nine officers that live in new homes [rather than 

the historic homes] because of the breakdown of 

the rank.” However, “Some want the historic homes 

and then they don’t want anything but that one 

home.” RCI and Lincoln personnel did their best 

to satisfy expectations, but at times some majors, 

colonels, and generals expressed displeasure.165

For the most part, Lincoln successfully dealt 

with the historic home issue and effectively produced renovated and newly constructed homes 

without exceeding its budget. In fact, because of 

the sheer number of historic homes on the installation, many consider Fort Sam Houston to be the 

best example in the RCI system of how to deal with 

historic homes. According to David Brigham, “As a 

result of a combination of circumstance and effort 

by the Fort Sam Houston staff, Fort Sam Houston’s 

RCI program can serve as a model for successful 

historic preservation of historic Army housing.”166

The project demonstrated that RCI personnel can 

work successfully with SHPOs and the Advisory 

Council to reach appropriate solutions for historic 

home renovations.

Figure 7-36. Family members out for a stroll in a new RCI neighborhood at Fort Hood, Tex. 

Courtesy of Lend Lease.

Many more installations than the five discussed here traveled down the RCI path between 

2002 and 2006. Former RCI program director 

Spigelmyer pointed out that in 2004 alone, the 

Army had privatized 11 Army installations, totaling 17,000 homes. He also noted that by 2005, the 

federal government had leveraged $600 million 

of its own money into $7.9 billion contributed 

by the private sector for the construction of new 

and renovated Army homes. “Never in our wildest 

dreams did we expect this favorable of a leverage 

factor,” Spigelmyer declared.167

From 2002 through 2006, the Army made 

awards to nine different private partners for 23 RCI 

projects (dates of transfer to partners noted):

• Fort Bragg, North Carolina (Picerne Military 

Housing, August 2003)

• Presidio of Monterey/Naval Postgraduate 

School, California (Clark Pinnacle, October 

2003)

• Fort Stewart/Hunter Army Airfield, Georgia 

(GMH Military Housing, November 2003)

• Fort Campbell, Kentucky (Actus Lend Lease, 

December 2003)

• Fort Belvoir, Virginia (Clark Pinnacle, December 2003)

• Fort Irwin/Moffett Federal Airfield/Parks 

Reserve Forces Training Area, California 

(Clark Pinnacle, March 2004)

• Fort Hamilton, New York (GMH Military 

Housing, June 2004)

• Fort Detrick, Maryland/Walter Reed Army 

Medical Center, Washington, D.C. (GMH 

Military Housing, July 2004)

• Fort Polk, Louisiana (Picerne Military Housing, September 2004)

• Fort Shafter/Schofield Barracks, Hawaii 

(Actus Lend Lease, October 2004)

• Forts Eustis/Story, Virginia (J.A. Jones, 

December 2004)

• Fort Leonard Wood, Missouri (American 

Eagle Communities, March 2005)

• Fort Sam Houston, Texas (Lincoln Military 

Housing, March 2005)

• Fort Drum, New York (Actus Lend Lease, May 

2005)

• Fort Bliss, Texas/White Sands Missile Range, 

New Mexico (GMH Military Housing, July 

2005)

• Fort Benning, Georgia (Clark Pinnacle, January 2006)

• Fort Leavenworth, Kansas (Michaels Military 

Housing, March 2006)

• Fort Rucker, Alabama (Picerne Military Housing, April 2006)

• Carlisle Barracks, Pennsylvania/Picatinny 

Arsenal, New Jersey (American Eagle Communities, May 2006)

• Fort Gordon, Georgia (GMH Military Housing, May 2006)

• Fort Riley, Kansas (Picerne Military Housing, 

July 2006)

• Redstone Arsenal, Alabama (Redstone Investments, October 2006)

• Fort Knox, Kentucky (Actus Lend Lease, 

December 2006)168

Some of the installations involved in these 

projects were large posts, such as Fort Bragg, North 

Carolina; Fort Campbell, Kentucky; Fort Polk, 

Louisiana; Fort Bliss, Texas; Fort Benning, Georgia; 

and Fort Riley, Kansas. Others were much smaller, 

a group that included Fort Hamilton, New York; 
232 Privatizing Military Family Housing 233

CHAPTER S E V E N

Consolidating the RCI Program, 2002–2005

Carlisle Barracks, Pennsylvania; Picatinny Arsenal, New Jersey; and Red Stone Arsenal, Alabama. 

Some were in rural areas, such as Fort Polk, while 

others were in urban locations, such as Fort Hamilton, located in New York City. Many of these were 

privatized as single RCI projects, but some, such 

as Carlisle Barracks, Picatinny Arsenal, and Forts 

Eustis/Story, Virginia, had to be combined to make 

RCI work. Some installations had a long history, 

such as Fort Leavenworth, Kansas, which was the 

“oldest active Army post west of the Mississippi 

River” (established in 1827).169 Others were relatively new, such as Fort Irwin, California, which 

had been established in the 1940s. RCI followed its 

own unique path at each base. Yet the increasing 

standardization of the program meant that RCI 

projects had achieved a certain maturity.170

Conclusion

From 2002 through 2005, the RCI program 

expanded dramatically. During that period, the Army 

privatized family housing at 26 installations and, 

with its private development partners, built 3,940 

new homes and renovated 6,192 others. RCI projects 

were due to begin at seven additional installations in 

FY 2006, and the Army anticipated privatizing all the 

remaining bases by the end of FY 2010. In addition 

to family housing, the Army executed its first UPH 

project for senior single soldiers at Fort Irwin. As an 

article in Defense Communities explained, “No other 

Army Quality of Life program has touched more 

Soldiers and their families than the privatization of 

family housing in the United States.”171

As this expansion occurred, the RCI program, 

on strong ground due to the success of the pilots 

and support from Congress and high Army officials, tried to streamline processes and make the 

program more efficient. Providing guidelines on 

environmental sustainability and construction 

standards was part of this, as was enacting a twostep RFQ and issuing RFQs for geographic groupings, rather than for individual projects/installations. Additional training for staff at both RCI 

headquarters and at bases was also important.

As the RCI program strove to transform family 

housing throughout the Army, officials released 

solicitations for projects at installations with a 

much wider range of characteristics and housing 

requirements than the four pilot projects exhibited. From 2002 through 2005, the Army successfully launched RCI projects at small installations, 

at isolated bases, at installations with a large 

historic housing footprint, at purple bases with 

large civilian populations, and at installations in 

urban or high-profile areas. Each of these projects 

produced new challenges and risks that had not 

been encountered at the pilots.

To meet these challenges, the RCI office developed a variety of innovative solutions. Jones Lang 

LaSalle consultants under the supervision of the 

lead consultant, Dr. Barry Scribner, continued their 

advisory and support role for the Army RCI Office, 

which was essential in helping the Army manage 

the legal and financial complexity of the newer 

projects. For example, to privatize small installations, RCI leadership and JLL consultants instituted a new development strategy that involved 

“pairing” or “grouping” several installations into 

one project with a single development partner. 

Accordingly, RCI initiated combination projects for 

Fort Irwin/Moffett Air Field/Camp Parks in California and Fort Detrick/Walter Reed in the Maryland/Washington, D.C., area, among others. These 

joint projects enabled RCI to be both effective and 

profitable at small installations.

The RCI program continued to produce 

innovations throughout this time period. Perhaps 

the most striking was the development of the 

town center at Fort Belvoir, for which the Army 

partnered with AAFES to construct a hub where 

neighbors could congregate for both shopping 

and relaxation, while others lived overhead, an 

outstanding New Urbanist-inspired example of 

mixed retail and residential land use. Based on the 

success of the Belvoir effort, the Army negotiated 

an overall Memorandum of Understanding with 

AAFES so that they could collaborate on additional 

installations. Other innovations included providing wireless internet service to residents at the 

Presidio of Monterey and the NPS, as well as outfitting homes on these installations with study space 

to accommodate the needs of students. In the 

realm of financing, the partners on the Irwin/Moffett/Parks and Detrick/Walter Reed projects tried 

to develop different ways of acquiring funds for 

necessary construction and renovation. Although 

the Orion Park land sale fell apart because of 

environmental issues, it still indicated a new way 

of thinking about sources of funds for RCI, as did 

the RCI program’s attempts to deal with a lack of 

developable land at Walter Reed. Also highlighting the flexibility of the RCI program was the way 

in which installations integrated historic housing 

into projects. Especially at Fort Sam Houston, the 

partner successfully negotiated agreements with 

the SHPO and Advisory Council on Historic Preservation that maintained the historic character of 

the homes while enhancing their livability.

By 2005, then, it seemed that the RCI program 

was on a strong footing. Soldiers on several installations lived in new or renovated housing that was 

markedly superior to what was available before the 

program, while developers continued to generate 

new ideas about how to enhance a sense of community in their projects. The program did not yet 

extend to all the installations in the United States, 

but it was well on its way.
234 Privatizing Military Family Housing 235

CHAPTER S E V E N

Consolidating the RCI Program, 2002–2005

Endnotes to Chapter 7

1. Don Spigelmyer personal communication with Matthew 

Godfrey, 13 April 2009.

2. “Rhonda Q. Hayes, Deputy Director, Army Residential 

Communities Initiative (RCI),” Folder: Admin-Pers-OrgSigDel-Rosters, Subfolder: Bios, Share Drive database, RCI 

Program Office, Crystal City, Va. Hereafter cited as RCI 

Office.

3. Rhonda Hayes, written comments to authors, 25 January 

2011.

4. Hayes comments, 25 January 2011.

5. Ted Lipham telephone interview by Paul Sadin, 13 October 2008, Seattle, Wash., Transcript, 13.

6. Jack Keane telephone interview by Paul Sadin, 16 March 

2009, Seattle, Wash., Transcript, 3, 6.

7. SAIE-RCI, “Memorandum for the RCI Integrated Process Team Members,” 23 February 2001, Folder: IPT, Share 

Drive database, RCI Office.

8. “Residential Communities Initiative, Assistant Secretary 

of the Army (Installations and Environment),” PowerPoint 

presentation, 21 May 2001, 3-5, document provided by 

William Mysliwiec.

9. Assistant Secretary of the Army for Installations & 

Environment, RCI Office, “RCI Primer: An Introduction to 

the RCI Program,” 1 June 2011, 6-11, document provided by 

RCI Office. 

10. ASAIE-RCI, “Army Information Paper,” 26 March 2002, 

Folder: Marketing-Articles-RCI Video-Commo, Subfolder: 

RCI Articles, Share Drive database, RCI Office.

11. “RCI Primer,” 11.

12. “RCI Primer,” 12.

13. “Military Housing Privatization: Year in Review, What’s 

Happening Now, Tomorrow,” PowerPoint presentation, 20 

January 2009, http://www.phma.com/pds/presentations/

Tues-20-January/OSD_PHMA.pdf.

14. National Development Council, “Course Descriptions,” 

http://nationaldevelopmentcouncil.org/index.php/site/ 

training_schedule/category/courses.

15. RCI Program Office, “RCI Program Overview,” PowerPoint presentation, Documentum database, RCI Office.

16. Don Spigelmyer personal communication with Matthew Godfrey, 24 January 2009. 

17. Patrick Kelly interview by Leigh Cutler, 3 April 2008, 

Presidio at Monterey, Calif., Transcript, 12.

30. See, for example, “Fort Detrick, Maryland; Fort Hamilton, New York; Picatinny Arsenal, New Jersey; and Walter 

Reed Army Medical Center, District of Columbia: Request 

for Qualifications (RFQ),” Documentum database, RCI 

Office.

31. “Army Information Paper,” 26 March 2002.

32. Rhonda Hayes, written comments to authors, 13 February 2011.

33. Hayes comments, 13 February 2011.

34. Hayes comments, 13 February 2011.

35. Hayes comments, 13 February 2011.

36. Spigelmyer personal communication, 24 January 2009.

37. RCI group interview, 24.

38. Clark Pinnacle Family Communities, LLC “Executive 

Overview: CDMP Fort Irwin/Moffett Field/Parks Reserve 

Forces Training Area,” 14 July 2003, 5-6, Electronic files, 

RCI Office, Fort Irwin, Calif. Hereafter cited as Irwin RCI 

Office.

39. Dean Stefanides, written comments to authors, 13 

February 2011.

40. Larry Becker, Ian (Sandy) Clark, and Gunnar Pedersen, 

“Information Paper, SAIE-RCI, June 27, 2002, Subject: 

Presidio of Monterey (POM)/Naval Postgraduate School 

(NPS) Residential Communities Initiative (RCI) Award,” 

Documentum database, RCI Office.

41. Ladye Blair and Sandra Key interview by Paul Sadin, 

8-9 October 2008, Fort Irwin, Calif., Transcript, 13-14, 26-

27; Fort Irwin, “Facts and Figures,” http://www.irwin.army.

mil/Post/Info/Pages/FactsandFigures.aspx.

42. U.S. Army, “FORSCOM REG 350-50 Training at NTC, 

PowerPoint slides, File: Transformation—Additional PN 

to Irwin, RCI Program Director’s Files, Pinnacle Building, 

Fort Irwin.

43. Gina Slater, Jennifer Fraser, and Rick Wimer interview by Paul Sadin, 7 October 2008, Fort Irwin, Calif., 

Transcript, 35, 38. Hereafter referred to as Pinnacle group 

interview.

44. Michael Zahuranic and Gary Boyd, “Residential Communities Initiative: A Case Study,” MBA Professional 

Report, Naval Postgraduate School, December 2003, 31, Defense Technical Information Center, http://stinet.dtic. mil.

45. U.S. Army, Fort Irwin, Moffett Airfield, Camp Parks 

RFQ, DACA 31-02-R-0001, Appendix C, C-18, Electronic 

files, Irwin RCI Office.

46. U.S. Fort Irwin, Moffett Airfield, Camp Parks RFQ, 

Appendix C, C-20.

47. U.S. Army, “Fort McCoy, Moffett Army Family Housing and Parks Reserve Forces Training Area,” PowerPoint 

presentation, 4 December 2001, 13-14, Electronic files, 

Irwin RCI Office.

48. U.S. Fort Irwin, Moffett Airfield, Camp Parks RFQ, Appendix C, C-32, 34.

49. “California Combine RCI December Deliverables,” 27 

December 2002, Electronic files, RCI Program Director’s 

Office, Irwin RCI Office.

50. Gina Slater, Pinnacle group interview, 6.

51. Geoffrey Prosch to Julian Burns, 8 April 2004, in Sarah 

White email string, 8 April 2004, File: Orion Finances, RCI 

Program Director’s Office, Irwin RCI Office.

52. Clark Pinnacle Family Communities, LLC, “Executive 

Overview: CDMP Fort Irwin/Moffett Field/Parks Reserve 

Forces Training Area,” 32.

53. Jodi Winters interview by Paul Sadin, 7 October 2008, 

Transcript, 11-12.

54. Sarah White to Rafael Muniz, email, 8 April 2004, 

Jaime Callaghan email chain, 8 April 2004, File: Orion 

Finances, RCI Program Director’s Office, Irwin RCI Office.

55. “California Combine RCI December Deliverables,” 27 

December 2002.

56. Clark Pinnacle Family Communities, LLC, “Executive 

Summary, CDMP Fort Irwin,” 39.

57. Clark Realty, “Partners in Progress: How Clark and the 

Army Are Creating a Lasting Legacy for Soldiers and Their 

Families through the Residential Communities Initiative,” 

information sheet provided by Hallie Groff, Clark Realty 

Capital, 15 February 2011.

58. Ivan Bolden, “Army Residential Communities Initiative 

(RCI) Discussion Paper – Taxation,” n.d., 1, Share Drive 

database, RCI Office.

59. Bolden, “Army Residential Communities Initiative 

(RCI) Discussion Paper – Taxation,” 2.

60. Michael Defferding, Jones, Lang, LaSalle, “RCI Tax 

Issue/Strategy Briefing to Dr. Fiori,” PowerPoint presentation, 29 October 2002, 4, Share Drive database, RCI Office.

61. Bolden, “Army Residential Communities Initiative 

(RCI) Discussion Paper – Taxation,” 2.

62. Shirley Johnson, Tax Counsel, State Board of Equalization, to Stephen Vagnini, Monterey County Assessor, 18 

April 2003, File: SB 451, RCI Program Director’s Office, 

Irwin RCI Office.

63. Michelynn Carrellas email to Jack Lester, et al., 4 September 2004, attachment, in Sarah White email thread, 4 

September 2004, File: Property Taxes, Irwin RCI Office.

18. Interview of Don Spigelmyer, Dean Stefanides, Rhonda 

Hayes, Mike McCarley, Matt Keiser, Barry Scribner, Bill 

Mysliwiec by Matthew Godfrey, 13 February 2007, Crystal 

City, Va., Transcript, 39. Hereafter cited as RCI group 

interview.

19. William A. Armbruster, Deputy Assistant Secretary of 

the Army, Privatization & Partnerships, Memorandum for 

See Distribution, 10 March 2003, Documentum database, 

RCI Office. See also “DASA (I&H) Standard Operating 

Procedure for Review, Approval and Signature of RCI 

Project Documents,” 3 June 2005, Documentum database, 

RCI Office.

20. “Quality Standards for New and Replacement Residential Communities Initiative (RCI) Family Housing,” 27 

November 2002, Documentum database, RCI Office. In 

March 2003, Fiori issued the policy that each RCI home 

would have “a minimum of three bedrooms.” Mario P. 

Fiori, Memorandum for the Assistant Chief of Staff for 

Installation Management, 17 March 2003, Documentum 

database, RCI Office.

21. “RCI Primer,” 6.

22. Joyce VanSlyke and Theresa Adams, “The Army’s 

Residential Communities Initiative (RCI) Program Gains 

Momentum,” February 2003, 2, Folder: Marketing-Articles-RCI Video-Commo, Subfolder: RCI Articles, Share 

Drive database, RCI Office.

23. “Sustainable Residential Communities for Military 

Families Draft (as of 7/17/06),” Folder: GSA Award Package 

2006, Subfolder: Old Versions_Additional Info, Share 

Drive database, RCI Office; and Frank Greve, “Green 

Revolution Sweeping the US Construction Industry,” 

McClatchy Newspapers, 12 December 2006, http://www.

commondreams.org.

24. U.S. Army Corps of Engineers, Engineering and Construction Bulletin No. 2003-20, Issued: 07 November 2003 

(Revised 10 May 2006), http://www.wbdg.org/ccb/ARMYCOE/COEECB/ecb_2003_20.pdf).

25. Dale Andrews and Casey Nolan interview by Matthew 

Godfrey and Paul Sadin, 23 June 2008, Transcript, 27.

26. Don Spigelmyer in email to Ian Clark, Dean Stefanides, 

John Lonnquest, and Rhonda Hayes, 17 October 2011. 

27. Actus Lend Lease, “Background: Army Hawaii Family 

Housing,” Folder: GSA Award Package 2006, Subfolder: 

Old Versions_Additional Info, Share Drive database, RCI 

Office. See also The Outdoor Circle, “About Us,” http://

www.outdoorcircle.org/about_us.

28. “Sustainable Residential Communities for Military 

Families Draft (as of 7/17/06).” 

29. Russ Hamilton interview by Matthew Godfrey, 5 June 

2007, Fort Carson, Colo., Transcript, 12-13.
236 Privatizing Military Family Housing 237

CHAPTER S E V E N

Consolidating the RCI Program, 2002–2005

64. Simon Limage, Office of Rep. Ellen Tauscher, email 

to LTC David Anderson, 23 October 2003, in Sarah White 

email thread, 23 October 2003, File: Property Taxes, Irwin 

RCI Office.

65. California Construction Link, “Clark Construction 

Finishes First Phase of Military Housing, Begins Another,” 

1 October 2006, shelved materials, RCI Program Director’s 

Office, Irwin RCI Office.

66. RCI, “Residential Communities Initiative – Monterey 

Bay,” n.d., Defense Language Institute Foreign Language 

Center & Presidio of Monterey POM Archives, Chamberlin Library (hereafter referred to as DLIFLC & POM Archives), Presidio of Monterey, Calif. Presidio of Monterey 

hereafter cited as POM.

67. Commander, Naval Facilities Engineering Command, 

to Chief of Naval Operations (N44), Point Paper, 13 May 

1998, 2, RCI Office Files, POM.

68. David Gross, Garrison Commander, email to Mary 

Meyer, 12 October 1997, File: Housing 1996-1999, 21.20 Box 

9, DLIFLC & POM Archives, POM.

69. David Gross, Garrison Commander, email to HQDepartment of the Army, 23 October 1997, File Housing 

1996-1999, 21.20 Box 9, DFILC & POM Archives, POM.

70. Robert Chaplin, Superintendent, to Chief of Naval Operations (N4), 30 April 1998, RCI Office Files, POM.

71. Andrea Marks to Todd Czarnecki, 13 October 1998, in 

Caryn Washinton to Orin Collier email thread, 22 October 

1998, RCI Office Files, POM.

72. Tim Smith to Todd Czarnecki, email 13 May 1998, RCI 

Office Files, POM.

73. Penny Sinclair email to Larry Wright, 16 October 1998, 

RCI Office Files, POM.

74. Larry Wright email to Penny Sinclair, 20 October 1998, 

RCI Office Files, POM.

75. Peter Dausen interview by Leigh Cutler, 4 April 2008, 

Monterey, Calif., Transcript, 2.

76. Dausen interview, 3.

77. Dausen interview, 3-6.

78. “10 USC 2884 Project Report, Installations: Presidio of 

Monterey, California,” Documentum database, RCI Office.

79. Larry Becker, Ian (Sandy) Clark, and Gunnar Pedersen, “Information Paper, SAIE-RCI, June 27, 2002, Subject: 

Presidio of Monterey (POM)/Naval Postgraduate School 

(NPS) Residential Communities Initiative (RCI) Award,” 

Documentum database, RCI Office.

80. Kelly interview, 8.

81. Kelly interview, 4.

82. Kelly interview, 4.

83. RCI, “Residential Communities Initiative, Fort Detrick, 

Maryland, Open House,” PowerPoint presentation, 18 

January 2002, 6, Electronic files, RCI Project Manager’s 

Office, Fort Detrick, Md. Hereafter cited as Detrick RCI 

Office.

84. GMH Military Housing, LLC, “Walter Reed Army 

Medical Center and Fort Detrick Community Development and Management Plan – Executive Overview,” n.d., 

2-3, Electronic files, Detrick RCI Office.

85. SAIE-RCI, “Information Paper,” 4 June 2003, Electronic 

files, Detrick RCI Office.

86. Joyce VanSlyke email to Laura Cole, 3 June 2003, Electronic files, Detrick RCI Office.

87. RCI, “WRAMC/Fort Detrick Residential Communities Initiative Joint Project Review,” Draft, 8 July 2003, 13, 

Electronic files, Detrick RCI Office.

88. Army Public Affairs Office News Release, “Army Announces Fort Detrick Partner for Residential Communities Initiative,” 1 July 2003, http://www4.army.mil/ocpa/

print.php?story_id_key+4700. 

89. GMH Military Housing, LLC, “Community Development and Management Plan – Executive Overview,” 1.

90. “Memorandum of Agreement between U.S. Army 

Garrison, Ft. Detrick, Maryland and U.S. Army Garrison, 

Walter Reed Army Medical Center, Maryland,” 10 March 

2004, Electronic files, Detrick RCI Office.

91. Robert Shepko interview by Paul Sadin, 27 June 2008, 

Fort Detrick, Md., Transcript, 2, 11.

92. GMH Military Housing, LLC, “Community Development and Management Plan – Executive Overview,” 3.

93. RCI, “Residential Communities Initiative Lessons 

Learned Regarding Small Installations and Small Contractors,” n.d., Folder: Lessons Learned PM and PDC, Share 

Drive database, RCI Office.

94. Walter Reed Army Medical Center actually had 10 historic homes, but five were within the boundaries of a prior 

enhanced use lease (EUL) project, and would thus only 

be managed temporarily within the RCI project until the 

existing tenants departed. At that time, the homes would 

transfer back to the Army. Two other homes had already 

been condemned and scheduled for demolition, with the 

approval of the Maryland SHPO. RCI, “WRAMC/Detrick 

CDMP Comments,” n.d., ca. October 2003, Folder: CDMP 

Comments, Box 2, Detrick RCI Office.

95. GMH Military Housing, LLC, “Community Development and Management Plan–Executive Overview,” 4.

96. Shepko interview, 11.

97. Shepko interview, 4.

98. U.S. Department of Defense, “Base Closure and Realignment Report,” DefenseLink, Vol. 1, May 2005, http://

www.defenselink.mil.

99. “RCI – BRAC 2005 Answer Book,” Folder: Lessons 

Learned - PM&PDC & KM, Subfolder: 2005 - Tampa 

PM&PDC - Jun 05, Share Drive database, RCI Office. See 

also “RCI Program Provides Housing for Army Families,” 

Engineer Update (U.S. Army Corps of Engineers), April 

2007, http://www.hq.usace.army.mil/cepa/pubs/apr07/ 

story3.htm. Also see “Draft Information Paper, SAIE-RCI, 

September 24, 2003, Subject: Base Realignment & Base 

Closure (BRAC) Treatment in Residential Communities 

Initiative (RCI) Projects,” Documentum database, RCI 

Office.

100. U.S. Department of Defense, “Base Closure and Realignment Report,” DefenseLink, Vol. 2, May 2005, http://

www.defenselink.mil.

101. “Base Closure and Realignment Report,” Vol. 1, May 

2005.

102. Robert Shepko, personal communication with Paul 

Sadin, 30 April 2009.

103. “Forest Glen to Transfer to Fort Detrick,” 21 August 2008, http://www.dcmilitary.com/stories/082108/

stripe_28211.shtml. 

104. RCI, “Ft. Detrick and Walter Reed Army Medical Center RCI Project Briefing to RCI Program Office,” PowerPoint presentation, 2 February 2004, 6-7, Electronic files, 

Detrick RCI Office.

105. RCI-PAM, “Fort Detrick/Walter Reed Army Medical 

Center 2006 Portfolio and Asset Management Annual Site 

Visit After Actions Report,” Draft, 2006, 4-5, Folder: 2006 

PAM Annual Site Visit, Box GMH, Detrick RCI Office. 

106. U.S. Army, Fort Belvoir, “Historic Fort Belvoir,” http://

www.belvoir.army.mil/history.asp?id=Antecedents.

107. U.S. Army, “Annual History, U.S. Army Garrison, Fort 

Belvoir, FY 2004,” n.d., Drawer 4, Resident Communities 

Liaison Office, Directorate of Public Works Building, Fort 

Belvoir, Va. Hereafter cited as Belvoir RCLO.

108. U.S. Army, “Army Announces Fort Belvoir Partner 

for Residential Communities Initiative,” Documentum 

database, RCI Office. 

109. Donald Carr interview by Dawn Vogel and Matthew 

Godfrey, 25 June 2008, Fort Belvoir, Va., Transcript, 8-10.

110. William Armbruster, Deputy Assistant Secretary of 

the Army, to Senator George Allen, 20 May 2003, Folder: 

Congress (incl. sub-folders), Share Drive database, RCI 

Office.

111. “Fort Belvoir Plays Fair On Little League Field,” Washington Post, 22 May 2003, T-8.

112. Carr interview, 15.

113. “Fort Belvoir Plays Fair On Little League Field.”

114. Armbruster to Allen, 20 May 2003.

115. Carr interview, 16.

116. Anne Chazal and Christopher Hobson, “Surveys for 

the Northern Well Amphipod (Stygobromus phreaticus) 

at Fort Belvoir, Virginia,” Natural Heritage Technical 

Report 02-11, Richmond, Va.: Virginia Department of Conservation and Recreation, Division of Natural Heritage, 

2003, 1, Drawer 3, Belvoir RCLO. 

117. Chazal and Hobson, “Surveys for the Northern Well 

Amphipod (Stygobromus phreaticus) at Fort Belvoir, 

Virginia,” 3.

118. RCI-Fort Belvoir, “Memorandum for Record,” 19 

December 2002, Binder: Fort Belvoir RCI Corporate Board 

Meeting, Drawer 4, Belvoir RCLO.

119. Jones Lang LaSalle, “Fort Belvoir CDMP, Final Report 

of Variances and Lessons Learned,” 29 August 2003, 1-2, 

Drawer 5, Belvoir RCLO.

120. Ron Spigelmyer in email to Ian Clark, Dean Stefanides, John Lonnquest, and Rhonda Hayes, 17 October 

2011. 

121. Jones Lang LaSalle, “Fort Belvoir CDMP, Final Report 

of Variances and Lessons Learned,” 2.

122. Alec MacGillis, “Downtown Fort Belvoir,” Washington 

Post, 22 October 2006.

123. Clark Pinnacle Family Communities, LLC, “Executive 

Summary, CDMP Fort Belvoir,” 15 August 2003, 11, document provided by Pat Baker, RCI Program Office.

124. Mahlon Apgar IV and Leslie Bell, “Army Residential 

Communities Initiative II–Fort Belvoir,” Copyright Mahlon 

Apgar, IV, 2008, 2, document provided by Mahlon “Sandy” 

Apgar, IV.

125. Apgar and Bell, “Army Residential Communities Initiative II–Fort Belvoir,” 7.

126. Michelynn Carellas email to Joyce VanSlyke, 29 October 2003, File: AAFES-MWR, Share Drive database, RCI 

Office.

127. Apgar and Bell, “Army Residential Communities Initiative II–Fort Belvoir,” 7-8.

128. Apgar and Bell, “Army Residential Communities Initiative II–Fort Belvoir,” 7-8.

129. Apgar and Bell, “Army Residential Communities Initiative II–Fort Belvoir,” 8-9.

130. Edward Soriano interview by Paul Sadin, 4 June 2007, 

Fort Carson, Colo., Transcript, 14.

131. CNU Charter Award publication, n.d., included in 

Thomas Gallas, Torti Gallas and Partners, to Ivan Bolden, 

RCI Project Manager, 29 March 2006, document provided 

by Ivan Bolden.

132. “Clark Pinnacle Wins Best in American Living Award 

for Herryford Village, Fort Belvoir,” http://www.belvoirfamilyhousing.com/latestNews/news012506.asp.
238 Privatizing Military Family Housing 239

CHAPTER SEVEN

Consolidating the RCI Program, 2002–2005

133. “New Urbanism: It’s in the Army Now,” New York 

Times, 8 June 2006. 

134. Andrews and Nolan interview, 8.

135. Clark Pinnacle Family Communities, LLC “Executive 

Overview: CDMP Fort Irwin/Moffett Field/Parks Reserve 

Forces Training Area,” 24.

136. Don Spigelmyer, written comments to authors, re-

ceived 7 February 2011.

137. Draft Memorandum, 16 May 2004, File: AAFES-MWR, 

Share Drive database, RCI Office. See also “Talking Points 

SAIE-RCI,” 2 February 2005, Folder: Information Papers – 

General Topics, Share Drive database, RCI Office.

138. “Memorandum of Understanding, Subject: Army & 

Air Force Exchange Service (AAFES) and Army Residential 

Community Initiative (RCI) Project Coordination,” Folder: 

AAFES – MWR Issues, Share Drive database, RCI Office.

139. “For Military Post, a Transforming Mission,” Wash-

ington Post, 21 November 2002, reprinted in Donald Carr 

email to Julia Dill, 21 November 2002, Binder: Press Infor-

mation, Belvoir RCLO.

140. Andrews and Nolan interview, 22.

141. Marc Holma, Office of Review and Compliance, 

Virginia Department of Historic Resources, to LTC Kevin 

Tate, Director of Installation Support, Fort Belvoir, 22 May 

2003, 3, Folder: SHPO/PA, Drawer 2, Belvoir RCLO.

142. James Zook, Director, Department of Planning And 

Zoning, Fairfax County, Virginia, to LTC Tate, 6 June 2003, 

3, Folder: SHPO/PA, Drawer 2, Belvoir RCLO.

143. Zook to LTC Tate, 6 June 2003, 3.

144. Elizabeth Merritt, Deputy General Counsel, National 

Trust for Historic Preservation, to Patrick McLaughlin, 

U.S. Army Environmental and Natural Resource Division, 

11 June 2003, Folder: SHPO/PA, Drawer 2, Belvoir RCLO.

145. David Harold Brigham, “Privatization of the Army’s 

Historic Resources: An Examination of the Effects of 

Privatization at Fort Sam Houston, Texas on Historic 

Properties,” M.A. thesis (Baltimore, Md.: Goucher College, 

2007), 74.

146. Fort Belvoir Residential Communities, LLC, “Fort Bel-

voir Project Overview to ULI,” 31 March 2008, PowerPoint 

presentation, document provided by Casey Nolan, Clark 

Pinnacle Family Communities, Fort Belvoir, Va.

147. Fort Sam Houston Family Housing LP, “Executive 

Summary,” CDMP, n.d., 1, document provided by Pat 

Baker, Fort Sam Houston, Tex.

148. All quotations in U.S. Army, Fort Sam Houston, “Fort 

Sam Houston,” www.samhouston.army.mil/pdf/FSHBack-

ground.pdf. See also Pat Baker interview by Dawn Vogel, 3 

September 2008, Fort Sam Houston, Tex., Transcript, 6.

149. RCI, “Fort Sam Houston CDMP Briefing to Com-

manding General,” PowerPoint presentation, 27 Septem-

ber 2004, Slide 6, document provided by Pat Baker, Fort 

Sam Houston.

150. Thomas Kraeer to Matthew Godfrey, email, 21 April 

2009.

151. U.S. Army, “Programmatic Agreement Among Fort 

Sam Houston, Texas, Texas State Historic Preservation 

Officer, and Advisory Council on Historic Preservation for 

the Privatization of Family Housing at For Sam Houston, 

Texas,” 10 September 2004, document provided by Pat 

Baker, Fort Sam Houston.

152. U.S. Army Environmental Command, “Army Alternate 

Procedures to 36 CFR Part 800,” http://aec.army.mil/us-

aec/cultural/aap.html.

153. Allyson McKay, oral history interview with Ron Ben-

nett by Dawn Vogel, Fort Sam Houston, 4 September 

2008, 3.

154. David Harold Brigham, “Privatization of the Army’s 

Historic Resources: An Examination of the Effects of 

Privatization at Fort Sam Houston, Texas on Historic 

Properties,” M.A. thesis (Baltimore, Md.: Goucher College, 

2007), 74.

155. RCI, “Fort Sam Houston CDMP Briefing to Command-

ing General,” Slides 10, 30-35.

156. Teresa ElHabr interview by Dawn Vogel, 4 September 

2008, Fort Sam Houston, Texas, Transcript, 4.

157. Fort Sam Houston Family Housing LP, “Executive 

Summary,” 5.

158. Fort Sam Houston Family Housing LP, “Executive 

Summary,” 7-11; and Lincoln Military Housing, LLC, “Fort 

Sam Houston: Preliminary Concept Plan,” 2003, 10, pro-

vided by Pat Baker, Fort Sam Houston.

159. RCI Office, “Housing Creates Accessible Units for 

Warriors in Transition,” News-Leader, 28 February 2008, 

Binder: RCI News Leader Articles, RCI Program Office, 

Fort Sam Houston, Tex. Hereafter cited as Sam Houston 

RCI Office.

160. ElHabr interview, 5.

161. “Fort Sam’s Historic Homes Restored to Original 

Style,” San Antonio Express-News, 7 January 2006, in Bind-

er: RCI News Leader Articles, Sam Houston RCI Office.

162. Fort Sam Houston Family Housing LP, “Executive 

Summary,” 7.

163. Brigham, “Privatization of the Army’s Historic Re-

sources,” 74.

164. Allyson McKay and Ron Bennett interview by Dawn 

Vogel, 4 September 2008, Fort Sam Houston, Tex., Tran-

script, 3.

165. Baker interview, 13.

166. Brigham, “Privatization of the Army’s Historic Re-

sources,” 73.

167. Don Spigelmyer, untitled document beginning 

“When I first started working on housing privatization,” 

Folder: Marketing-Articles-RCI Video-Commo, Share 

Drive database, RCI Office.

168. See Appendix A for a more complete and detailed list 

of RCI projects.

169. U.S. Army, “Fort Leavenworth History and Tour,” 

http://garrison.leavenworth.army.mil/sites/about/history.

asp.

170. For more information on these installations, see the 

table in Appendix A.

171. Don Spigelmyer and Barbara Sincere, “Privatization 

Teaches Business Lessons,” PHMA Defense Communities 

Magazine (May/June 2005): 23.
241

CHAPTER EIGHT

The Evolution of the RCI Program,

2005–2007

As privatization took place at different 

installations, changing assessments of the 

Residential Communities Initiative (RCI) 

program at the national level and within the U.S. 

Army significantly affected the program’s shape and 

structure. The original Military Housing Privatization Initiative (MHPI) legislation capped family 

housing and unaccompanied personnel housing 

privatization spending at $850 million and $150 million respectively. In 2004, the Congressional Budget 

Office (CBO) announced that private industry 

contributions, which the CBO had recently started 

counting toward the caps, would put the privatization program over the limit. Based on the CBO’s 

determination, U.S. Department of Defense (DOD) 

officials attempted to muster congressional help to 

eliminate the cap, so that RCI and other privatization programs could proceed. The CBO’s estimate of 

RCI expenses foreshadowed the Office of Management and Budget’s (OMB) changing opinion about 

how RCI projects should be scored, an issue that 

had the potential to disrupt the flexibility of the RCI 

program. As discussions with the OMB took place, 

the Army had its own internal debates as to whether 

the RCI program should continue to operate under 

the Office of the Assistant Secretary of the Army for 

Installations and Environment or function under 

the Office of the Assistant Chief of Staff for Installation Management. By 2008, although the RCI 

program still faced significant challenges, it seemed 

to have garnered enough support—from Congress, 

from military leaders, and from private industry—to 

ensure that it would remain a viable program well 

into the future.

Scoring Issues

In 2004, the RCI program faced a new hurdle 

that threatened to disrupt or even halt new privatization projects. The dilemma involved the amount 

of money the military could legally spend on 

privatization of housing under the MHPI authorities. The original MHPI legislation, signed into law 

Figure 8-1. Construction workers installing energyproducing photovoltaic film on the roof of a new Army 

RCI home in the Bougainville Community, Aliamanu 

Military Reserve, part of Actus Lend Lease’s Island Palm 

Communities in Hawaii.

Courtesy of Lend Lease.
242 Privatizing Military Family Housing 243

CHAPTER EIGHT

The Evolution of the RCI Program, 2005–2007

in February 1996, included a ceiling on the housing 

privatization funds that Congress could appropriate. Congress had set the spending cap at $850 

million for family housing and $150 million for 

unaccompanied personnel housing (UPH) as protections in case the program failed or the money 

was being spent inappropriately.1

In 2003, the caps became an issue because 

the CBO altered the scoring methodology, which 

determined which project funds should count 

against the caps. Up until 2003, CBO scored only 

those appropriations that funded the “government’s contribution to each privatized housing 

project.” Beginning in 2004, however, the CBO 

would score all the “estimated benefits that accrue 

to the Government over time,” which included 

“all of a private partner’s investment in a family 

housing project.” Consequently, Fiscal Year (FY) 

2005 MHPI family housing projects, estimated 

by the Office of the Secretary of Defense (OSD) 

to count as $82.7 million against the cap, would, 

under the CBO’s new formula, instead be scored 

at $7.3 billion.2

In addition to exceeding the authorized cap 

by a large margin, this method of scoring, according to an Army information paper, “could kill the 

Military Housing Privatization Initiative because 

the program would not offer any [budgetary] 

advantage over traditional MILCON [Military Construction].” Army officials, who arguably had the 

most to lose because the Army’s RCI program had 

proceeded further than that of most of the other 

services, contended that the money borrowed by 

the private partner to pay for initial construction 

was not government spending because the Army 

was “strictly a limited partner, without a management role in the partnership.” The partner, not the 

government, bore the financial risk.3

These arguments failed to convince the CBO. 

As a result, DOD officials took their case to Congress, sending information bulletins to congressional members, pointing out which congressional 

districts had installations that would lose privatization projects. Several RCI projects that were in 

the planning stages would be affected by the CBO’s 

decision: Fort Bliss, Texas; Fort Sam Houston, 

Texas; Fort Gordon, Georgia; Fort Benning, Georgia; Picatinny Arsenal, New Jersey; Fort Rucker, 

Alabama; Redstone Arsenal, Alabama; Fort Drum, 

New York; Fort Knox, Kentucky; Fort Leavenworth, 

Kansas; and Carlisle Barracks, Pennsylvania.4

On the other side, the CBO argued that a 

“primary purpose of the federal budget is to 

measure the amount of resources the government 

draws from the economy ... [so] the budget should 

be inclusive, measuring all governmental activities, not just liabilities.” The CBO defined MHPI 

privatization projects as “governmental activities” because, first, “The government exercises 

substantial control over the project,” and, second, 

“The government is the dominant or only source 

of project income.”5

 It was the CBO’s position that 

all costs connected with military family housing 

should be treated as governmental investments 

because the government “controls the ventures and 

ultimately will own the housing.”6 Defense Department officials tried to rebut the latter claim by 

contending that the Army “divests itself of housing rather than obtains housing.”7

 Philip Grone, 

Assistant Deputy Undersecretary of Defense for 

Installations and Environment, simply called the 

CBO’s position “fundamentally flawed” because 

privatized housing was not a government venture.8

According to Don Spigelmyer, who had had 

a long history with privatization even before he 

became executive director of RCI, the scoring 

deadlock went back to the passage of the MHPI 

legislation. He noted, “The Congressional Budget 

Office has not been a big supporter of [privatization]. They’ve always felt these [projects] are too 

governmental in nature.” Because of this, Spigelmyer compared the CBO to “a dog barking the 

whole time and trying to get in under the fence.” 

The CBO saw the cap as a way to “get in under the 

fence,” Spigelmyer observed, which is why it was 

requiring the scoring of all costs.9

 At the end of 

December 2003, Robert Helwig of the OSD told 

Spigelmyer that CBO officials agreed with the main 

goals of RCI but were “simply budget purists who 

want to cover all government obligations up front.” 

Because of that, Helwig accurately predicted, “I 

think raising the cap will be the central issue for 

the next 6 to 12 months.”10

In March 2004, at a House Military Construction Appropriations subcommittee hearing on family housing privatization, U.S. Representative Joseph 

Knollenberg (R-Michigan), who had assumed the 

chairmanship from David Hobson, observed that 

the cap problem had already reached “crunch time” 

for the RCI program. He called a hearing to discuss 

the situation. At the hearing, Knollenberg and a 

number of his colleagues, including U.S Representative Chet Edwards (D-Texas), considered a legislative solution to the problem, believing that the 

cap was “too low right now, far too low.” However, 

obtaining the new legislation would be a lengthy 

process that might not be concluded before the 

DOD reached the spending limit, and if that happened the remaining privatization projects would 

have to be put on hold.11

Meanwhile, U.S. Representatives Isaac Skelton 

(D-Missouri) of the House Armed Services Committee and Solomon Ortiz (D-Texas) of the House 

Subcommittee on Military Readiness lamented 

that a Republican Congress had missed the 

opportunity to adjust the cap in its 2003 budget 

Figure 8-2. RCI-built homes in the Heritage Heights neighborhood of Carlisle Barracks, Pa.

Courtesy of RCI Office.
244 Privatizing Military Family Housing 245

CHAPTER EIGHT

The Evolution of the RCI Program, 2005–2007

preparation. Skelton and Ortiz also complained 

that the Republican-controlled House had refused 

to influence or push the CBO on the cap issue, 

“sounding the death knell for the MHPI program.”12

The statements of the two Democrats caused 

Deputy Assistant Secretary William Armbruster 

to remark, “[It is] unfortunate that the Cap issue is 

now becoming a partisan one!”13

In the summer and early fall of 2004, partisan flare-ups over the cap issue increased. A June 

editorial in the Army Times called RCI “a Political 

Pawn” and blamed the House Budget Committee 

for not resolving the issue because it was “seeking 

to look tough on spending in an election season 

after three years of helping sail the nation into a 

sea of record red ink.”14 High-level DOD leadership 

also entered the debate. In July 2004, Deputy 

Secretary of Defense Paul Wolfowitz wrote that the 

DOD “strongly supports raising or eliminating the 

budget authority limitation for housing privatization.” If such actions were not taken, Wolfowitz continued, developers would not be able to 

maintain construction and renovation schedules 

and, as a result, “the build-out in new construction and renovation may be stretched from years 

to decades.” Wolfowitz also opined that the CBO 

“greatly exaggerates the risk to the government.”15

In September 2004, the Bush administration 

threw its support behind the Defense Department’s position, urging both parties in Congress 

to pass S. 2674, a version of the Military Construction Appropriations Bill for FY 2005 that contained 

language raising the privatization cap to $1.85 

billion.16 That bill, however, would have provided 

only temporary relief for RCI and other privatization programs because, without a change to the 

CBO scoring stance, family housing funding would 

quickly reach the new cap. Fortunately, Congress 

passed the National Defense Authorization Act for 

FY 2005 in the fall of 2004, and that bill removed 

the MHPI caps altogether. President Bush signed 

the bill into law on October 28, 2004. Although 

Congress had removed the caps, the new CBO 

scoring rules remained in place, ensuring that 

scoring would continue to be a stumbling block for 

the RCI program.17

In 2004, various changes were proposed for 

the way in which privatization should be scored. 

OMB officials asserted that the 1997 Raines 

memorandum stipulated that the OMB would 

periodically review and adjust its scoring guidelines. Joshua Bolten, director of the OMB, especially wanted to see RCI scoring changed because 

he believed that the initiative really was a government venture, not a private one. He originally 

proposed that, at the end of FY 2007 (when the 

DOD was supposed to have all inadequate housing on U.S. military posts eliminated), the OMB 

begin scoring at 100 percent up front any limited 

liability corporation (LLC) or partnership that 

took part in privatization. However, the OSD 

objected to this timing. The two sides eventually 

compromised on implementing the new policy 

at the end of FY 2010, to coincide with a revised 

DOD goal of eliminating inadequate housing by 

2010. Accordingly, Bolten issued a memorandum 

on August 2, 2005, stating that “after September 

30, 2010, new projects proposing the use of a coowned LLC will be scored under traditional scoring rules as a governmental activity.” In addition, 

if any existing LLC should need additional loans 

after September 30, 2010, “The borrowing will be 

scored under the traditional scoring rules, regardless of the borrowing purpose.”18

Key players in both the OSD and the RCI program worried about the effects of postponing scoring changes until 2010. Joseph Sikes, head of the 

OSD’s Housing and Competitive Sourcing office, 

protested, “If [Bolten] had written that memo back 

in the beginning, we wouldn’t have done any project.”19 William Armbruster also objected, explaining that the policy would become an obstacle “if we 

want to rework the scope, restructure the project 

at all.” He believed that the Army would have to 

“get some relief from [the decision] if we’re going 

to take advantage of what this LLC program allows 

us to do.”20 Jones Lang LaSalle (JLL) consultant 

and former Army Family Housing director Dean 

Stefanides agreed: “We will have to do battle again 

Figure 8-3. Former Deputy Secretary of Defense Paul Wolfowitz (left) with former Secretary 

of Defense Donald H. Rumsfeld at the Pentagon, June 2010.

Photograph by Cherie Cullen. Courtesy of U.S. Department of Defense.

Figure 8-4. Community gardening project at RCI 

development at Fort Campbell, Ky.

Courtesy of RCI Office.
246 Privatizing Military Family Housing 247

CHAPTER EIGHT

The Evolution of the RCI Program, 2005–2007

to get this new policy changed.”21 Stefanides proved 

to be correct. An August 13, 2010, letter from the 

OMB to Under Secretary of Defense Dorothy 

Robyn stated, “In light of the fact that other more 

purely private military housing projects still receive 

scoring exceptions and the fact that the goal of 

eliminating inadequate U.S. housing has almost 

been reached, there is no longer a compelling 

reason for the special scoring of LLCs.”22 The OSD 

continued to negotiate with the OMB for favorable 

scoring treatment of LLCs and received a ruling in 

December 2010, via the budget-passback language, 

which indicated that “Existing projects with the 

co-owned LLC management structure may continue to use private financing without the borrowing being scored for expansion and recapitalization 

of existing housing projects.”23

However, this authority was limited just 

to family housing projects. It did not include 

incipient UPH and Privatization of Army Lodging 

(PAL) (on-post transient lodging) programs, to 

which the Army was committed. Negotiations 

between the OSD and OMB to develop permanent scoring guidelines for all MHPI projects 

continue as of this writing.

In the meantime, the Army realized that an 

organizational structure that was already in place 

at a few of its RCI projects could serve as a template 

for reducing potential scoring implications for RCI 

projects. The Army had implemented a two-tiered 

LLC at Fort Polk, the Presidio of Monterey, Fort 

Irwin, and Fort Leavenworth to enhance the ability 

of the projects to “sell” historic tax credits or depreciation. In one of the tiers, the Army is not a part of 

the LLC. Therefore, future financings could be conducted through this branch of the organization. 

Many RCI projects began to look to this model, 

just in case the OMB declined, at some point in 

the future, to allow favorable scoring treatment for 

co-owned LLCs.

Army Hawaii Family Housing

While the OMB, the DOD, and Congress 

wrestled with the issue of scoring military housing 

privatization projects, the RCI office, JLL consultants, and private developers continued to create 

innovative financial structures for privatization 

projects around the country. The most noteworthy 

example was the financial arrangement negotiated with Actus Lend Lease for the Army Hawaii 

project, which included family housing at Fort 

Shafter, Schofield Barracks, Helemano Military 

Reservation, Wheeler Army Air Field, and other, 

smaller installations on the island of Oahu. The 

August 2003 project award to Actus Lend Lease 

was remarkable because of the large size of the 

deal, which carried bonds of $1.6 billion, and 

the innovative financial structure, which had an 

unusually high variable debt level of 30 percent 

for the project. The high variable debt level has 

resulted in significant savings in interest since the 

partnership agreement between the Army and the 

developers was signed in July 2004.24 The inventive 

approach earned recognition from Project Finance

magazine, which awarded the Hawaii RCI project 

the 2005 “Public Private Partnership Deal of the 

Year” award. The Project Finance article describing 

Figure 8-5. View of neighborhood on the Aliamanu Military Reserve, Hawaii, prior to the start of 

the RCI project there.

Courtesy of Lend Lease.

Figure 8-6. The Hawaii RCI project encompassed a wide variety of installation and housing types 

spread around the island of Oahu.

Courtesy of Lend Lease.
248 Privatizing Military Family Housing 249

CHAPTER EIGHT

The Evolution of the RCI Program, 2005–2007

the award remarked, “The Army Hawaii Family Housing financing is a perfect marriage of the 

possibilities inherent in US financial engineering 

and capital markets capabilities, and practices in 

accommodation outsourcing that have become 

common in the UK. It comes from a line of projects 

dating back to 1998, but is the most ambitious deal 

yet attempted.”25

The Hawaii RCI project was by far the “largest 

and most complex privatization project deal structure to date.”26 While most RCI project deals that 

closed by 2006 had not been valued at more than 

$300 million, the size of the initial 10-year development plan for Hawaii was $1.6 billion. Hawaii RCI 

project team members, along with Actus Lend 

Lease staff, JLL consultants, and financial advisors from Bank of America, Goldman Sachs, and 

JP Morgan, worked together to create a unique 

financial structure based on “approaching as many 

markets as possible and tranching the debt in a 

mixture of wrapped and unwrapped, and floating 

and fixed rate notes ... [and] included the use of 

credit-linked certificates to reinvest the proceeds 

of the bond issue.”27 The credit-linked certificates 

offered the partners the benefits of “superior 

returns for about the same risk profile.”28

Ambitious financing was not the only way 

in which the Army’s Hawaii project broke new 

ground. Island Palm Communities, the publicprivate partnership, raised the bar for building 

environmentally sustainable communities. Project 

planners for Island Palm Communities and RCI 

staff for Army Hawaii pushed farther ahead of a 

trend, seen at many other RCI projects at that time, 

to develop ecologically sustainable neighborhoods. 

In fact, the Simpson Wisser neighborhood at Fort 

Shafter served as a pilot in the U.S. Green Building 

Council’s project called Leadership in Energy and 

Environmental Design for Neighborhood Development, which aimed to establish guidelines for the 

first national “green ratings” for entire neighborhoods. A recent article about the project called the 

Simpson Wisser development “possibly one of the 

most sustainable neighborhoods built on an Army 

installation.”29 Simpson Wisser and other installation neighborhoods utilized a variety of energysaving and water-conserving strategies, including 

the use of “rooftops, car parks, exterior walls, and 

water catchment systems.”30

The overall scale and geographic reach of the 

Hawaii project were also remarkable. Island Palm 

Communities eventually included family housing developments on seven different installations 

spread around the island of Oahu. In addition to 

Fort Shafter, the others were Aliamanu Military 

Reserve, Schofield Barracks, Helemano Military 

Reserve, Tripler Army Medical Center, Wheeler 

Army Airfield, and Red Hill (a U.S. Coast Guard 

installation). The project, which had been transferred to Island Palm Communities in October 

2004 and which closed financially in May 2005, was 

expected to provide 7,894 much-needed homes for 

Figure 8-7. New home construction in one of the Hawaii project neighborhoods.

Courtesy of Lend Lease.

Figure 8-8. Layout and construction status for family housing neighborhoods at 

Fort Shafter, Hawaii.

Courtesy of Lend Lease.
251

CHAPTER EIGHT

The Evolution of the RCI Program, 2005–2007

250 Privatizing Military Family Housing

soldiers and their families by project completion in 

2014. In 2009, the Association of Defense Communities awarded the “Most Innovative Community 

Project of the Year Award” to Army Hawaii Family 

Housing, recognizing the project’s approach to 

“providing residents with modern and interactive 

community experiences that foster participation 

and belonging, as well as embodying sustainable 

living principles.”

The 2007 Reorganization of Rci

The Hawaii project was just one (albeit one 

of the largest) of the accomplishments of Army 

housing privatization during this period. But in 

some ways, the RCI program became a victim of its 

own success. In 2006 and 2007, the Army awarded 

an additional five RCI projects—Fort Lee, Virginia; 

West Point, New York; Fort Jackson, South Carolina; Fort Sill, Oklahoma; and Forts Wainwright/

Greely, Alaska—bringing the number of awarded 

projects to 32 (see appendix). As the RCI program 

continued to expand, some Army officials believed 

that it had matured to the point where it did not 

need the protection of, or ready access to, the 

Department of the Army Secretariat. At the same 

time, the Army was trying to streamline installation management. In October 2006, the Army 

redesignated the Installation Management Agency 

(IMA) the Installation Management Command 

(IMCOM). Centralizing installation functions 

Actus Lend Lease

Actus Lend Lease was involved in the Army’s RCI 

program nearly from the beginning. In 1999, Actus 

Corporation joined forces with several other private 

organizations—Lend Lease, First National Bank of 

Chicago, and Connell Finance—to form Actus Lend 

Lease. Independently, each company lacked the 

capability to respond to the need for better military 

housing. But together, in partnership with the Army, 

the consortium oversaw seven military housing 

projects, providing more than 10,000 new homes 

and more than 3,500 renovations. In 2011, the company changed its name to Lend Lease.

In 2000, Actus Lend Lease won a $289 million 

contract with the Army to renovate and expand a 

housing community at Fort Hood, one of the four 

original pilot projects of the RCI program. Financial 

terms of the deal were finalized in New York City on 

September 11, 2001. At Fort Hood, the partnership 

between Actus and the Army was strong, in part 

because Actus adapted quickly to the military culture at Fort Hood, while the Army recognized that 

its partner came from a for-profit culture. Both sides 

embraced the idea that their partnership was more 

than a simple contractual relationship. Fort Hood 

Family Housing’s accomplishments in building new 

homes and forging a collaborative partnership at 

Fort Hood went a long way toward confirming the 

viability of the RCI program. In 2011, Fort Hood Family Housing became the largest green community in 

Texas, receiving a certification from the U.S. Green 

Building Council for achievement in sustainable 

homebuilding and design.

Following the Fort Hood project, Actus Lend 

Lease successfully tackled privatized family housing developments at a number of other military 

installations, starting with Fort Campbell Family 

Housing (Kentucky) and then Army Hawaii Family Housing, the largest RCI project, which calls for 

7,894 homes by 2015. Between 2003 and 2007, the 

company also oversaw developments at Fort Drum 

(New York), Forts Wainwright and Greely (Alaska), 

and Fort Knox (Kentucky). In these projects, the company sought to be sensitive to local considerations. 

At Alaska’s North Haven Communities, for example, 

Actus built new homes according to the arctic construction recommendations endorsed by the Cold 

Climate Housing Research Center, a local nonprofit 

organization. In addition, Actus’s design for Alaska’s 

Fort Greely blended natural and architectural elements by incorporating river-rock masonry among 

log-style homes. New York’s Fort Drum Mountain 

Figure 8-10. An Actus Lend Lease leasing consultant talks 

with a new resident.

Courtesy of Lend Lease.

Figure 8-9. View of RCI housing development, with solar panels attached to the roof of 

each home, on the Aliamanu Military Reserve, one of several installations included in the 

Hawaii RCI project.

Courtesy of Lend Lease.
253

CHAPTER EIGHT

The Evolution of the RCI Program, 2005–2007

252 Privatizing Military Family Housing

Community Homes—part of a pilot program offering apartment housing for single service members—was dedicated to the 10th Mountain Division, 

the renowned Army ski troops of World War II who 

later pioneered the recreational skiing industry in the 

United States. The company’s projects have also provided a variety of local employment opportunities.

Actus Lend Lease, through its RCI partnerships 

with the Army, has focused on providing comfortable 

Figure 8-11. Ribbon-cutting ceremony for Actus Lend 

Lease–built homes at Fort Campbell, Ky.

Courtesy of RCI Office.

Figure 8-12. Two young Fort Knox, Ky., residents at an Actus 

Lend Lease–sponsored event.

Courtesy of Lend Lease.

new family housing construction and designing 

places that foster community growth. “Not only are 

we building and maintaining homes for our welldeserving service members and their families, but 

we are creating entire communities with splash 

parks, pitch and putt greens, dog parks, and a plethora of community activities.... We have the opportunity to have a large impact on our residents and their 

overall living experience.”31

under IMCOM led officials to explore a reorganization of RCI administration and oversight.

In June 2006, the Secretary of the Army and 

the Chief of Staff of the Army had directed the 

Office of the Deputy Under Secretary of the Army 

for Business Transformation to examine the distribution of installation management work within 

the Army. Known as the Installation Management 

Study, or IMS, this study examined the workload of 

the Office of the ASA, I&E. In the words of Assistant Chief of Staff for Installation Management 

(ACSIM) Lieutenant General Robert Wilson and 

Assistant Secretary of the Army for Installations 

and Environment Keith Eastin, the study team 

concluded that the Army should “realign the RCI 

Executive Director to head the OACSIM [Office of 

the Assistant Chief of Staff for Installation Management] Installation and Housing Directorate, 

keep the RCI team intact, and move the RCI team 

to OACSIM.”32

Meanwhile, the Office of the Deputy Assistant Secretary of the Army for Privatization and 

Partnerships was sponsoring a Lean Six Sigma 

study to examine its own efficiencies. Lean Six 

Sigma is a methodology to increase management 

efficiency that was adopted from the automobile 

industry. Its goal in this case was “to streamline 

bureaucracies and processes ... within the Army 

way of doing business.”33 Essentially, the study 

examined the functions of the Deputy Assistant 

Secretary’s office to see where efficiencies could be 

introduced. Before the Lean Six Sigma process had 

concluded, the Army issued the IMS and directed 

the Deputy Assistant Secretary, as part of Lean Six 

Sigma, to reorganize the RCI program according to 

the IMS recommendations. William Armbruster 

thus worked with the RCI Director Don Spigelmyer 

and the Principal Deputy Assistant Secretary of the 

Army for Installations and Environment Geoffrey 

Prosch to develop the best process for moving RCI 

into the OACSIM.34

In the spring of 2007, Armbruster’s office 

unveiled its reorganization plans. Rather than 

follow the initial IMS suggestion to transfer all of 

the RCI Program Office to the OACSIM, the plan 

proposed splitting the program in two. Some RCI 

personnel would go to the OACSIM and be responsible for asset management and supervision of RCI 

projects and operations. Others would stay within 

Armbruster’s office and be responsible for overseeing the entire RCI portfolio, including interacting with Congress and setting overall policy. The 

plan provided that when an installation’s family 

housing units were transferred to the partner, the 

Office of the Deputy Assistant Secretary would 

cede management and oversight of the individual 

project (that is, an asset) to the Asset Management 

team within the Public-Private Initiatives Division 

of the OACSIM. This team would then have “direct 

interaction with Garrison Commanders and the 

partners and service providers to ensure obligations under the terms of the business agreements 

are met.” The team would also provide recommendations to Deputy Assistant Secretary Armbruster 

for major privatization decisions and policies. The 

ultimate overseer for these major decisions and 

policies would be the Portfolio Management team 

within Armbruster’s office, which was “the proponent for business policy.”35 JLL continued to serve 

as the Army’s MHPI advisor, working for both 

organizations.

Although some still wanted the entire RCI 

program to fall under the OACSIM, Army officials 

accepted Armbruster’s recommendations and kept 

a contingent of RCI personnel under the Secretariat. Yet many within the RCI Program Office 

were not pleased with the splitting of the program. 

Some thought that RCI needed to be kept whole 

because “staffing is not robust enough to separate 

project implementation duties from PAM [Portfolio and Asset Management] duties.” Others argued 

that direct access to the Assistant Secretary was 

still necessary because “political sensitivities continue to require senior Army leadership involvement.”36 Still others wondered whether placing part 

of the program under the OACSIM bureaucracy 

would stifle both innovation and efficiencies. In 

Spigelmyer’s opinion, “If we had been under the 

Army staff for a lot of this program, we would 

never [have] been where we’re at.”37 On the other 

hand, proponents of the change believed that the 

transition was necessary, asserting that “If the project continues at the Army Secretariat level, it will 

be difficult to develop local, subordinate command 

and installation competence.”38

The actual reorganization occurred in the late 

summer of 2007. At that time, Don Spigelmyer 

departed as executive director of the RCI Program. “I retired because of this reorganization,” 

Spigelmyer said. “I could not support splitting the 

RCI team or moving part of the function to the 

Army Staff. I felt it would add bureaucratic layers, 

duplicate effort, and diminish the expertise that 

had taken over a decade to acquire.”39 He added, “In 

essence, I thought it was a dumb decision then and 

I still think it is a dumb decision.”40

Ivan Bolden became head of the PublicPrivate Initiatives and Competitive Sourcing 
254 Privatizing Military Family Housing 255

CHAPTER EIGHT

The Evolution of the RCI Program, 2005–2007

Division within the Directorate of Installation 

Services in the OACSIM, which became responsible for the RCI program’s asset management 

responsibilities. Ian “Sandy” Clark, the architect 

of PAM, was appointed deputy chief of the division. Within Armbruster’s office, Thomas Kraeer 

took responsibility for portfolio management and 

Rhonda Hayes led the transaction management 

function (including restructurings and financial 

transactions). At the end of 2008, Clark reported 

that the transition was “working well,” although 

there was “still a strong push to centralize everything at the ACSIM in our office.”41 Upon the 

resignation of political appointees in the Army 

Secretariat on April 30, 2009, the Secretariat 

team reorganized again, moving from the Deputy 

Assistant Secretary of the Army, Energy and Partnerships to the Deputy Assistant Secretary of the 

Army, Installations and Housing (now “Installations, Housing & Partnerships”) and becoming 

the Capital Ventures Directorate, with Rhonda 

Hayes as director. Although some in the RCI 

Program resisted the reorganization, it at least 

meant that the program would continue, albeit 

in a different form. RCI had proven its viability, 

and Army leaders began applying its principles to 

solve other installation problems.

Impact of Base Realignment and 

Closure (BRAC) 2005

 In the meantime, the RCI program was also 

revising projects at numerous installations to 

accommodate changes introduced in the final 

round of the Base Realignment and Closure 

(BRAC) program in 2005. After the announcement of the final BRAC assignments, the Secretary 

of Defense reported, “The Army is relocating the 

fighting force—rebasing its overseas units in the 

continental United States. It is rebalancing the 

fighting force.... The Army is becoming a far better 

force—a campaign-quality, Joint and Expeditionary Army with the capabilities to provide relevant 

and ready combat power to the Combatant Commanders from a portfolio of installations that 

trains, sustains, enhances the readiness and wellbeing of the Joint Team, and provides a platform 

for rapid deployment.”42 The BRAC announcement 

initiated changes that aimed to enhance the Army’s 

maneuvering and fighting capacities, but it also 

brought new challenges to Army housing privatization that would test the flexibility and responsiveness of the RCI program.

Well before the DOD’s September 2005 BRAC 

announcement, RCI Director Don Spigelmyer correctly understood the potential for this final round 

of base closures to bring major changes that would 

significantly impact RCI projects. He also realized that BRAC would be only the first of several 

significant changes that Army leadership was then 

considering. To address these issues as comprehensively as possible, on March 17, 2005, Spigelmyer 

directed the program to tackle the following:

Analyze the infrastructure and environmental 

conditions at selected Army installations, 

to support re-stationing analyses and assess 

maximum housing development potential and 

constraints. Develop a baseline for evaluating 

impact on family housing associated with 

re-stationing actions. Establish an analytical 

framework and baseline for evaluating potential 

base realignment and closure impacts. Refine 

the equity investment requirements associated 

with known/planned increases to the housing 

requirements consistent with the regulatory 

and statutory limitations, and provide a model 

to address possible revisions due to future 

stationing decisions.43

In response, program staff began to identify 

and prioritize RCI project locations with respect to 

BRAC’s likely impacts on Army family housing. The 

RCI staff completed these reviews on May 31, 2005, 

which prepared the RCI program for the coming 

changes. RCI staff also shared the information with 

BRAC teams, which were considering the various 

upcoming alterations to installation missions, to 

help inform BRAC planners about the potential 

need for new family housing at installations slated 

to grow.44

When the 2005 BRAC announcement of installation changes arrived, it was clear that a number 

of the RCI projects were directly affected. The Fort 

McPherson and Fort Gillem, Georgia, project was 

cancelled prior to the selection of a developer. 

Fort Monroe, Virginia, was removed from the Fort 

Eustis and Fort Story project during the project 

planning phase. Fort Monmouth, New Jersey, was 

removed from the combined Fort Monmouth/

Carlisle Barracks/Picatinny Arsenal project. In Fort 

Monmouth’s case, the project’s financing by potential lenders had become prohibitively expensive 

due to real estate speculation anticipating BRAC, 

prompting RCI Deputy Director Hayes to “pull the 

plug” on the project—wisely, as it turned out—

while the BRAC announcement was still pending. 

Walter Reed Army Medical Center in the District 

of Columbia was already privatized at the time of 

the announced closing, but fortunately almost all 

of the RCI family housing was in an off-post civilian enclave that could continue to support Army 

residents at their new location in Bethesda. The 

closure of Pope Air Force Base, North Carolina, 

resulted in a merger of that installation’s housing 

Figure 8-13. Ian “Sandy” Clark, deputy chief of the Army’s Public-Private Initiatives and Competitive 

Sourcing Division in 2008, speaking at a Professional Housing Management Association training session. 

Curt Savoy and Debbie Hutton are seated at right.

Couresy of PHMA.
256 Privatizing Military Family Housing 257

CHAPTER EIGHT

The Evolution of the RCI Program, 2005–2007

program into the Fort Bragg RCI project, with a 

corresponding increase in family housing assets. 

The decision to make Fort Richardson, Alaska, a 

joint base with Elmendorf Air Force Base removed 

Fort Richardson from the Army’s RCI project list 

and led to a planned merger with the U.S. Air 

Force housing privatization project. McChord Air 

Force Base followed the opposite course, as BRAC 

realignment created Joint Base Lewis McCord. 

The DOD incorporated the nascent privatization 

program at McChord into the existing Fort Lewis 

RCI, producing another joint privatized housing 

project, this one led by the Army. Fort Eustis and 

Fort Story, Virginia, became Air Force-led and 

Navy-led installations respectively, and Fort Sam 

Houston, Texas, became an Air Force-led installation. However, since the Army RCI program had 

already privatized family housing at Forts Lewis, 

Eustis/Story, and Sam Houston, they were kept 

under Army oversight.45

Two four-star commands, Army Training and 

Doctrine Command (TRADOC) and Army Forces 

Command (FORSCOM), were designated to 

move to Fort Eustis and to Fort Bragg. The moves 

required the RCI program, for the first time, to 

construct four-star-general officer homes. This 

effort would take significant coordination and 

would challenge the RCI team’s project management skills, especially with the direct involvement 

of very senior Army officials in the construction 

plans for these new homes.

Concurrent with the release of the 2005 BRAC 

assignments, the Army announced plans to reorganize its entire fighting force. Called the Army 

Modular Force (AMF) Transformation, the plan 

aimed to alter the service’s brigade structures in a 

manner that would produce significant changes at 

several installations. The primary objective of the 

AMF was to make the Army into “a larger, more 

powerful, more flexible deployable force.”46 In what 

the Army described as, “the most significant Army 

restructuring in the past 50 years,” the AMF would 

convert 10 active-duty divisions operating in 2006 

into “a 48 brigade combat team force” by FY 20007.47

The AMF Transformation, and subsequent changes 

under the 2007 Grow-the-Army initiative, discussed 

at length in Chapter 9, would eventually turn Fort 

Bliss, Texas, into one of the largest (in troop size) 

installations in the nation and would also significantly increase the size of Fort Irwin, California. The 

reorganization forced the RCI program to reassess 

the housing needs at Fort Bliss, Fort Irwin, and 

other installations affected by the AMF plan.

Looking to the Future

By the fall of 2007, the Army had used the 

principles of RCI to deliver comfortable, clean, 

affordable housing to soldiers and families at 28 

RCI projects spread out over 35 installations. But as 

these projects proceeded successfully, the RCI program began to encounter some new and some not 

so new problems—weakening financial markets, 

OMB scoring issues, unaccompanied personnel 

housing issues, and others—that they could not 

have anticipated when RCI first got off the ground 

in 1998. Having learned to expect the unexpected, 

RCI officials tried to determine what issues the 

RCI program would have to confront in the future. 

One of the biggest challenges was simply ensuring 

that supporters did not get complacent. As Joyce 

VanSlyke of the Office of the Deputy Assistant Secretary of the Army for Privatization and Partnerships explained, Army leaders and other government officials tended to think that once all of the 

housing had transferred, there was nothing else for 

the Army to do. In actuality, according to VanSlyke, 

just maintaining oversight of the extensive portfolio was a large undertaking: “You’ve got to keep 

close oversight on these projects and work out the 

challenges that come up through the system.”48

That included ensuring that new installation 

commanders did not suddenly make changes that 

would inhibit development of the program 20 or 30 

years later. “If you make major changes in this year, 

which weren’t supposed to happen until year 10 or 

year 20,” VanSlyke stated, “you’re going to impact 

development scope.”49 Thomas Kraeer agreed: 

“The main thing that we need to do is make sure 

that we balance the sources, the revenue coming 

in, and what we use that money for” because “if it 

gets out of balance and the uses are higher than 

the sources, then that money has got to come from 

someplace [else].”50

Figure 8-14. New housing at Fort Eustis, Va., one the RCI 

projects impacted by the 2005 BRAC decisions.

Courtesy of Balfour Beatty Communities.

Figure 8-15. RCI housing at Fort Irwin, Calif., one of the installations due to grow in troop size under the Army 

Modular Force Transformation.

Courtesy of Clark Realty Capital.
259

CHAPTER EIGHT

The Evolution of the RCI Program, 2005–2007

258 Privatizing Military Family Housing

Another challenge that the RCI program 

would face was taxation. Although some entities, such as Alameda County in California, had 

threatened taxation, no state or local jurisdiction had required the taxing of RCI property up 

to the year 2008. Yet RCI officials worried that 

such entities could impose taxation at any time. If 

that happened, they declared, detrimental effects 

would follow. “Up to date, we haven’t been taxed 

for these projects, except for payment in lieu of 

taxes in some places,” Don Spigelmyer explained 

in February 2007. “That’s something that could 

change, just like in the Capehart and the Wherry 

program.”51 If a local entity did propose taxation, 

Deputy Assistant Secretary Armbruster viewed it 

as the partner’s responsibility to address the issue: 

“If there’s an issue on taxes, the partner has got 

to take the lead with the local taxing authority to 

deal with that.”52 The reason for placing the onus 

on the partner was that the RCI program danced 

a fine line with taxation. Most state and county 

entities did not require the payment of taxes 

because they regarded RCI projects as governmental in nature, but the program needed Congress, 

the CBO, and OMB to maintain the view that 

these were private, not governmental, ventures. If 

government officials did not involve themselves 

extensively with taxation questions, it helped the 

program continue to walk the private-governmental tightrope, although it was becoming an 

increasingly difficult balance to maintain.

Although Congress had resolved the budgetary cap issue in 2004, the CBO’s revised scoring 

procedures, coupled with the OMB’s changing 

scoring ideas, threatened RCI’s way of operating 

in the future. Leaders feared that the OMB’s new 

Figure 8-16. The installation commander’s RCI-built house at Camp Parks, Calif.

Courtesy of Clark Realty Capital.

Michaels Military Housing

Michaels Military Housing was a latecomer to the 

RCI Program, becoming an RCI partner firm when 

it received the award for the Fort Leavenworth, Kansas, privatization project in December 2004. In March 

2008, Michaels added the Fort Huachuca/Yuma Proving Ground project in Arizona to its development 

portfolio. The company also manages privatized 

housing at Andrews Air Force Base in Maryland and 

MacDill Air Force Base in Florida. Over the course 

of 40 years in the business, Michaels had become 

one of the top 30 management and development 

companies in the country. When it began work at 

Fort Leavenworth, Michaels Military Housing faced 

a steep learning curve. The initial experience deficit 

did not prevent Michaels from incorporating innovative designs into its family housing. For instance, as 

noted by Ron Hansen, current president of Michaels 

Military Housing, the company made the Fort Huachuca/Yuma Proving Ground project one of the first 

RCI housing developments to depend largely on 

construction by local homebuilders (Arizona firms 

R.L. Workman Homes and Castle & Cooke), “rather 

than big-box or in-house construction companies.”53

As a result, these installations now feature beautiful 

new homes that were completed significantly under 

budget. One resident, after seeing her new home in 

Fort Huachuca’s DeAnza Village, said, “This is the 

best family housing we have ever seen, and we have 

been in the Army 20 years.”54

Michaels Military Housing will build 200 new 

homes and two community centers at Fort Huachuca-Yuma Proving Ground during the project’s 

five-year Initial Development Period and will manage an end-state total of 1,069 homes at the two 

installations. At Fort Leavenworth, the company has 

Figure 8-17. Residents of DeAnza Village at Fort Huachuca, 

Ariz., in front of their new home.

Courtesy of RCI Office.

tackled the complex task of renovating 100-year-old 

historic row homes and commanders’ houses, which 

entailed working closely with the installation’s historical architect and the state historic preservation 

officer. They have reopened homes that are comfortable and functional for modern families but that also 

retain a high degree of historic integrity.55

Because the company’s mission is to improve 

quality of life for soldiers and their families, Michaels 

Military Housing has also put considerable effort into 

building community relationships and family support. For instance, when it observed the increasing 

toll that long deployments overseas were taking on 

families, the company started a Deployed Spouses 

program, in which staff of Fort Huachuca-Yuma 

Proving Ground Communities, LLC, and Fort Leavenworth Frontier Heritage Communities, LLC, the 

partner entities, assist resident families in whatever 

way they can.
260 Privatizing Military Family Housing 261

CHAPTER EIGHT

The Evolution of the RCI Program, 2005–2007

Endnotes to Chapter 8

1. National Defense Authorization Act for Fiscal Year 1996, 

Public Law 104-106, U.S. Statutes at Large 110 (1996): 550.

2. Senators Dianne Feinstein and Kay Bailey Hutchison, 

Subcommittee on Military Construction Appropriations, 

to Senators Don Nickles and Kent Conrad, Senate Budget 

Committee, 17 May 2004, Folder: Scoring-FundingLLCS-2875, Share Drive database, RCI Program Office, 

Crystal City, Va. Hereafter cited as RCI Office.

3. SAIE-RCI, “Army Information Paper,” 4 March 2004, 2, 

Folder: Scoring-Funding-LLCS-2875, Share Drive database, RCI Office.

4. “Army Information Paper,” 4 March 2004.

5. Senate Budget Committee, Budget Bulletin, 23 August 

2004, 108th Cong., 2d sess., no. 9, Folder: Scoring-Funding-LLCS-2875, Share Drive database, RCI Office. 

6. Congressional Budget Office, “The Budgetary Treatment of Leases and Public/Private Ventures,” February 

2003, xii, Folder: Scoring-Funding-LLCS-2875, Share Drive 

database, RCI Office.

7. “Analysis of CBO Report, The Budgetary Treatment of 

Leases and Public/Private Ventures,” February 2003, 5, 

Folder: Scoring-Funding-LLCS-2875, Share Drive database, RCI Office.

8. House Armed Services Committee, MILCON Subcommittee, Hearing on Military Construction Appropriations 

for 2005, 3 March 2004, Congressional Transcript No. HM05-2004, 34, Folder: Congress (incl. sub-folders), Subfolder: FY05, Congressional Hearings, Revitalization Hearing 

Docs—Mar 04, Share Drive database, RCI Office.

9. Interview of Don Spigelmyer, Dean Stefanides, Rhonda 

Hayes, Mike McCarley, Matt Keiser, Barry Scribner, Bill 

Mysliwiec by Matthew Godfrey, 13 February 2007, Crystal 

City, Va., Transcript, 33. Hereafter cited as RCI group 

interview.

10. Robert Helwig to Donald Spigelmeyer, et al, 9 December 2003, Folder: Congress (incl. sub-folders), Share Drive 

database, RCI Office.

11. House Armed Services Committee, Hearing on Military 

Construction Appropriations for 2005, 33.

12. Ike Skeleton and Solomon Ortiz, “GOP Budget Resolution Threatens Military Housing Program,” press release, 

22 March 2004, Attachment to William Armbruster to 

Don Spigelmeyer, Rhonda Hayes email thread, 23 March 

2004, Folder: Scoring-Funding-LLCS-2875, Share Drive 

database, RCI Office.

13. William Armbruster to Geoffrey Prosch, email 23 

March 2004, in Armbruster to Spigelmeyer email, 23 

March 2004, Folder: Scoring-Funding-LLCS-2875, Share 

Drive database, RCI Office.

14. “Housing a Political Pawn,” Army Times, 7 June 2004, 

Folder: Scoring-Funding-LLCS-2875, Share Drive database, RCI Office.

15. Paul Wolfowitz, Deputy Secretary of Defense, to Representative David Obey, Committee on Appropriations, 

20 July 2004, Folder: Scoring-Funding-LLCS-2875, Share 

Drive database, RCI Office.

16. Executive Office of the President, Office of Management and Budget, “Statement of Administration Policy, 

S.2674—the Military Construction Appropriations Bill, 

FY2005,” 20 September 2004, Folder: Scoring-FundingLLCS-2875, Share Drive database, RCI Office.

17. Department of Defense, Housing and Competitive 

Sourcing, “Military Housing Privatization Initiative 

Program Evaluation Plan,” Feb. 2005, Draft, document 

provided by RCI Office.

18. Joshua B. Bolten, Director, Memorandum for the Secretary of Defense, 2 August 2005, Documentum database, 

RCI Office. See also Joseph Sikes interview by Matthew 

Godfrey, 20 July 2007, Crystal City, Va., Transcript, 11; and 

“Questions for William A. (Bill) Armbruster, Deputy Assistant Secretary of the Army for Privatization & Partnerships, Draft 11, Feb 07,” Documentum database database, 

RCI Office.

19. Sikes interview, 11.

20. William Armbruster interview by Matthew Godfrey, 13 

February 2007, the Pentagon, Arlington, Va., Transcript, 16.

21. RCI group interview, 19.

22. Office of Management and Budget [OMB] to Dorothy 

Robyn, Under Secretary of Defense, August 13, 2010, letter 

content provided by Dean Stefanides.

23. OMB to Under Secretary Robyn.

24. Rhonda Hayes, written comments to authors, received 

14 February 2011.

25. “North American PPP Deal of the Year 2005,” Project 

Finance, 1 February 2006, http://www.projectfinancemagazine.com/IssueArticle/2414193/Deals/North-AmericanPPP-Deal-of-the-Year-2005.html.

26. Joyce VanSyke, ASA-I&E, to Rhonda Hayes, Dean 

Stefanides, and Barry Scribner, email, 14 March 2006, 

document provided by Dean Stefanides.

27. VanSlyke to Hayes, et al.; and Gary Buechler, Hawaii 

RCI Office, to William Armbruster, ASA-I&E, email, 11 

January 2006, document provided by Dean Stefanides.

28. VanSlyke to Hayes, et al.

29. Ann M. Choo Wharton, “Hawaii’s Privatization Initiatives Come Full Circle,” Public Works Digest (January /

February 2011): 30.

30. Choo Wharton, “Hawaii’s Privatization Initiatives 

Come Full Circle,” 30.

policy would adversely affect project restructurings 

and they wondered how OMB Director Bolten’s 

August 2, 2005, memorandum would impact the 

fledgling UPH and PAL programs. In the case of 

PAL (on-post transient lodging), Bolten’s decision 

on scoring forced the Army to use just a ground 

lease rather than the RCI’s limited liability partnership, though the process was able to move forward. 

Nonetheless, it was clear that RCI leaders would 

continue to have to come up with ways to deal with 

adverse scoring policies.

In general, however, the RCI program seemed 

well positioned to continue to supply soldiers 

with quality homes on installations. One reason 

for this was its portfolio and project management. Independent studies conducted by the U.S. 

Military Academy and by the U.S. Government 

Accountability Office (GAO) both lauded PAM. 

In 2005, Principal Deputy Assistant Secretary of 

the Army, I&E Geoffrey Prosch commissioned the 

U.S. Military Academy to conduct an independent 

examination of the PAM program. Through data 

analysis and interviews with private partners, 

RCI staff, garrison commanders, and others, the 

academy concluded that the PAM program was an 

“innovative” approach “that enables Partners to 

leverage Army and Partner investments and apply 

commercial portfolio management and real estate 

development best practices to deliver the best 

value to Army stakeholders.” Specifically, the study 

applauded the way that PAM incorporated those 

best practices into all aspects of its program and 

how it drew on the best business models from the 

private sector in its financial analyses. The academy recommended that PAM enhance its training program so that it could continue to succeed 

but otherwise found it effective in safeguarding 

the Army’s interests.56 Similarly, the GAO concluded in April 2006 that the PAM program was a 

“robust and comprehensive method for overseeing 

awarded projects.” It commended the Army for 

its work in this area and recommended that other 

services, such as the U.S. Navy, take note.57

Conclusion

As the RCI program continued to mature and 

progress, many observers felt it was increasingly 

unnecessary to keep RCI under the Secretariat, 

especially given the Army’s efforts to centralize 

installation management under the OACSIM and 

Installation Management Command. These views 

resulted in the division of the RCI program into 

two halves: one under the OACSIM and the other 

under the Secretariat. This splitting of functions, 

together with the difficult timing of changes in 

OMB scoring, demonstrated that the RCI program 

still faced substantial obstacles and could potentially be derailed. For the moment, though, the 

future looked promising. RCI was “a huge change 

in the way we traditionally have dealt with our families and our soldiers,” Deputy Assistant Secretary 

Armbruster reported in February 2007, and up to 

that point the change had succeeded admirably.58
262 Privatizing Military Family Housing

31. Actus Lend Lease, written comments to authors, 14 

February 2011.

32. Lieutenant General Robert Wilson, Assistant Chief of 

Staff for Installation Management, and Keith E. Eastin, 

Memorandum for See Distribution, 7 May 2007, copy provided by Ian “Sandy” Clark. See also U.S. Army, “IMCOM 

Transformation: The Enterprise Approach to Managing 

Installations in Support of Institutional Adaptation and 

the Expeditionary Army, March 2009,” 4, http://www.

imcom.army.mil..

33. Joyce VanSlyke interview by Matthew Godfrey, 27 June 

2008, the Pentagon, Arlington, Va., Transcript, 3.

34. Wilson and Eastin, Memorandum, 7 May 2007.

35. “P&P Reorganization Strategy,” 1-3, Attachment to 

Wilson and Eastin, Memorandum, 7 May 2007.

36. Untitled document beginning “Question One: Why 

operate and manage the housing privatization program 

from the Secretariat?” Folder: Lean Six Sigma, Share Drive 

database, RCI Office.

37. RCI group interview, 37.

38. “Assistant Secretary of the Army for Installations 

and Environment,” 7, Attachment to Wilson and Eastin, 

Memorandum for See Distribution, 7 May 2007.

39. Don Spigelmyer, written comments to authors, 20 

January 2011.

40. Spigelmyer comments, 20 January 2011.

41. Ian “Sandy” Clark telephone interview by Paul Sadin, 1 

December 2008, Seattle, Wash., Transcript, 22, 24-25. See 

also Rhonda Hayes’ personal communication with Matthew Godfrey, 8 April 2009; and VanSlyke interview, 7.

42. DOD, Department of Defense Base Closure and 

Realignment Report, Volume 1, May 2005, Part 2 of 2, 

Detailed Recommendations (Preface), 2, Final, Revised 

report available at: http://www.brac.gov/finalreport.html.

43. RCI, Statement of Work, Task Order, Contract 

DASW01-02-D-0003, March 17, 2005, Section C, 1, document provided by Rhonda Hayes.

44. Rhonda Hayes, written comments to authors, 14 February 2011.

45. Hayes comments, 14 February 2011.

46. DOD, Department of Defense Base Closure and Realignment Report, Volume 1, 2.

47. Congressional Research Service, U.S. Army’s Modular 

Redesign:Issues for Congress, CRS Report RL32476, prepared by Andrew Feickert, Foreign Affairs, Defense, and 

Trade Division (Washington D.C.: Congressional Research 

Service, 2006, rev. 2007), summary page.

48. VanSlyke interview, 14.

49. VanSlyke interview, 14.

50. Thomas Kraeer interview by Matthew Godfrey, 18 

October 2007, Crystal City, Va., Transcript, 13.

51. RCI group interview, 37.

52. Armbruster interview, 17.

53. Ron Hansen, written comments to authors, 18 February 2011.

54. Alton Dunham, U.S. Army, “Huachuca, Partners 

Debut Homes That Wow Soldiers, Families,” Homepage 

of the U.S. Army, 10 February 2010, http://www.army.mil/

article/34243/huachuca-partners-debut-homes-that-wowsoldiers-families.

55. Jeanne Chandler, “Updating Homes, Conserving History,” Defense Communities (September/October 2006): 

23-24.

56. U.S. Military Academy, USMA Study of the Residential 

Communities Initiative (RCI) Portfolio and Asset Management (PAM), Technical Report No. DSE-TR-0612 (West 

Point, N.Y.: United States Military Academy, 2006), 8. See 

also U.S. Military Academy RCI Project Team, “Setting 

High Housing Standards: Comprehensive Study of the RCI 

Pam Program Finds Best Practices Abound,” Defense Communities (September/October 2006): 34-38.

57. GAO, Military Housing: Management Issues Require 

Attention as the Privatization Program Matures, 2. See 

also Clark telephone interview, 17.

58. Armbruster interview, 18.
265

CHAPTER NINE

Moving Forward Amid New 

Challenges, 2008–2010

By the beginning of 2008, the Residential 

Communities Initiative (RCI) program 

had made noteworthy progress in building 

new housing, revitalizing existing housing, and 

establishing world-class residential communities 

at installations throughout the United States. And 

by the end of 2008, the private partners had been 

selected to work on the final RCI housing privatization projects—at Fort Sill, Oklahoma; Forts 

Wainwright and Greely, Alaska; Fort Huachuca 

and Yuma Proving Ground, Arizona; and Aberdeen 

Proving Ground, Maryland.1

 At the same time, 

RCI leaders became increasingly convinced that 

the RCI model could help the military improve its 

handling of two other issues: the way in which it 

housed single, or “unaccompanied,” soldiers and 

the way in which it lodged installation visitors. 

Even after a decade of many successes in 

family housing privatization, the U.S. Army’s RCI 

program still faced some of its biggest challenges 

to date in the period from 2008 through 2010. 

Foremost among them were the adjustments and 

accommodations required to weather the nation’s 

worst financial and housing market crisis since the 

Great Depression and the call to respond to the 

changing needs of the Army organizations, soldiers, and military families as they dealt with the 

tremendous impact of fighting two overseas wars. 

The RCI program was able to meet these 

challenges because of the experience the program had gained during its first eight years 

and the expertise of RCI staff, consultants, and 

partners, many of whom had received accolades 

for their achievements. The program as a whole 

received two awards in 2008, followed by awards 

to individual members of the RCI team. In May 

2008, the Urban Land Institute gave RCI its 

Award for Excellence: The Americas, which was 

its “most prestigious recognition program.”2

 Then, 

in December 2008, the program received the 

Presidential Award for Management Excellence, 

an accolade given by the Office of Personnel 

Figure 9-1. New Urbanism influenced 

the design of Clark Pinnacle’s town center 

development at Fort Belvoir, Va.

Courtesy of Clark Realty Capital.
266 Privatizing Military Family Housing 267

CHAPTER NINE

Moving Forward Amid New Challenges, 2008–2010

Management (OPM) to Executive Branch programs that excel in management performance.3

Informed of the award on Christmas Eve 2008, 

Don Spigelmyer, who had served as RCI director, 

responded that he “couldn’t have asked for a better Christmas gift,” as the award recognized the 

long years of effort that he and the others in the 

RCI Program Office had put into it.4

New Obstacles for Army Housing 

Privatization

The economic downturn that began in 2007 

and accelerated in 2008 created new obstacles for 

RCI projects. As credit tightened and prices for 

construction materials rose, RCI project partners 

faced the possibility of default on debts or even 

bankruptcy, while investors became increasingly 

cautious about backing residential developers in 

the depressed housing market.

At the same time, multiple deployments of 

soldiers in support of the Global War on Terror and 

for Overseas Contingency Operations had a lingering effect on occupancy rates at RCI family housing 

projects and Unaccompanied Personnel Housing (UPH) projects (for both single soldiers and 

married soldiers who did not have their families 

with them). In some instances, the deployments 

resulted in vacancies difficult to fill, while in others, such as at Fort Stewart, early redeployments 

allowed projects to plan for future occupancy 

needs as some rotations ended while others began 

anew.5

 Projects faced challenges in adapting to the 

fluctuations in personnel as America’s involvement in global conflicts persisted throughout the 

decade. Even more significant, the duration and 

number of deployments were placing increasing 

demands on soldiers’ families and on the organization as a whole. More than ever, improving the 

quality of life for families and military communities—which included better housing and supportive neighborhoods—became an important part 

of the Army’s mission. The RCI program and the 

Army’s private partners in housing privatization 

increased their efforts and continued to innovate 

to support that mission.

Similarly, changes and initiatives within 

the Army itself continued to reshape many RCI 

projects. In December 2007, on the heels of the 

Department of Defense’s (DOD) Grow-the-Force 

initiative to increase the strength of the Army, 

the Army issued a plan, subsequently referred to 

as Grow-the-Army, to activate three new troop 

units the following year, inclusive of 65,000 new 

active-duty service members.6 The objectives of 

the Grow-the-Army initiative were to “reduce the 

frequencies of overseas deployments for soldiers” 

and to boost the Army’s force-structure growth 

with “the stationing of six new infantry brigade 

combat teams, eight support brigades ... and 

associated growth in smaller combat support 

and combat service support units.”7 Additionally, 

under Global Defense Posture Realignment, the 

military planned to relocate 70,000 personnel 

back to the United States from stations overseas.8

The demand for additional housing resulted in 

“modifications to each project’s original development scope, additional project borrowing, and 

... additional government contributions to these 

Figure 9-2. RCI team receiving the Presidential Award for Management Excellence in 

December 2008. 

Courtesy of RCI Office.

Figure 9-3. Friends and family members cheer soldiers of the 4th Brigade Combat Team 

(Currahee), 101st Airborne Division, returning to Fort Campbell, Ky., after a 12-month 

deployment to Afghanistan, March 2009. 

Photograph by Sam Shore. Courtesy of U.S. Department of Defense.
268 Privatizing Military Family Housing 269

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Moving Forward Amid New Challenges, 2008–2010

projects as gap funding to help build new homes 

for soldiers and families.”9

Fort Bliss, spanning the New Mexico and 

Texas border, provides an example of the types of 

circumstances that the RCI program would face at 

many installations as a result of Grow-the-Army 

and other initiatives. Between 2005 and 2012, the 

number of military families expected to be posted 

at the base would increase by approximately 

38,000. To help meet the escalated demand for 

housing, Balfour Beatty Communities (BBC), the 

RCI partner at Fort Bliss, added 600 additional 

new homes to the construction schedule.10 Fort 

Carson, Colorado, was also directly affected by 

the Grow-the-Army initiative. It had reached its 

end-state goal of 2,664 homes in 2004, but new 

plans increased the goal to a total of 3,368 homes 

to accommodate the increase in force strength. 

By the summer of 2010, the Army had planned 

to invest nearly $100 million in the additional 

construction at Carson.11 The Army’s new force 

structure requirements created a similar need for 

more family housing at Forts Bragg, Knox, Lewis, 

Polk, and Sill.12

Despite these challenges in the waning years 

of the decade, the Army remained committed, 

as stated in the Army Family Covenant (AFC), to 

“providing soldiers and their families a supportive environment where they can live and thrive.”13

Announced in October 2007, on the cusp of the 

proposed increase in personnel, the AFC was the 

Army’s “promise to provide balance in sustaining 

Soldiers and their families.”14 During a visit that 

month to one of the new RCI project neighborhoods at Fort Belvoir, Virginia, Secretary of the 

Army Pete Geren remarked that if you asked any 

soldier to describe what specific things make 

for a “good quality of life,” the answer would 

be, “housing, the home they live in, [and] the 

neighborhood they live in.”15 Secretary Geren’s 

comment affirmed the importance of the RCI 

housing program particularly at a time when the 

duration and difficulty of fighting wars in Iraq 

and Afghanistan were taking a toll on the Army’s 

ability to retain soldiers and attract recruits. “In 

order to have a healthy Army, we’ve got to have 

healthy Soldiers and we have to have a healthy 

Army Family, as well.”16

2008 Credit and Financial Crises

The downturn in the national economy 

proved an unexpected encumbrance to the RCI 

program. The origins of the 2008 credit crisis 

that plunged the national economy into a deep 

recession were well documented in the federal 

Financial Crisis Inquiry Report, released in January 2011. The report explained:

The crisis reached seismic proportions in 

September 2008 with the failure of Lehman 

Brothers and the impending collapse of the 

insurance giant American International 

Group (AIG). Panic fanned by a lack of 

transparency of the balance sheets of major 

financial institutions, coupled with a tangle of 

interconnections among institutions perceived 

to be “too big to fail,” caused the credit markets 

to seize up. Trading ground to a halt. The stock 

market plummeted. The economy plunged into 

a deep recession.17

Figure 9-4. Ribbon-cutting ceremony for the opening of new homes in the Dogwood 

neighborhood at Fort Polk, La., one the installations that required additional housing 

because of the Grow-the-Army initiative. 

Courtesy of RCI Office.

Figure 9-5. Soldier in the 23rd Engineer Company is reunited with his family after 

returning home to Fort Richardson, Alaska, from a year-long deployment to Afghanistan, 

2011. U.S. Army photograph by Sgt. Tamika Dillard. 

Courtesy of U.S. Department of Defense.
270 Privatizing Military Family Housing 271

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The credit crisis and economic aftermath had 

serious repercussions for the Army RCI program. 

Direct outcomes included less funding available 

for new home construction and a corresponding increase in the number of homes targeted 

for renovation at many installations, as well as a 

reduced scope and fewer amenities at some of the 

newly awarded housing projects.18 Hardest hit were 

prospective housing projects, because developers struggled to obtain loans for construction 

and management through the domestic financial markets, which were in turmoil. In addition, 

developers functioning as partners on existing RCI 

projects began receiving lower return rates on their 

invested funds, which the companies needed to 

pay for upcoming phases of construction. Developers found that they had to pay higher interest rates 

because there were fewer investors interested in 

buying military housing bonds, and the remaining 

investors wanted stricter underwriting criteria for 

loans. As a result, developers had less money to 

spend on new construction and renovation than 

they had anticipated. At Fort Lee, for example, the 

developer fell $10 million short of what it needed in 

loan money, forcing it to build 97 fewer new homes 

than its CDMP had called for.19

Of course, long before the economic turmoil 

of 2008, RCI program managers and advisors 

had spent considerable time and effort educating 

the financial community about the opportunities and risks of financing RCI projects. Many of 

the projects benefited from a favorable lending 

environment during the early years of the program. 

During the heaviest period of new Army privatization projects, roughly 2002 to 2005, government 

benchmark rates for 30-year bonds and London 

Interbank Offer Rates remained at fairly low levels 

compared to earlier decades. In addition, the 

“spread,” or risk premium, between comparatively 

“risk-free” government rates and the rates that 

lenders demanded before purchasing bonds was 

also relatively low during much of this period.20 As 

a result, plentiful investment money flowed to the 

best projects requiring debt financing, especially 

once projects were awarded favorable investmentgrade ratings by the primary rating agencies (Standard & Poor’s, Moody’s, and Fitch). This favorable 

financing environment fell apart in 2008.

Evidence of problems began early in March 

2008 with the collapse of the investment bank 

Bear Stearns. Turmoil and fear crept into the 

credit markets during the summer of 2008, making borrowing more difficult and increasing the 

risk premiums for financing, including financing of Army RCI projects. With the collapse of 

Lehman Brothers, financing for RCI projects 

became much more difficult to obtain. In some 

cases, RCI projects started with a “soft,” or operational, closing before the projects could have a 

“hard,” or financial closing. This again illustrated 

the benefits of the Army’s RCI partner structure, 

which retained the flexibility to make decisions 

to the benefit of both members of the partnership and to soldiers and families.21 The delays in 

financing RCI projects during the credit crisis 

affected the following projects, resulting in split 

operational and financial closings:

• Fort Jackson operational closing August 1, 

2008; financial closing October 30, 2008

• Joint Base Lewis-McChord combined project 

operational closing October 1, 2008; financial 

closing December 4, 2008

• Fort Wainwright/Fort Greely operational closing April 1, 2009; financial closing September 

28, 2010

• Aberdeen Proving Ground operational 

closing December 1, 2009; financial closing 

December 21, 2009

• Fort Sill operational closing November 1, 

2008; financial closing June 1, 2010.22

The credit crisis certainly made borrowing more 

difficult, but the problems in the credit market were 

not limited to RCI project financing and debt. Also 

affected were the Guaranteed Investment Contracts 

(GICs), or holding accounts, that held most of the 

RCI projects’ invested funds in interest-bearing 

securities, pending their use as development and 

construction funds. The investment grade ratings 

for bond insurers and surety providers, who held 

important roles in guaranteeing the debt payments 

for RCI projects, suffered as well. Additionally, 

RCI projects used swap providers, similar to many 

municipal bond debt placements, to swap variablerate liabilities for fixed-rate payments that helped 

to lower the overall cost of borrowing. All of these 

providers of financial guarantees were tested during 

the credit crisis and faced credit rating downgrades.

The RCI program met these challenges by forcing GIC providers to post collateral when prudent, 

by replacing swap providers with credit-worthy 

financial providers, and by restructuring project 

financing to minimize risk to project development 

and construction funds. The RCI Quarterly Report 

in March 2010 illustrated the impact on returns of 

RCI project short-term invested funds:

Interest rates on Guaranteed Investment 

Contracts (GICs) that have been entered into 

since 2008 and non-GIC lockbox accounts 

have fallen sharply from previously achieved 

levels, materially reducing the amount of 

Figure 9-6. New home in the Westcott development at Joint Base Lewis-McChord, Wash., 

one of the installations to receive additional government funding in order to keep up with 

growing demand for family housing. 

Courtesy of RCI Office.
272 Privatizing Military Family Housing 273

CHAPTER NINE

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interest income generated each month. 

Project management teams are searching for 

alternative investment strategies to GICs, but 

options remain limited in 2010.23

Despite the faltering economy and the military’s need to restructure its financial plans, the 

RCI program was able to forge ahead, and successfully. In 2009, a Government Accountability 

Office (GAO) report found that the majority of 

the privatization projects exceeded the minimum 

occupancy rate of 90 percent.24 Furthermore, in 

order to keep up with increased housing demands 

due to the large force size returning from bases 

abroad, the Army budgeted approximately $585 

million for developers working on five already 

awarded privatization projects in fiscal years 2008 

and 2009.25 This additional Army funding went to 

Forts Bliss, Bragg, Carson, and Stewart, and Joint 

Base Lewis-McChord.26 The increased funding 

made available to developers on those five projects 

was intended to help meet the growing demand for 

Army housing that resulted from forces returning 

from abroad.27

A part of the strategy for programming 

increased funds to specific projects was to “retrofit” housing projects after the selected developer/

partner had taken over. Regulations stipulated that 

government investments in project partnerships 

were limited “to not more than 33 percent cash, or 

45 percent if land or facilities are all or part of the 

investment, of the capital cost” of the proposed 

projects.28 By coupling new projects with already 

awarded contracts, the government was able to 

increase overall funding to ensure that housing 

would be available when needed.

Fort Sill, Oklahoma, provides one example 

of a retrofitted contract. The financial closing of 

the Fort Sill privatization project was delayed for 

roughly 18 months because market conditions 

made the proposed CDMP scope impossible to 

accomplish.29 At the same time, the decision to 

move the Air Defense Artillery School from Fort 

Bliss to Fort Sill increased the housing requirements by another 78 homes over the original 

end-state of 1,650 homes. The project was finally 

able to reach financial closure in June 2010, due 

to the Army’s plan to spend an additional $20 

million in Grow-the-Army funding to address 

the deficit in houses.30 But the key to the solution 

was the Army’s decision to couple Fort Sill housing privatization with an uncompleted project at 

Fort Meade, Maryland. In so doing, the government’s cumulative investment was 28.8 percent, 

compared to 55.8 percent if the Army had programmed funds directly to Fort Sill. In that case, 

the investment would have been in excess of the 

percentage cap. In providing funds for ongoing 

contracts and new construction, the process of 

retrofitting contracts benefited both installations 

and military personnel.31

As RCI projects progressed toward the end 

of the decade, the program achieved significant 

milestones, received awards, and worked within 

communities to improve available housing for 

service members. In September 2008, four members of the RCI team—Rhonda Hayes, William 

Mysliwiec, Matthew Keiser, and Jim Rich—all 

received the Army Commanders Award for Civilian Service medal for their work on RCI’s acquisition process.32 By the end of September 2008, the 

program was delivering more than 450 homes per 

month, with some projects, such as Fort Gordon, 

Georgia, exceeding their delivery schedules.33 In 

the prior month, the Army had negotiated with 

the City of Seaside, California, to obtain additional 

land for housing at the Presidio of Monterey/Naval 

Postgraduate School. As part of the agreement, 

the Army obtained enough land to construct an 

additional 400 houses, while the City of Seaside 

benefitted by receiving tracts of land that were 

formerly within Fort Ord.34 By the end of 2008, RCI 

had delivered more than 17,000 homes while maintaining a 91.5 percent occupancy rate—on target 

with stated goals—while nationally the housing 

recession had “reached pandemic proportions, 

with a decline in home sales of 12.4 percent.”35

In 2009, the downturn in the housing market 

seemed to pose a threat to the Army’s RCI program at the same time as the Basic Allowance for 

Housing (BAH) for the year at RCI installations 

increased an average of 7.2 percent.36 By enhancing 

their purchasing power, BAH increases gave service 

members an advantage over others in the general 

housing marketplace. Program officials worried 

that the situation could decrease installation occupancy rates. Yet at the end of six months, overall 

installation occupancy had dropped just one-tenth 

of a percentage point, while at the same time the 

following year, installation occupancy had actually 

increased from the previous March when the concerns about the BAH increase were first raised.37

While occupancy rates at the majority of Army 

RCI installations were at or above expectations, 

the military did experience some fluctuations due 

to extended deployments overseas. In 2009, for 

instance, an 82 percent occupancy rate at Fort Benning, Georgia, was credited, in part, to the duration 

Figure 9-7. New homes and residents in neighborhood of the Presidio of Monterey. The Army’s 

land exchange with the city of Seaside, Calif., will allow for the construction of 400 additional 

home at the installation. 

Courtesy of Clark Realty Capital. 
274 Privatizing Military Family Housing

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of deployments to Afghanistan and Iraq. According to the GAO’s assessment of the situation, 

“extended deployments prompted some family 

members left behind to vacate their on-installation 

privatized houses and move to be closer to other 

family members.”38 Conversely, service members 

returning home from deployments contributed 

to spikes in occupancy, as noted at that same base 

at the close of 2008. Occupancy rose 4.4 percent, 

largely attributed “to an increase in inbound Service members.”39

Challenges for RCI Partners

Because they were private or publicly traded 

businesses, companies partnering with the Army 

in the RCI program had to negotiate not only the 

unexpected challenges of the credit crisis and 

nationwide recession, but also the instability in 

the American corporate world, including company takeovers and buyouts. Such was the case for 

one RCI partner firm in May 2008, when Balfour 

Beatty PLC, a global engineering, construction and 

investment company based in London, acquired 

GMH Military Housing, one of the Army’s most 

active privatization partners. At the time, GMH 

Military Housing was the developer (or was about 

to achieve financial closure) for RCI projects at Fort 

Carson, Fort Stewart/Hunter Airfield, Fort Hamilton, Fort Detrick/Walter Reed Army Medical Center, Forts Eustis/Story, Fort Bliss, Fort Gordon, Fort 

Jackson, and the U.S. Military Academy at West 

Point. Although RCI privatization projects had 

been transferred from one partner to another in 

the past, this was the first time that a partner was 

acquired by an outside corporation.40 According 

to some Balfour Beatty managers, the transition, 

aside from the name change, “occurred without 

interruption to the military housing services and 

was transparent to the military families.”41 Three 

months after the acquisition, on August 1, 2008, 

Balfour Beatty Communities successfully closed 

on new housing projects at West Point, New York, 

and Fort Jackson, South Carolina, projects that 

transferred a total of more than 2,000 homes to 

new Balfour Beatty Partnerships.42 Looking back at 

the takeover and successful transition, managers 

at Balfour Beatty believe that it demonstrated significant strengths in the RCI program, particularly 

the program’s “ability to adapt and accommodate 

to ever-changing events,” which in recent years had 

included “projects transferring between partners, 

partner acquisitions, as well as financial market 

collapse, while continuing to provide quality housing for soldiers and their families.”43

Figure 9-8. Two happy family housing residents in a neighborhood of the RCI Kalakaua 

Community development at Schofield Barracks, Hawaii. 

Courtesy of Lend Lease.

Balfour Beatty Communities/GMH Military Housing

275

Balfour Beatty Communities, formerly GMH Military Housing, has been a leader in the RCI program 

for many years. The company has partnered with 

the Army on 11 different projects in a dozen states 

plus the District of Columbia, through projects that 

include more than 14,000 new or renovated homes 

for U.S. service members and their families. In 2002, 

GMH Military Housing won its first RCI contract, for 

Fort Stewart/Hunter Army Airfield (Georgia). Subsequently, the company was awarded two additional 

projects, Walter Reed Medical Center (Washington, 

D.C.) and Fort Detrick (Maryland), later combined 

into a single project, the first time two separately 

solicited RCI projects were combined to enhance 

the efficiency of both.

GMH Military Housing also took over several projects initially awarded to other companies. 

Among these were Fort Hamilton (New York), Forts 

Eustis and Story (Virginia), Fort Leonard Wood (Missouri), and Fort Carson (Colorado). The company 

Figure 9-9. Staff gathered on front steps of Balfour Beatty 

Communities office at Fort Detrick, Md. 

Courtesy of RCI Office.

went on to win contracts for projects at Fort Bliss 

(Texas) in 2004, and Fort Gordon (Georgia) in 2005. 

The Army subsequently made housing privatization for White Sands Missile Range (New Mexico) 

a part of the Fort Bliss RCI project. In addition, the 

company acquired from a previous developer two 

projects affected by the Army’s Base Realignment 
277

CHAPTER NINE

Moving Forward Amid New Challenges, 2008–2010

and Closure program: Carlisle Barracks (Pennsylvania) and Picatinny Arsenal (New Jersey). It later won 

contracts for West Point (New York) in 2007 and Fort 

Jackson (South Carolina) in 2008.

In 2008, Balfour Beatty PLC, an international 

engineering, construction, and investment company, acquired GMH Military Housing from its parent company, GMH Communities Trust. This acquisition was approved by the Army and marked the 

first time an RCI project partner had been acquired 

by another company. In addition to its focus on 

services to residents—leasing, maintenance, snow 

removal, yard care, and answering everyday questions—the company has also sought to introduce 

community and sustainability initiatives, including recycling programs, and efficient lighting and 

appliances. Brad Collier, Regional Project Director 

for Balfour Beatty Communities, said “There is no 

greater reward than to execute the numerous ribbon-cutting ceremonies where the keys to a brand 

new home are handed over to a young Soldier and 

276 Privatizing Military Family Housing

his or her family. Often people would cry, saying 

they never thought this was possible and offering 

their heartfelt thanks.”44

In a June 2008 interview, Robert Shepko, then 

Senior Vice President of Balfour Beatty Housing, 

talked about the company’s successes in Army privatization projects and mentioned some of the challenges that remained for Balfour Beatty and other 

companies partnering with the Army in the RCI program. Shepko observed, “I think every year expectation levels increase and the bar gets reset as you 

deliver on what you say you’re going to deliver. So 

what might not have been expected before ... after 

that bar has been raised, it’s kind of like, ‘Well, wait. 

You used to do that. Why aren’t you doing it?’”45

Fortunately, the partnership between the Army 

and Balfour Beatty Communities has continued to 

meet expectations, while also demonstrating the 

flexibility of the company and the RCI program to 

weather financial downturns, transfers of projects, 

and even acquisitions among private partners.

Figure 9-10. Balfour Beatty Communities-sponsored 

Halloween event for residents at Fort Carson, Colo.

Courtesy of RCI Office.

Figure 9-11. RCI family housing at Fort 

Hamilton, N.Y.

Courtesy of Balfour Beatty Communities.

Although a number of RCI partners had to 

accommodate transitions in the midst of the 

financial and credit crisis, they continued to employ 

innovative designs and development strategies 

to improve the living conditions of soldiers and 

their families. These types of improvements to 

Army homes and communities came at a critical 

time, when the wear and tear of combat duties and 

multiple deployments placed immense burdens on 

many Army families. Many of the new features of 

RCI housing developments demonstrated that the 

privatization partners were doing more than simply 

building houses; they were also building communities. For instance, at Forts Wainwright and Greely 

in Alaska, the partner LLC North Haven Communities and the developer Actus Lend Lease paid 

special attention to home design in a region where 

winter’s reduced daylight hours, harsh winds, and 

subzero temperatures keep residents indoors for 

long periods of time. North Haven implemented the 

construction recommendations of the Cold Climate 

Housing Research Center, which led the housing 

team to design homes with “triple-glazed casement 

windows and a ‘cold roof’ design to prevent the formation of ice dams and minimize heat loss.” North 

Haven also attended to smaller details, such as 

“painting rooms with bright colors, placing windows 

strategically to capture optimum light, installing 

full-spectrum lighting in bathrooms and kitchens, 

and creating spacious living areas so families can 

entertain during those long winter months.”46

Other RCI developer partners likewise initiated 

plans or programs to enhance the home lives and, 

by extension, the work lives of Army families. These 

efforts included events and memorial sites to honor 

both returning and fallen soldiers. Housing partner 

Balfour Beatty Communities, for example, teamed 

with the Army to create the “Warriors Walk” at Fort 

Stewart, Georgia, which honors soldiers from the 

Third Infantry Division who fell in Iraq but is also 

often used as a place to greet soldiers coming home 

from deployment.

Figure 9-12. New RCI housing in the Gertsch Heights neighborhood at Fort Wainwright, Alaska. 

Courtesy of RCI Office.
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CHAPTER NINE

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At Fort Stewart/Hunter Army Airfield in Georgia, 

there is a long, straight path bounded by hundreds 

of young Eastern redbud trees, one for each fallen 

service member of the Third Infantry Division who 

served in operations Iraqi Freedom and Enduring 

Freedom. The path is called Warriors Walk, a memorial that draws friends and loved ones who come to 

pay respect and to commemorate, often with wreaths 

and other mementos that they leave along the path. 

The site has hosted numerous dignitaries and special 

events. Soldiers have marched there before deployments and returned there on arrival home. Within 

this RCI community, this area is a symbolic tribute to 

men and women who have died in service.

The Army held the first ceremony at Warriors 

Walk in April 2003. Since then, dedications of new 

trees have taken place almost monthly. As of February 2011, the site commemorated a total of 436 

soldiers, ranging in rank from private to colonel, 

a redbud tree representing each one of them. The 

278 Privatizing Military Family Housing

Warriors Walk

trees’ pink blossoms emerge in early springtime, 

as though to observe the season of the war’s first 

casualties. Eventually, when the trees mature, their 

branches will form a canopy above the walkways. 

The memorial has been expanded several times 

as the list of soldiers killed in the war has grown 

longer, with paths extended and new pathways 

poured, stone plaques lining the walk. The redbudlined pathways flank the full length of Cottrell Field 

on both sides.

Balfour Beatty Communities manages the site 

of the memorial at Fort Stewart. Chris Williams, 

president of Balfour Beatty, described the walk as 

a way “to express our deep respect, appreciation, 

and remembrance” for fallen members of the Third 

Infantry. He declined comment specifically on the 

company’s role in the memorial, which remains 

mostly a private tribute for past and current community residents. “It’s not about us,” Williams said, “it is 

about those soldiers.”47

Figure 9-13. New tree plantings along Warriors Walk, Fort 

Stewart, Ga., December 2006.

Courtesy of Balfour Beatty Communities.

Figure 9-14. Close-up of one soldier’s memorial and the 

personal mementos that friends and loved ones left at the site.

Courtesy of Balfour Beatty Communities.

Privatization of Unaccompanied 

Personnel Housing 

In addition to its family housing efforts, the 

RCI program also tackled single or Unaccompanied 

Personnel Housing (UPH) and the development 

of adequate visitor lodging on Army installations. 

The 1996 MHPI legislation stipulated that the Army 

could use the privatization authorities to address 

unaccompanied housing, even establishing a fund 

for that purpose. However, the services did not 

really begin utilizing the authorities for UPH until 

the first decade of the twenty-first century. Under 

the National Defense Authorization Act for FY 2003, 

the U.S. Navy received authority to move forward 

with three housing pilot projects for single sailors. 

The Army followed the Navy’s example and began 

exploring its first UPH project at Fort Irwin in 2002. 

Because of its isolated location in California’s 

Mojave Desert, Fort Irwin had historically quartered a higher proportion of unaccompanied personnel (soldiers who had no family members with 

them) than other installations. Before 2002, Irwin 

had 121 Bachelor Officers Quarters and Senior 

Bachelor Enlisted Quarters (for those ranked 

from Sergeant First Class to Sergeant Major), but 

they were small, unattractive, and in disrepair. As 

a result, a large number of those senior soldiers 

either rented living quarters or purchased mobile 

homes. When Clark Pinnacle began investigating the possibility of constructing a town center 

at Fort Irwin similar to the one it was building 

at Herryford Village at Fort Belvoir, it decided to 

incorporate 200 apartments for senior unaccompanied personnel (SFC and above, including officers) 

into the center to fulfill the installation’s need. The 

Army agreed to the construction.48

Elsewhere, the development of an Army barracks privatization program, that is, UPH for Privates and Staff Sergeants, proceeded slowly, in part 

because of Army culture and because of the cost 

to the BAH account. Army leaders wanted junior 

single soldiers to live together in barracks, rather 

than separately in apartments, to preserve the 

soldiers’ war-fighting ethos, command and control, 

and training in the barracks as a way of Army life. 

But privatizing barracks in the United States would 

have added significantly to the Army’s budget. 

One estimate in 2004 was as high as $700 million 

of BAH to privatize barracks nationwide. It was 

clear that Army barracks were in as bad a condition 

as family housing, if not worse, and the Army did 

not have the money to repair, maintain, or sustain 

them. The RCI Program Office and particularly 

Rhonda Hayes and her staff worked diligently to 

get Army leaders to accept the barracks privatization idea. But they had little success in the face of 

the strong resistance they encountered from barracks and BAH proponent offices.49

In April 2004, the Acting Secretary of the Army 

established a UPH Privatization Task Force to 

investigate the “financial feasibility [and] desirability of UPH privatization.” The task force issued 

its findings in November 2004, announcing that 

in selected cases in the United States, the UPH 

privatization program was financially feasible and 

desirable. However, over the six months of the 

study, the task force and its executive council could 

not reach consensus on these findings or recommendations. Therefore, the task force report went 

to the Army leadership only, and report recommendations were not officially disseminated. As a 

compromise between the UPH task force and its 

executive council, the report findings were incorporated into the “Holistic Barracks Strategy” effort 

of the Office of the Assistant Chief of Staff for 

Installation Management (OACSIM). Specifically, 

the Army would consider privatizing housing for 

Sergeants (SGTs, E-5s) and Staff Sergeants (SSG, 
280 Privatizing Military Family Housing 281

CHAPTER NINE

Moving Forward Amid New Challenges, 2008–2010

E-6s) where feasible and appropriate to complete 

the modernization of barracks at that site. However, after reviewing the study report, the Secretary 

of the Army decided in January 2005 to see how 

the Navy’s pilot program proceeded before initiating one at the Army level.

Subsequently, in March 2006, single SSGs 

were forced to live off post, thus freeing space for 

more junior single soldiers. Also during 2006, the 

Assistant Secretary of the Army for Installations 

and Environment (ASA, I&E) started to show some 

interest in barracks privatization due to a shortage 

of modernization funds. Accordingly, there were 

several initiatives dealing with barracks privatization and briefings were developed to obtain Vice 

Chief of Staff of the Army (VCSA) support. In 

March 2006, the VCSA asked for validation of the 

2004 UPH task force financial results, and subsequently the Office of the ASA Financial Management & Comptroller validated the potential 

savings. However, Army leadership—including 

the VCSA; ASA, I&E; and ACSIM—were still not 

fully committed to starting a barracks privatization 

program in the Army. They also felt pressure from 

internal Army stakeholders to maintain the status 

quo and keep the old barracks programs in place.50

Finally, in 2006, Army officials agreed to move 

forward with several non-barracks pilot projects 

for senior single soldiers (SSGs and above, including officers) at Fort Irwin, Fort Drum, Fort Bliss, 

and Fort Stewart. In September 2008, Fort Irwin 

became the first installation to complete construction of UPH apartments and house unaccompanied soldiers under the RCI privatization 

Figure 9-15. UPH club house facility at Fort Stewart, Ga. 

Courtesy of RCI Office.

Figure 9-16. Lodge for UPH apartment residents at The Timbers complex at Fort Drum, N.Y.

Courtesy of Lend Lease.

program. The first 22 homes were completed ahead 

of schedule, and the first tenants moved into their 

new quarters in early September. In January 2008, 

the Army closed on the Fort Stewart UPH project 

for ranks E-6 and above. GMH Military Housing 

(now Balfour Beatty Military Housing), already the 

partner for privatized family housing on the installation, was also the partner for privatized single 

housing through the UPH project. By project 

completion, GMH expects to have added 334 oneand two-bedroom apartments that will accommodate approximately 370 soldiers. 

The deteriorating state of the national housing and credit markets threatened, for a time, 

the economic viability of the Fort Stewart UPH 

project, but the Army’s new BAH rates released 

in December 2006 included a favorable 14 percent 

BAH increase for unaccompanied soldiers with 

a rank of E-6. The increase was 12 percent higher 

than the BAH rates projected in the pro forma for 

the partnership deal. This provided GMH with 

greater financial stability and allowed the partnership to lock into place more favorable interest 

rates at closing.51

The Fort Drum UPH project aimed to build 

192 “garden walk-up style” apartments, 64 of them 

one-bedroom apartments and 128 of them twobedroom apartments. Soldiers holding the rank of 

staff sergeant through captain, as well as single sergeants who had a non-availability certificate (provided to soldiers when adequate on-post barracks 

accommodations are not available), would live in 

the apartments. Fort Bragg set a goal of 312 apartments (120 one-bedroom and 192 two-bedroom). 
282 Privatizing Military Family Housing 283

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Moving Forward Amid New Challenges, 2008–2010

Both installations were scheduled to have the first 

apartments on line in February 2009. By June 2008, 

the Army had successfully closed on four RCI-UPH 

projects that would eventually provide 1,038 apartments and a total of 1,394 rooms for unaccompanied soldiers. All were due to be completed by 

summer 2011. However, RCI’s plans for Fort Bliss, 

which had called for 358 apartments (306 onebedroom and 52 two-bedroom), were interrupted 

by the increasing volatility in national and global 

financial markets. Fort Bliss did not close due to 

problems with the project financials as credit and 

real estate crises grew worse.

Although it appeared in 2009 that UPH 

privatization would be restricted to senior soldier 

accommodations, the ACSIM reinvigorated the 

possibility of a barracks privatization program with 

the Barracks Privatization Initiative (BPI). At the 

same time, congressional interest in a BPI-type 

program appeared to be gaining strength. However, the BPI proposal stalled once more in 2010, 

again due to the Army’s resistance to a cultural 

change. The Senate and House had already preliminarily investigated the possibilities in a 2009 

congressional study of UPH privatization, which 

focused on privatization of UPH for senior single 

soldiers (SSG and above, including officers) and 

junior single soldiers (Privates [PVTs] through 

Sergeants [SGTs]). 

That UPH study generated both House and 

Senate reports on the study’s results and findings. The House report asked for analyses of UPH 

privatization for senior and junior single soldiers, 

but the Senate request focused on privatization of 

junior enlisted barracks only. Accordingly, the UPH 

study undertook further work to provide an update 

of the SSG-plus and UPH privatization program 

but focused on UPH barracks privatization for 

PVTs through SGTs, since the Army had already 

implemented a SSG-plus privatization program. 

It should be noted that the UPH study addressed 

permanent-party housing only. It did not include 

student, training, reserve component, cadet, 

ROTC, or other training requirements, accommodations, or operations. Further, the study’s report 

did not provide any recommendations, because the 

congressional reports had not requested any and 

because there had been no change in the Army’s 

policy that UPH privatization was limited only to 

SSG-plus housing where there were no adequate or 

affordable off-post rentals.52

The two congressional reports covered four 

major areas investigated in the UPH study. The 

results and findings were as follows: 

• The study found no legal impediment to 

barracks privatization and therefore no new 

authorities were needed.

• The study concluded that the Army could not 

continue its traditional way of operating barracks—in which the Army exercises complete 

command and control over junior enlisted 

soldiers, builds unit cohesion, protects the 

war-fighting ethos, and provides a reasonably comfortable and safe environment for 

soldiers—without adverse OMB budgetary 

scoring treatment. 

• The study found that barracks privatization 

would fix and sustain quality accommodations over the long term, thus improving 

quality of life for single junior enlisted soldiers, making conditions similar to what their 

married counterparts enjoyed.

• The study found that barracks privatization 

was less costly than current barracks programs when the two were compared using 

a life cycle cost analysis (LCCA). A LCCA 

requires that both alternatives use the same 

standards and both are funded at 100 percent 

of requirements. However, barracks standards 

are constrained by law and the Army does not 

fund barracks at 100 percent of the required 

costs. As a result, barracks privatization 

would be a substantial net cost to the Army. 

The Army has $6 billion worth of barracks 

modernization scheduled through FY 2013, 

aiming to reach a higher standard of barracks 

quality by 2015.53

The UPH program continued to move forward 

toward the end of the decade, with new deliveries at 

a number of installations. On November 10, 2008, 

just two months after the first deliveries of UPH 

apartments at Fort Irwin, the first Unaccompanied 

Senior Enlisted Quarters and Unaccompanied 

Officer Quarters were handed over at Fort Stewart. 

The installation held a ribbon-cutting ceremony the 

following month to recognize the deliveries of the 

buildings and a clubhouse. By the end of 2008, five 

buildings were ready for occupancy at Fort Stewart 

through the program.54

In early 2009, the first new apartments at Forts 

Bragg and Drum were completed. The UPH housing that had already opened at Fort Irwin was at 95 

percent occupancy and was drawing favorable comments from residents.55 Halfway through the year, 

the program counted deliveries of the 104 Phase I 

apartments at Fort Irwin and a complete transfer 

of 192 UPH units at Fort Drum.56 At the end of the 

year, all of Fort Stewart’s 334 UPH apartments were 

delivered. Fort Bragg was still not complete, but 

Figure 9-17. Kitchen layout in model apartment for The Timbers UPH housing 

complex at Fort Drum, N.Y.

Courtesy of Lend Lease.
284 Privatizing Military Family Housing 285

CHAPTER NINE

Moving Forward Amid New Challenges, 2008–2010

deliveries were ahead of schedule. With 88.4 percent of total planned deliveries already transferred, 

the UPH program was progressing smoothly considering the larger challenges posed by the broader 

national economic climate.57

While Forts Irwin and Drum maintained occupancy close to 100 percent, Forts Bragg and Stewart 

lagged well behind the other installations, with 

average occupancy at approximately 75 percent 

between the two. Project teams worked toward 

developing attractive marketing plans, but additional deployments in support of overseas missions 

continued to hamper efforts at filling vacancies.58

The housing was available, but the soldiers were 

not present—a sign of the lingering effects of 

America’s involvement in extended wars abroad.

Privatization of visitor Lodging on

Army Installations

In a similar way, the Office of the Deputy 

Assistant Secretary of the Army for Privatization 

and Partnerships used the RCI model to privatize 

visitor lodging on Army installations. Several posts 

had facilities for visitors, but, according to Deputy 

Assistant Secretary Armbruster, “Most of them do 

not offer what you can get outside the gate.”59 Therefore, Armbruster explored whether the Army could 

team with hotel chains to construct better lodging 

facilities, and in 2005 Army leaders approved the 

Privatization of Army Lodging (PAL) program.60

Yet Congress resisted the plan. Some congressional members wanted the Army and the U.S. Air 

Force Exchange Service (AAFES) to deal with lodging; others felt that construction of new facilities 

should be accomplished using Military Construction (MILCON) appropriations.61 In the National 

Defense Authorization Act for FY 2006, Congress 

required both the Secretary of the Army and 

AAFES to submit reports on whether they thought 

visitor lodging really should be privatized and, if 

so, whether AAFES was the proper entity to do it. 

The act stipulated that the Army could not issue 

a Request for Qualifications (RFQ) for the PAL 

program until Congress had received these reports. 

According to a House of Representatives conference report, these requirements were placed in the 

bill because Congress felt that “AAFES should be 

allowed fair consideration in any competitive procurement of lodging management and services.”62

As the Secretary of the Army and AAFES 

prepared these reports, Armbruster and the PAL 

team worked with Congress and other Army leaders to gain more support for PAL privatization. 

Through these efforts, the RCI Program Office 

eventually obtained approval to proceed with 

lodging privatization of three groups, categorized 

as A, B, and C. Subsequently, in October 2006, 

the Army partnered with Actus Lend Lease and 

Intercontinental Hotels to begin visitor lodging 

privatization at the 13 installations that comprised Group A, including Redstone Arsenal; 

Yuma Proving Ground; Forts Rucker, Leavenworth, Riley, Polk, Sill, Hood, Sam Houston, 

Myer, and McNair; and Fort Shafter/Tripler Army 

Medical Center. (McNair and Redstone were later 

dropped from Group A.) “We are very excited with 

what Intercontinental is offering,” Armbruster 

declared. “We’re going to give [visitors] a quality 

of hotel opportunities that we just simply don’t 

have and can’t have with Army lodging.”63

Although the PAL program adopted some of 

the principles of the RCI program, it was implemented by the PAL team, a group of individuals 

well versed in Army Lodging but with no experience in privatization. The team was able to negotiate with Actus Lend Lease to develop a Lodging 

Development Management Plan, but the Army and 

the PAL team were never able to reach consensus 

on the legal and financial structure of the deal. The 

PAL program had been in progress since October 2003 and had suffered numerous delays and 

setbacks, while also facing opposition from both 

AAFES and Army Lodging proponents. As a result, 

PAL was suffering from a serious credibility challenge within the Army. In the meantime, the 2008 

credit crisis occurred, dealing another blow to the 

PAL program’s ability to obtain a favorable credit 

rating and receive financing.

In October 2008, Paul Bollinger, Armbruster’s 

successor as Deputy Assistant Secretary of the 

Army for Energy and Partnerships, assigned 

Deputy Director of RCI Rhonda Hayes to take over 

the PAL program. Hayes and her team of Barbara 

Sincere, Dean Perez, and Mark Hausherr from 

Jones Lang LaSalle (JLL), who could draw on years 

of experience in RCI projects, quickly assessed the 

status of the negotiations. They determined which 

deal points were appropriate and which had to be 

restructured and then opened previously closed 

communication channels with the 10 affected 

installations and the leadership of the Army Lodging community. The biggest challenge for Hayes 

and her team was reestablishing the credibility of 

PAL with the Army leadership. The program had 

previously announced, and subsequently missed, a 

number of financial closing dates, leading Hayes to 

conclude that any more public delays would be the 

death of the program. She steadfastly refused to set 

a transition date until the Army was certain that 

financing could be obtained.

Financing the project proved to be a significant challenge. When the Army initiated the PAL 

Figure 9-18. Room in new Army lodging at Fort Sill, Okla.

Courtesy of RCI Office.
286 Privatizing Military Family Housing 287

CHAPTER NINE

Moving Forward Amid New Challenges, 2008–2010

program in 2003, Army Lodging made the decision to cease recapitalization at these installations, choosing instead to invest Army Lodging 

recapitalization funds primarily overseas where the 

assets would not be privatized. While this move 

was deemed a reasonable business decision at the 

time, the protracted delays between creation of 

the PAL program in 2003 and the pursuit of private 

investment in 2009 had produced a lodging inventory which, in many cases, did not meet minimum 

private-sector standards for quality of life and safety, 

much less resemble industry lodging standards. As 

a result, the financial community deemed the Army 

Lodging projects at the first 10 locations inadequate for use as collateral for a permanent loan. In 

response, the Army, Actus Lend Lease, and Bank 

of America carefully crafted a new financial structure, combining construction loans and equity, that 

would cover the first 24 months of the PAL program.

The Army’s objective for the first two years of 

the program would be to meet private-sector code 

compliance and to place five hotels under the 

Holiday Inn Express brand. They did this in order 

to ensure that the assets qualified as suitable collateral for obtaining a permanent loan in August 

2011. Group A installations ultimately “closed” 

(that is, the partnership agreement between the 

Army and the developer was signed and sealed) 

in August 2009, 10 months after Hayes and her 

team assumed the reins. In appreciation for the 

“rescue” of PAL, Actus Lend Lease presented lifeguard rescue rings with “USS PAL” emblazoned 

on them to Hayes, Hausherr, and Sincere. All the 

while, Congress kept a close eye on the program, 

requiring the Secretary of the Army to submit 

a report on how the program was working eight 

months after lodging privatization had taken 

place. The Secretary’s report would also make 

recommendations for future expansion.64

Conclusion

The improvements that the Army RCI program brought about in military housing were 

evident in statistics, awards, and in the words of the 

residents—a testament to the success of the Residential Communities Initiative. Toward the end of 

2009, the RCI program delivered its 20,000th home, 

with an end-year total of 21,560 new homes in the 

program.65 But the success of the program went 

beyond the numbers. In May 2009, Fort Belvoir’s 

Fairfax Village Neighborhood Center earned the RCI 

program its first platinum rating for Leadership in 

Energy and Environmental Design (an internationally-recognized green building certification award). 

The center utilized “environmentally friendly 

materials and building practices,” including the 

significant accomplishment of diverting 95 percent 

of construction and demolition waste from landfills 

toward other purposes.66

In September, the program published the 

results of a 2009 survey of RCI program housing. 

As recorded in the quarterly portfolio report:

This year, for the first time, satisfaction ratings 

for all Services, Property and Overall Housing 

Experience factors improved over the previous 

year’s survey ratings; all either met or exceeded 

the Army Goal Value of 3.5 on a 5.0 scale.67

In addition, a full two-thirds of RCI residents 

of both new and renovated homes responded that 

they would likely recommend privatized military 

housing to others—an increase of 10 to 15 percent 

over the previous year. 

By the third quarter of 2010, the Army continued to program substantial funds toward improving RCI projects, with 11 installations scheduled to 

receive approximately $455 million in appropriations by the end of the year.68 The Army’s final 

RCI project slated to transfer to a private partner, 

Fort Richardson, Alaska, was subsequently transferred to the Air Force privatization team after Fort 

Richardson become part of Joint Base ElmendorfRichardson in October 2010 in the wake of the 

2005 BRAC legislation. As had been determined in 

the case of Joint Base Lewis-McChord, described 

earlier, it made no sense to have two separate 

privatization initiatives on the same installation.69

In 2010, nearly all Army family housing in the 

United States (except for some homes at very small 

installations) was privatized.
288 Privatizing Military Family Housing 289

CHAPTER NINE

Moving Forward Amid New Challenges, 2008–2010

Endnotes to Chapter 9

1. C. Todd Lopez, “Final Housing Privatization Partners 

Chosen,” Army News Service, 27 June 2010.

2. Ian “Sandy” Clark, Deputy Chief, PPID, “Public-Private 

Initiatives Division (PPID), Residential Communities 

Initiative (RCI) Update,” 22 January 2009, PowerPoint 

presentation, http://www.phma.com/pds/presentations/

Thur-22-January/Army/RCI_Update_Army_Day.pdf.

3. U.S. Office of Personnel Management, News Release, 

“OPM Presents 2008 Presidential Award for Management 

Excellence,” 5 December 2008, http://www.opm.gov/

news/opm-presents-2008-presidential-award-for-management-excellence,1442.aspx.

4. Don Spigelmyer personal communication with Matthew Godfrey, 24 January 2009.

5. RCI, ASA-I&E, “Portfolio and Asset Management Quarterly Portfolio Report for the Quarter Ended 30 September 

2008,” 38, document provided by David Hoffman, RCI 

Office.

6. Government Accountability Office (GAO), Military 

Housing Privatization: DOD Faces New Challenges Due to 

Significant Growth at Some Installations and Recent Turmoil in the Financial Markets, Report to the Subcommittee on Readiness, House Committee on Armed Services, 

GAO-09-352 (Washington D.C.: GAO, 2009), 26; and 

Elizabeth M. Lorge, “Army announces stationing decisions 

for new troops,” Army News Service, 19 December 2007, 

http://www.army.mil/article/6683/army-announcesstationing-decisions-for-new-troops.

7. U.S. Army, “Army Announces Stationing Decisions,” 

News Release, 19 December 2007.

8. GAO, Military Housing Privatization, 3, 27. The General 

Accounting Office changed its name to the Government 

Accountability Office on July 7, 2004. This book has retained the same abbreviation (GAO) for both names.

9. Rhonda Hayes, written comments to authors, 14 February 2011.

10. GAO, Military Housing Privatization, 27, 29.

11. RCI, ASA-I&E, “Portfolio and Asset Management Quarterly Portfolio Report for the Quarter Ended 30 June 2010,” 

19-20, document provided by David Hoffman, RCI Office.

12. Rhonda Hayes comments, 14 February 2011.

13. Laura Avery, U.S Army War College, “Implementing the 

Army Family Covenant: How Well Is the Army Doing?” 

Strategy Research Project (Carlisle Barracks, PA: U.S. 

Army War College, 2009), 3.

14. Avery, “Implementing the Army Family Covenant,” 2.

15. Quoted in Melina Rodriguez, “Army Secretary Visits Families, Privatized Homes at Fort Belvoir,” Army 

News Service, 4 October 2007, http://www.army.mil/

article/5332/army-secretary-visits-families-privatizedhomes-at-belvoir.

16. Quoted in Melina Rodriguez, “Army Secretary Visits 

Families, Privatized Homes at Fort Belvoir.”

17. The Financial Crisis Inquiry Report, Official Government Edition (Washington D.C.: GPO, 2011), xvi, http://

www.gpo.gov/fdsys/pkg/GPO-FCIC/pdf/GPO-FCIC.pdf.

18. GAO, Military Housing Privatization, 8-10.

19. GAO, Military Housing Privatization, 8, 33-37.

20. Rhonda Hayes comments, 14 February 2011.

21. Hayes comments, 14 February 2011.

22. Hayes comments, 14 February 2011.

23. RCI, ASA-I&E, “Portfolio and Asset Management Quarterly Portfolio Report for the Quarter Ended 31 March 

2010,” 11, document provided by David Hoffman, RCI 

Office.

24. GAO, Military Housing Privatization, 5, 19.

25. GAO, Military Housing Privatization, 6.

26. GAO, Military Housing Privatization, 28.

27. GAO, Military Housing Privatization, 6-7.

28. GAO, Military Housing Privatization, 28.

29. RCI, ASA-I&E, “Portfolio and Asset Management 

Quarterly Portfolio Report for the Quarter Ended 30 June 

2010,” 39.

30. RCI, ASA-I&E, “Portfolio and Asset Management 

Quarterly Portfolio Report for the Quarter Ended 30 June 

2010,” 12.

31. GAO, Military Housing Privatization, 28-30.

32. “Final Housing Privatization Partners Chosen,” Army 

News Service, 24 September 2008, http://www.army.

mil/-news/2008/09/23/12628-final-housing-privatizationpartners-chosen.

33. RCI, ASA-I&E, “Portfolio and Asset Management Quarterly Portfolio Report for the Quarter Ended 30 September 

2008,” 2, document provided by David Hoffman, RCI 

Office; and RCI, ASA-I&E, “Portfolio and Asset Management Quarterly Portfolio Report for the Quarter Ended 

30 June 2008,” 20, document provided by David Hoffman, 

RCI Office.

34. RCI, ASA-I&E, “Portfolio and Asset Management 

Quarterly Portfolio Report for the Quarter Ended 30 September 2008,” 22.

35. RCI, ASA-I&E, “Portfolio and Asset Management Quarterly Portfolio Report for the Quarter Ended 31 December 

2008,” 13-14, 22, document provided by David Hoffman, 

RCI Office.

36. RCI, ASA-I&E, “Portfolio and Asset Management 

Quarterly Portfolio Report for the Quarter Ended 31 

March 2009,” 9, document provided by David Hoffman, 

RCI Office.

37. RCI, ASA-I&E, “Portfolio and Asset Management Quarterly Portfolio Report for the Quarter Ended 31 March 

2009,” 14-16; RCI, ASA-I&E, “Portfolio and Asset Management Quarterly Portfolio Report for the Quarter Ended 30 

September 2009,” 14, document provided by David Hoffman, RCI Office; and RCI, ASA-I&E, “Portfolio and Asset 

Management Quarterly Portfolio Report for the Quarter 

Ended 30 September 2010,” 15, document provided by 

David Hoffman, RCI Office.

38. GAO, Military Housing Privatization, 22.

39. RCI, ASA-I&E, “Portfolio and Asset Management 

Quarterly Portfolio Report for the Quarter Ended 31 

March 2009,” 38.

40. Balfour Beatty Communities, written responses to 2011 

RCI questionnaire, 17 February 2011, 3.

41. Balfour Beatty Communities, written responses to 2011 

RCI questionnaire, 3.

42. RCI, ASA-I&E, “Portfolio and Asset Management 

Quarterly Portfolio Report for the Quarter Ended 30 September 2008,” 19-20.

43. Balfour Beatty Communities, written responses to 2011 

RCI questionnaire, 4.

44. Brad Collier, written comments to authors, February 

17, 2011.

45. Robert Shepko, oral history interview by Paul Sadin, 

Fort Detrick, Maryland, 27 June 2008, 18-19.

46. Betsy Woolley, “A Haven in Alaska: Privatization Will 

Bring Significant Changes for On-base Family Housing,” 

Defense Communities (January/February 2011): 35.

47. Chris Williams, Balfour Beatty Communities, photographs and description sent to authors, 18 February 2011.

48. Dean Stefanides, written comments to authors, 13 

February 2011.

49. Stefanides comments, 13 February 2011.

50. Stefanides comments, 13 February 2011.

51. Stefanides comments, 13 February 2011.

52. Stefanides comments, 13 February 2011.

53. Stefanides comments, 13 February 2011.

54. RCI, ASA-I&E, “Portfolio and Asset Management 

Quarterly Portfolio Report for the Quarter Ended 31 December 2008,” 16, document provided by David Hoffman, 

RCI Office.

55. RCI, ASA-I&E, “Portfolio and Asset Management 

Quarterly Portfolio Report for the Quarter Ended 31 

March 2009,” 9, document provided by David Hoffman, 

RCI Office.

56. RCI, ASA-I&E, “Portfolio and Asset Management 

Quarterly Portfolio Report for the Quarter Ended 30 June 

2009,” 8, document provided by David Hoffman, RCI Office.

57. RCI, ASA-I&E, “Portfolio and Asset Management 

Quarterly Portfolio Report for the Quarter Ended 31 December 2009,” 8, document provided by David Hoffman, 

RCI Office.

58. RCI, ASA-I&E, “Portfolio and Asset Management 

Quarterly Portfolio Report for the Quarter Ended 30 September 2010,” 16, document provided by David Hoffman, 

RCI Office.

59. William Armbruster interview by Matthew Godfrey, 13 

February 2007, 11. See also RCI Program Office, “Residential Communities Initiative (RCI). RCI Program Overview,” 

February 2007, PowerPoint presentation, Documentum 

database, RCI Office.

60. Ian Clark, “Information Paper, SAIE-RCI, Subject: 

Military Housing Privatization Initiative (MHPI) Act and 

Authorities,” 12 February 2007, Documentum database, 

RCI Office. 

61. Armbruster interview, 11.

62. House, National Defense Authorization Act for Fiscal 

Year 2006: Conference Report to Accompany H.R. 1815, 

109th Cong., 1st sess., 2005, H. Rept. 109-360, 674.

63. Armbruster interview, 11. 

64. Stefanides comments, 13 February 2011.

65. RCI, ASA-I&E, “Portfolio and Asset Management 

Quarterly Portfolio Report for the Quarter Ended 30 

September 2009,” 14; RCI, ASA-I&E, “Portfolio and Asset 

Management Quarterly Portfolio Report for the Quarter 

Ended 31 December 2009,” 13, documents provided by 

David Hoffman, RCI Office.

66. RCI, ASA-I&E, “Portfolio and Asset Management 

Quarterly Portfolio Report for the Quarter Ended 30 June 

2009,” 22, document provided by David Hoffman, RCI 

Office.

67. RCI, ASA-I&E, “Portfolio and Asset Management 

Quarterly Portfolio Report for the Quarter Ended 30 September 2009,” 21, document provided by David Hoffman, 

RCI Office.
290 Privatizing Military Family Housing

68. RCI, ASA-I&E, “Portfolio and Asset Management 

Quarterly Portfolio Report for the Quarter Ended 30 September 2010,” 21, document provided by David Hoffman, 

RCI Office.

69. RCI Program Office, “Residential Communities 

Initiative (RCI): RCI Program Overview,” February 2007, 

PowerPoint presentation, 10, Documentum database, RCI 

Office.
293

Conclusion

On January 28, 2008, U.S. Representative 

Chet Edwards (D-Texas) entered a statement in the Congressional Record, honoring the Residential Communities Initiative (RCI) 

program. Noting that the Bush administration had 

called RCI “the most important military housing 

improvement program in our Nation’s history,” 

Edwards praised RCI for doing work on 88,000 

homes, using (at that time) a “10-to-1 leverage of 

public investment.” In Edwards’ words, “RCI projects are pioneering the use of manufactured housing, solar-powered and ‘green building’ techniques, 

and ‘new urbanism’ design concepts.” In addition, 

they are “achiev[ing] high satisfaction rates among 

military families” because they provide “faster 

construction, better housing, neighborhoods and 

community facilities, and more responsive maintenance and management.” Reflecting upon these 

features, Edwards characterized the program as “a 

major success” and counseled other government 

agencies to “look to RCI for lessons that may help 

to meet our national challenges in rebuilding infrastructure and managing resources.”1

Edwards’ high praise for the RCI program was 

more than justified. In the early 1990s, the U.S. 

Army—as well as the entire U.S. Department of 

Defense (DOD)—faced a bleak family housing situation. More and more of its soldiers had spouses 

and children, but the housing on installations was 

inadequate for these families. At best, homes were 

too small; at worst, they were shabby, substandard, poorly maintained, or outright falling apart. 

Estimating the total cost of revamping its housing 

system at nearly $20 billion, the DOD turned to the 

authorities granted in the Military Housing Privatization Initiative of 1996 (MHPI) for answers.

This was not the first time that the military 

had approached the private sector for help with 

its housing needs. The Wherry and Capehart 

programs in the mid-twentieth century also used 

private capital to construct family housing, but with 

limited success. Various other initiatives, such as 

Figure C-1. New family housing, constructed under Army RCI 

privatization, in the Linden Oaks neighborhood of Fort Bragg, N.C.

Courtesy of Picerne Military Housing.
294 Privatizing Military Family Housing 295

Con c lusion

Section 801, Section 802, and Section 2667, all utilized private resources as well. Yet the RCI program, 

in terms of both the number of homes affected 

and its acceptance by Congress and the Army, far 

exceeded these other ventures. What was it about 

the RCI program that enabled it to succeed so dramatically where others had languished or failed?

By the late 1990s the federal government had 

become more receptive to privatization concepts. The Reagan administration had started the 

trend in the 1980s when it explored outsourcing 

non-essential government functions and making 

government agencies more efficient overall. The 

Clinton administration continued the trend in the 

1990s, as Vice President Albert Gore led efforts to 

evaluate government efficiency following President 

Bill Clinton’s campaign pledges to “reinvent” the 

government. When President George W. Bush was 

elected president in 2000, he, too, asked government agencies to consider what non-essential 

functions they could outsource to the private sector. With such trends already underway across the 

government and even in the private sector, the idea 

of privatizing Army housing—which, indeed, was 

not a core military function—became more acceptable and even seemed appealing and desirable.2

Privatization fit the needs of the time. It 

coincided with military restructurings and downsizings associated with the end of the Cold War 

(the Wherry and Capehart programs) and the 

beginnings of the Global War on Terror. Downsizing in the early 1990s meant that the military 

received less funding for its operations, and 

both the Army and Congress pursued strategies 

for saving the military money. After 2001, as the 

Army became more deeply involved in conflicts 

in Afghanistan and Iraq as part of the Global War 

on Terror, it became increasingly important to 

soldiers to know that their families were safe and 

comfortable at home while they served overseas. 

As Don Spigelmyer noted, “If a soldier in Iraq 

knows his family is well taken care of and in a 

safe community, it allows him or her to focus 

more on their mission and do their job.”3

 Since at 

that point the Army operated as an all-volunteer 

organization, providing incentives to soldiers and 

their families to reenlist was highly important.

RCI also succeeded because it was able to provide to Army personnel something that traditional 

military construction (MILCON) could not: housing 

quality equal to what families could find off post. It 

was no coincidence that RCI came along at a time 

when the real estate market boomed in the United 

States. In the first decade of the twenty-first century, 

home ownership hit record highs for American 

families, reaching 69 percent in 2004. Soldiers did 

not want to be excluded from what so many of their 

civilian contemporaries were experiencing. 

Significantly, the housing boom also fueled 

an escalation in housing prices that resulted in 

higher Basic Allowance for Housing (BAH) levels 

for soldiers, enabling the RCI program to become 

profitable enough to attract large-scale developers.4

 Favorable interest rates were also a beneficial 

factor in financing the RCI program.

Another factor favoring the success of RCI 

was the change in housing expectations. By the 

twenty-first century, families in the United States 

had different expectations for housing than they 

had had in the 1950s, 1960s, and 1970s, the decades 

during which the Army had built most of the its 

family housing. Whereas housing in those decades 

had emphasized compactness—few bedrooms, 

few bathrooms—families in the twenty-first century wanted more space, including bedrooms for 

each child and at least two or three bathrooms.5

Existing homes on installations could not compete with those expectations and, as a result, RCI 

development saw the construction of larger homes 

(including the requirement that all homes have at 

least three bedrooms) and renovations that combined small one- and two-bedroom apartments 

into three- and four-bedroom homes. As Aimee 

Stafford at Fort Meade declared, “People want 

somewhere they can have their mom visit and [not 

be] embarrassed.”6

 MILCON could not provide 

such a home, but RCI could.

The fact that the Defense Department really 

had no other solution for fixing military housing 

also helped RCI succeed. As the program geared up, 

Army and DOD officials continually told Congress 

that housing was a massive problem, that no one 

had the large amounts of money required to fix it, 

and that it would take 30 years at current funding 

levels for the DOD to eliminate all inadequate housing. Officials estimated that the Army alone had a $7 

billion renovation, maintenance, repair, and deficit 

build-out backlog.7

 Under the RCI program, however, Congress appropriated only approximately $2 

billion to obtain 85,000 renovated and new homes 

in the United States. By comparison, some construction and renovation of family housing, using 

traditional MILCON funding, still occurred between 

1998 and 2010, but this funding supplied only a little 

more than 5,000 homes at a cost of approximately 

$1.3 billion.8 The privatization approach was much 

more economical and efficient. 

Because the privatization program was meant 

to provide a better quality of life for soldiers 

and families, RCI became a bipartisan program. 

Republican members of Congress, such as Joel 

Hefley, supported RCI, as did Democrats such as 

Chet Edwards and Norman Dicks. No representative or senator wanted to oppose a program that 

benefited soldiers and families in such a dramatic 

way, especially after RCI had actually reached the 

stage of quickly producing quality new and renovated homes and residential communities. Nor 

did any representatives or senators want to lose 

local RCI subcontract work for their constituencies. Both the Clinton and Bush administrations 

supported RCI as well.

The most important reason for the RCI program’s success, however, was its own leadership. 

Throughout the genesis and execution of the 

program, its leaders and consultants were firmly 

committed to privatization and worked tirelessly to gain support from those who opposed it. 

Don Spigelmyer, for example, was involved with 

privatization plans from their inception early in 

the 1990s, serving on tiger teams, developing the 

Figure C-2. Family in front of new Clark Pinnacle–built 

home in RCI family housing development at the Presidio of 

Monterey, Calif.

Courtesy of Clark Realty Capital.
296 Privatizing Military Family Housing 297

Con c lusion

Capital Venture Initiatives (CVI) program, and 

ultimately leading RCI, first as deputy director 

and then as executive director, until his departure 

from the program in 2007. Likewise, Ted Lipham 

was a strong supporter of RCI, and provided the 

RCI Task Force with critical leadership in its early 

years. According to Mahlon “Sandy” Apgar, IV, 

Assistant Secretary of the Army for Installations 

and Environment, another individual within the 

RCI organization who had a significant impact 

was Ivan Bolden, who worked closely with Apgar 

on the Integrated Process Team and eventually headed the RCI asset management function 

under the Office of the Assistant Chief of Staff 

for Installation Management in 2007.9

 Rhonda 

Hayes emerged as another key leader in the RCI 

program. She served as Don Spigelmyer’s deputy 

and she was critical to the success of the Unaccompanied Personnel Housing privatization and 

Privatization of Army Lodging (PAL) programs. 

Don Spigelmyer said of Hayes, now Director of 

Capital Ventures, Office of the Assistant Secretary 

of the Army (Installations, Energy, & Environment), “I could not have done my job without her. 

She was invaluable.”10 Starting in 1999, the RCI 

program’s advisers from Jones Lang LaSalle also 

played a key role in helping the Army develop 

and execute the RCI and PAL programs and their 

models, policies, and procedures.

Of course, Mahlon Apgar himself was a key 

figure in the development of the RCI program. 

With a lifetime of experience in real estate issues 

under his belt when he became Assistant Secretary of the Army for Installations and Environment, Apgar conceived the RCI program and, with 

the help of Undersecretary of the Army Bernard 

Rostker, convinced Congress to support it. Apgar 

did not necessarily win many friends in his work 

as Assistant Secretary, but numerous individuals 

involved with RCI testified that his creativity and 

his tenacity were critical to the program’s survival 

in its initial battles. As Joyce VanSlyke explained, 

“He had a very clear vision and goal of where this 

program was going....”11 According to Louis Bain, 

Housing Chief at Fort Lewis, Apgar was “basically 

the father of RCI.”12

Yet Apgar needed supporters in the Army itself 

to enable him to implement his vision. U.S. Army 

Forces Command Commanding General Thomas 

Schwartz and Vice Chief of Staff Jack Keane were 

two of the early advocates of RCI, and their support influenced other officials—both within Army 

headquarters and on installations—to accept the 

program. They were also influential in deflecting the initial opposition of some congressional 

members, as were Congressmen Edwards of Texas 

and Dicks of Washington. Although U.S. Representative David Hobson (R-Ohio) of the Military 

Construction Appropriations Subcommittee 

sometimes seemed opposed to RCI, he eventually 

became convinced of the viability of the program 

and supported it fully. Without these key individuals, RCI would have languished as a program in 

1999 and 2000.

Figure C-3. Todd Hunter, Rhonda Hayes, and Joseph Calcara during opening ceremonies of the 

Professional Housing Management Association’s (PHMA) 2011 professional development seminar. 

Courtesy of PHMA.

Figure C-4. Army families at a 2009 Spring Carnival, sponsored by Picerne Military Housing, at 

Fort Bragg, N.C.

Courtesy of Picerne Military Housing.
298 Privatizing Military Family Housing 299

Con c lusion

Another critical factor in the success of RCI 

was the creativity of those who worked on the 

program. Apgar clearly fit this mold, but the ideas 

and innovations of individuals in charge of housing on Army installations also helped the RCI 

pilot projects succeed. The implementation of the 

Portfolio and Asset Management program was 

another critical component to success, as it successfully resolved what had been one of the biggest 

problems with other privatization programs, such 

as Wherry: how to get the private partners to continue to invest in maintenance and not just pocket 

the money as profits.

The private partners also influenced the evolution and success of RCI. Most of them were either 

large firms that had both construction and property 

management experience, or partnerships between 

construction firms and property management 

firms. These companies willingly applied privatesector principles and thinking to the construction 

of military family housing. Through their work, the 

RCI program incorporated New Urbanism features 

such as neighborhood centers, shopping areas, and 

neighborhood events, all of which contributed to 

a larger sense of community. That sense of community was enhanced by the fact that RCI did not 

mandate cookie-cutter approaches to housing; 

instead, it allowed developers to produce housing 

that fit in well with the surrounding community. 

“When you visit a place like Fort Belvoir or you go 

down to Fort Hood or to Monterey,” William Armbruster, Deputy Assistant Secretary of the Army for 

Privatization and Partnerships, explained, “you will 

see a different flavor, a different environment”13 And 

that was the larger goal of RCI—to foster a feeling 

of distinct community and belonging.

Yet for all of its positives, RCI was not perfect. 

Although it had enjoyed bipartisan support for 

much of its existence, the threat of it becoming 

politicized was always lurking and sometimes 

emerged full force, as in the debates over the 

removal of the MHPI cap in 2004. The program 

made a smooth transition from the Clinton Administration to the Bush Administration to the Obama 

Administration, but whether each new president—

or new congressional members—would provide 

that same support was always a question.

In addition, even though soldiers appreciated the new housing that RCI created, some 

also believed that the program fostered a sense of 

“haves” and “have-nots” on installations. Those 

who lived in new or renovated housing were generally pleased with the program, but those who did 

not were less enamored of it and even at times 

resented RCI. These problems diminished as the 

partner moved through its initial development 

period and produced a more plentiful supply of 

new and renovated homes, but they caused some 

initial resistance. Other obstacles included the 

painful fact that not all installation commanders grasped the RCI partnering concept, and RCI 

personnel found that a major education effort was 

sometimes needed when installation commanders 

changed. Because of the time that it took for such 

education, some within RCI wondered whether 

Army headquarters could mandate an RCI training 

program for all installation commanders before 

they began their assignments.

New Urbanism elements, which heavily influenced housing on many RCI projects, such as Fort 

Belvoir, also triggered concerns. Although New 

Urbanist concepts of community and neighborhood development were the driving force behind 

Apgar’s vision for RCI and made the program 

appealing to many, others thought that New 

Urbanist principles sometimes forced soldiers to 

engage in unwanted social interactions. At Fort 

Belvoir, for example, Clark Pinnacle intentionally 

developed neighborhoods with central mailboxes 

and village greens to facilitate social opportunities. 

Some residents did not want those opportunities, 

especially soldiers returning from long deployments. “Too much social opportunity too quickly 

can be difficult to negotiate,” Jenny Lainhart, a 

Belvoir resident, noted. Tracey Cassidy, the spouse 

of Belvoir Staff Sergeant Brian Cassidy, pointed 

out that many people just want to “stay in” at the 

end of a long work day and not participate in what 

they consider to be forced socialization.14 The New 

Urbanist features that appealed to many detracted 

from the program for others.

The relationship between an installation and 

its outlying community under RCI could be rocky 

at times as well, since schools, population demographics, local real estate markets, traffic, and 

taxation were all affected. RCI policy called for 

early and frequent interaction with community 

leaders, but some installations communicated 

better than others. In any case, the need to develop 

community buy-in seemed important to the program’s overall success.

Another key factor in whether RCI struggled 

or succeeded was the relationship between an 

installation’s RCI office and its partner. At those 

installations where these two entities worked well 

together, RCI thrived. Where the relationship was 

dysfunctional, the RCI program struggled. Because 

many of those working in RCI offices had also 

worked for the Army under the MILCON system 

of housing, it was sometimes difficult for them 

to relinquish control to the partner. As RCI progressed, and as people became more comfortable 

with the program, these obstacles for the most part 

diminished, but some installations continued to 

struggle with the partnership concept.

On the whole, however, the RCI program was 

a resounding success. It had taken Army family 

housing to new levels of production and comfort 

in approximately 11 years and had done so using 

slightly less than $2 billion of government funds, 

while the private sector contributed more than 

$12.7 billion.15 Those who worked within the program found it very rewarding, especially seeing the 

faces of families whose quality of life had improved 

because of RCI. As John Picerne explained, “This 

wasn’t just about how many houses can you build.... 

This was more about elevating a quality of life and 

creating a better quality of life ... for soldiers and 

their families.”16 Because of this, many of those 

involved with the program found the experience 

to be one of the best of their professional career, 

including decorated generals such as Jack Keane. “I 

certainly took tremendous satisfaction of living a life 

among heroes, so to speak, most of my young and 

adult life,” Keane stated, but “right up there near the 

top is this program [RCI] because it did so much to 

transform the lives of people in the military.”17

As the RCI program proceeds into the future, 

it will be essential for it to continue to provide 

excellent service and products to soldiers and their 

families while also safeguarding the Army’s interests. How the program will evolve over the next 10 

years is difficult to predict. Whether partners will 

maintain the homes and replace them according to 

timelines delineated in the Community Development and Management Plans (CDMPs), thereby 

perpetuating the quality of life that RCI provides, 

remains to be seen. What is clear is that between 

1996 and 2010, the CVI and RCI programs did 

more to improve the quality of life of Army personnel than any other housing initiative had done 

before—and that was a remarkable achievement.
300 Privatizing Military Family Housing

Endnotes to the Conclusion

1. Honorable Chet Edwards of Texas, “Honoring the 

United States Army’s Residential Communities Initiative 

Upon Its 10th Year,” Congressional Record—Extension of 

Remarks, 28 January 2008, E82, thomas.loc.gov.

2. Even large corporations in the private sector itself focused on outsourcing their non-core functions. The Ford 

Motor Land Services Corporation, a part of Ford Motor 

Company, for example, decided in the 1990s to outsource 

real estate functions because they were not core businesses. Larry B. Kimbler and Ronald C. Rutherford, “Corporate 

Real Estate Outsourcing: A Survey of the Issues,” The 

Journal of Real Estate Research 8 (Fall 1993): 525-26. 

3. Quoted in William M. Welch, “Army Housing No Longer Homely,” USA Today, 12 October 2005.

4. Adam Carasso, Elizabeth Bell, Edgar O. Olsen, and C. 

Eugene Steuerle, “Improving Homeownership Among 

Poor and Moderate-Income Households,” The Urban 

Institute Opportunity and Ownership Project, no. 2 (June 

2005): 1; and Jane Adler, “Housing Opportunity: Real-Life 

Solutions,” Realtor Magazine (1 February 2003), http://

www.realtor.org/archives/feb03affordableintro. One 2006 

publication noted that housing prices had increased by 50 

percent since 2001, “and more than 100 percent in some 

hot markets.” Margaret Hwang Smith and Gary Smith, 

“Bubble, Bubble, Where’s the Housing Bubble?” Brookings 

Papers on Economic Activity, no. 1 (2006): 1.

5. Margot Adler, “Behind the Ever-Expanding American 

Dream House,” National Public Radio, All Things Considered, 4 July 2006, www.npr.org/templates/story/story.

php?storyID=5525283. See also “America’s Homes Get 

Bigger and Bigger,” ABC News Report, 27 December 2005, 

http://abcnews.go.com/GMA/Moms/story?id=1445039.

6. Aimee Stafford interview by Matthew Godfrey and Paul 

Sadin, 15 October 2007, Fort Meade, Md., Transcript, 21.

7. Beth Reece, “Military Housing: Civilian Style,” Soldiers

(October 2004): 26.

8. “Army Family Housing Construction, 1998-2007,” 

Spreadsheet provided by Dolat G. Desai, Office of the Assistant Chief of Staff for Installation Management. 

9. Mahlon “Sandy” Apgar, IV, interview by Matthew Godfrey, 18 July 2007, Baltimore, Md., Transcript, 25-26.

10. Don Spigelmyer, written communication to authors, 

DATE.

11. Joyce VanSlyke interview by Matthew Godfrey, 27 June 

2008, the Pentagon, Transcript, 5.

12. Louis Bain telephone interview by Paul Sadin, 4 December 2007, Seattle, Wash., Transcript, 3.

13. William Armbruster interview by Matthew Godfrey, 13 

February 2007, the Pentagon, Transcript, 6.

14. Quoted in William L. Hamilton, “New Urbanism: It’s in 

the Army Now,” New York Times, 8 June 2006.

15. “Final Housing Privatization Partners Chosen,” Army 

News Service, 24 September 2008. Contributing to the 

total are the most recent figures, which come from Dean 

Stefanides, written comments to authors, 5 February 2011.

16. John Picerne telephone interview by Matthew Godfrey, 

5 May 2008, Missoula, Mont., Transcript, 10.

17. Jack Keane telephone interview by Paul Sadin, 16 

March 2009, Seattle, Wash., Transcript, 13.
303

Selected Bibliography

I

n writing a history of something so recently 

conceived as the Residential Communities 

Initiative (RCI) program, it is necessary to rely 

largely on an abundance of electronic sources, 

personal papers provided directly to the authors, 

and oral history interviews. The archival electronic documents used in this study came mainly 

from two sources: Documentum, a documentmanaging database housed in the RCI Program 

Office, which was set up by the Norfolk District 

of the U.S. Army Corps of Engineers (USACE) to 

preserve important RCI-related documents; and 

a Share Drive that contains working files, such 

as emails, correspondence, photographs, PowerPoint presentations, information papers, and 

other important RCI documents generated by RCI 

Portfolio and Program Managers within the RCI 

Program Office. With the reorganization of the 

RCI Program Office in 2007, these two sources—

the Documentum database and the Share Drive 

database—are now accessed via the Public-Private Initiatives Division within the U.S. Army’s 

Directorate of Installation Services in the Office 

of the Assistant Chief of Staff for Installation 

Management and through the staff in the Office 

of the Deputy Assistant Secretary of the Army for 

Installations, Housing and Partnerships.

In addition, Historical Research Associates, Inc. (HRA) collected a variety of materials 

pertaining to the RCI program from individual 

installations, most notably Fort Carson, Fort 

Hood, Fort Lewis, Fort Meade, the Presidio of 

Monterey, Fort Irwin, Fort Sam Houston, and Fort 

Detrick. The RCI Office at each of these installations had both electronic and hard-copy documents in a variety of locations. The bibliographic 

entries below clarify in as much detail as possible 

the location of these documents.

Finally, William Baldwin of the USACE Office 

of History had four boxes of material pertaining 

to Army housing and the beginnings of the RCI 

program. These boxes will eventually be placed in 

the collections of the USACE Office of History in 

Alexandria, Va. 
304 Privatizing Military Family Housing 305

SELECTED BIBLIOGRAPHY

Primary Sources

Administrative Files

Assistant Secretary of the Army for Installations 

& Environment. RCI Office. “RCI Primer: An 

Introduction to the RCI Program,” June 2001. 

Document provided by RCI Office. 

CMH Community Management Office Files. Fort 

Carson Housing Office, Fort Carson, Colorado.

Defense Language Institute Foreign Language 

Center & Presidio of Monterey (POM) Archives. 

Chamberlin Library, Presidio of Monterey, 

California.

Office of RCI Program Analyst Files. Fort Carson 

Housing Office. Fort Carson, Colorado.

RCI Binders. RCI Office, Fort Meade, Maryland.

RCI Electronic and Program Director’s Files. RCI 

Office, Fort Irwin, California.

RCI Housing Manager’s Office Files. Community 

Support Building, Fort Detrick, Maryland.

RCI Office Files. Presidio of Monterey, California.

RCI Program Archives. Residential Communities 

Office, Public Works Building, Fort Lewis, 

Washington.

RCI Program Office Files. Fort Sam Houston, Texas.

RCI Project Manager’s Office Files. Fort Detrick, 

Maryland.

Resident Communities Liaison Office Files. 

Directorate of Public Works Building, Fort 

Belvoir, Virginia.

Uncatalogued Housing Materials. Research 

Collections, Office of History, U.S. Army Corps of 

Engineers Headquarters, Alexandria, Virginia.

Electronic Documents

Documentum electronic database. RCI Program 

Office, Crystal City, Virginia.

Share Drive database. RCI Program Office, Crystal 

City, Virginia.

Oral History Interviews

Anderson, Carol, and Michael Nix. Interview by Leigh 

Cutler. 18 September 2007.

Andrews, Dale, and Casey Nolan. Interview by 

Matthew Godfrey and Paul Sadin. 23 June 2008.

Apgar, Mahlon “Sandy” IV. Interview by Matthew 

Godfrey. 18 July 2007.

Armbruster, William. Interview by Matthew Godfrey. 

13 February 2007.

Baker, Pat. Interview by Dawn Vogel. 3 September 

2008.

Bain, Louis. Interview by Paul Sadin. 4 December 

2007.

Barbee, George. Interview by Paul Sadin. 2 and 4 

December 2008.

Barnes, Nancy. Interview by Paul Sadin and Leigh 

Cutler. 27 August 2007.

Blair, Ladye, and Sandra Key. Interview by Paul Sadin. 

8 October 2008.

Boisvert, Robert. Interview by Paul Sadin and Leigh 

Cutler. 27 August 2007.

Bolden, Ivan. Interview by Matthew Godfrey. 15 

February 2007.

Carr, Donald. Interview by Dawn Vogel and Matthew 

Godfrey. 25 June 2008.

Clark, Ian “Sandy.” Interview by Leigh Cutler. 18 July 

2007.

Clark, Ian “Sandy.” Interview by Paul Sadin. 1 

December 2008.

Cole, Laura. Interview by Dawn Vogel. 26 June 2008.

Cooke, Wilma, Randy Hennix, and Tric Zyzyk. 

Interview by Paul Sadin. 23 June 2008.

Dausen, Peter. Interview by Leigh Cutler. 4 April 2008.

Davis, Vicki. Interview by Paul Sadin. 25 June 2008.

Edwards, Chet. Interview by Matthew Godfrey. 18 

October 2007.

ElHabr, Teresa. Interview by Dawn Vogel. 4 September 

2008.

Erwin, Robert. Interview by Leigh Cutler. 19 

September 2007.

Faux, Debbie. Interview by Paul Sadin. 16 October 

2007.

Federline, Dawn. Interview by Dawn Vogel. 26 June 

2008.

Guzowski, Holly. Interview by Matthew Godfrey. 15 

February 2007.

Hamilton, Russ. Interview by Matthew Godfrey. 5 June 

2007.

Hamre, John. Interview by Matthew Godfrey. 18 July 

2007.

Hansen, Ron. Interview by Paul Sadin. 11 April 2008.

Hefley, Joel. Interview by Paul Sadin. 22 September 

2008.

Hefner, Sherry. Interview by Dawn Vogel. 26 June 

2008.

Hill, Steve. Interview by Paul Sadin. 27 September 

2007.

Hobson, David. Interview by Paul Sadin. 24 June 2008.

Howard, Clarke. Interview by Matthew Godfrey. 15 

February 2007.

Keane, Jack. Interview by Paul Sadin. 16 March 2009.

Kelly, Patrick. Interview by Leigh Cutler. 3 April 2008.

Koren, Tony. Interview by Paul Sadin. 24 July 2008.

Kraeer, Thomas. Interview by Matthew Godfrey. 18 

October 2007.

Lipham, Ted. Interview by Paul Sadin. 13 October 

2008.

Masengale, Roy. Interview by Paul Sadin and Leigh 

Cutler. 30 August 2007.

McKay, Allyson and Ron Bennett. Interview by Dawn 

Vogel. 4 September 2008.

Mikita, Pat, Dean Quaranta, and Harrison Cole. 

Interview by Matthew Godfrey and Paul Sadin. 4 

June 2007.

Mills, Cindy, Mike Greer, Boyd Lucas, and Kimberlee 

Schreiber. Interview by Paul Sadin and Leigh 

Cutler. 27 August 2007. (Equity group interview)

Mulvey, Bill. Interview by Matthew Godfrey. 19 

October 2007.

Mysliwiec, Bill, and Matthew Keiser. Interview by 

Matthew Godfrey. 15 February 2007.

Picerne, John. Interview by Matthew Godfrey. 5 May 

2008.

Prosch, Geoffrey. Interview by Matthew Godfrey. 15 

February 2007.

Quinney, Mack, and Jim Switzer. Interview by Leigh 

Cutler. 19 September 2007.

Reynolds, Debbie, and Marlene Naranjit. Interview by 

Matthew Godfrey. 18 October 2007.

Rostker, Bernard, and Charles Nemfakos. Interview by 

Matthew Godfrey. 17 July 2007.

Schlabach, Steve. Interview by Leigh Cutler. 19 

September 2007.

Shepko, Robert. Interview by Paul Sadin. 27 June 

2008.

Sikes, Joseph. Interview by Matthew Godfrey. 20 July 

2007.

Sincere, Barbara. Interview by Leigh Cutler. 17 July 

2007.

Slater, Gina, Jennifer Fraser, and Rick Wimer. 

Interview by Paul Sadin. 7 October 2008. 

(Pinnacle group interview)

Soriano, Edward. Interview by Paul Sadin. 4 June 

2007.

Spigelmeyer, Don, Dean Stefanides, Rhonda Hayes, 

Mike McCarley, Matt Keiser, Barry Scribner, Bill 

Mysliwiec. Interview by Matthew Godfrey. 13 

February 2007. (RCI group interview)

Stafford, Aimee. Interview by Matthew Godfrey and 

Paul Sadin. 15 October 2007.

Stafford, Jerry. Interview by Paul Sadin. 5 June 2007.

VanSlyke, Joyce. Interview by Matthew Godfrey. 27 

June 2008.

Washington, Caryn. Interview by Matthew Godfrey. 16 

October 2007.

White, Tom. Interview by Matthew Godfrey. 15 

October 2007.

Williams, Marvin. Interview by Leigh Cutler. 19 

September 2007.

Wilson, Ron. Interview by Paul Sadin. 15 October 

2007.

Winters, Jodi. Interview by Paul Sadin. 7 October 

2008.

Newspapers, Newsletters, and Other Media

ABC News

Annapolis Capital (Maryland)

Army

Army Link News

Army News Service

Army Residential Communities Initiative Newsletter
306 Privatizing Military Family Housing 307

SELECTED BIBLIOGRAPHY

Army Times

Baltimore Sun

CQ Weekly

Denver Post

Engineer Update (U.S. Army Corps of Engineers)

Engineering and Construction Bulletin (U.S. Army 

Corps of Engineers)

Hood Highlights (Actus Lend Lease newsletter at Fort 

Hood, Texas)

Killeen Daily Herald

McClatchy Newspapers

Maryland Gazette

National Public Radio

NBC News

New York Times

News Tribune

News-Leader (Texas)

Olympian (Washington State)

PHMA Defense Communities Magazine

RCI News Leader

Realtor Magazine

San Antonio Express-News

Soldiers

Soundoff! (Fort Meade, Maryland)

Tacoma News-Tribune

Temple Daily Telegram

USA Today

U.S. Newswire

Washington Post

Washington Times

Government Publications

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Programs: A History of the Wherry, Capehart, 

Section 801, and Section 802 Family Housing 

Programs in the Army.” October 1996. Copy 

provided by U.S. Army Corps of Engineers, Office 

of History, Alexandria, Va.

Chazal, Anne and Christopher Hobson. Surveys 

for the Northern Well Amphipod (Stygobromus 

phreaticus) at Fort Belvoir, Virginia. Natural 

Heritage Technical Report 02-11. Richmond, 

Va.: Virginia Department of Conservation and 

Recreation, Division of Natural Heritage, 2003.

Clark, Ian “Sandy.” “Public-Private Initiatives Division 

(PPID), Residential Communities Initiative 

(RCI) Update.” 22 January 2009. PowerPoint 

presentation. http://www.phma.com.

DCMilitary.com. “Forest Glen to Transfer to Fort 

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com.

________. “Fort Meade.” 24 April 2007. http://www.

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Residential Communities Initiative Upon Its 

10th Year.” Congressional Record—Extension of 

Remarks. 28 January 2008. E82. 

Else, Daniel H. Military Housing Privatization 

Initiative: Background and Issues. Washington, 

D.C.: Congressional Research Service, Library of 

Congress, 2001.

Haynes, Mary L. Department of the Army Historical 

Summary: Fiscal Year 1987. Edited by Cheryl 

Morai Young. Washington, D.C.: United States 

Army Center of Military History, 1995.

Kaplan, L. Martin. Department of the Army Historical 

Summary, Fiscal Year 1994. Edited by Cheryl 

Morai-Young. Washington, D.C.: United States 

Army Center of Military History, 2000.

U.S. Army. Annual Report of the Secretary of the 

Army on Civil Works Activities, Fiscal Year 1996 

(1 October 1995-30 September 1996). Volume 1. 

Washington, D.C.: U.S. Department of the Army, 

1996.

________. Army News Service. “Final Housing 

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2008. http://www.army.mil. 

________. Army Public Affairs. News Release. “Army 

Announces Fort Detrick Partner for Residential 

Communities Initiative.” 1 July 2003. http://

www4.army.mil.

________. News Release. “Army Announces New 

Residential Communities Initiative Partner at 

Forts Carson, Story, and Eustis.” 5 December 

2003. http://www4.army.mil.

________. News Release. “New U.S. Army Approach to 

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American Living Award for Herryford Village, 

Fort Belvoir.” http://www.belvoirfamilyhousing.

com. 

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army.mil.

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________. Fort Irwin. “Facts and Figures.” http://www.

irwin.army.mil.

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Construction Bulletin. No. 2003-20, Issued: 07 

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________. “RCI Program Provides Housing for Army 

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________. Engineer Research and Development 

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U.S. Army Environmental Command. “Army Alternate 

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U.S. Army Installation Management Command. 

“IMCOM Transformation: The Enterprise 

Approach to Managing Installations in Support 

of Institutional Adaptation and the Expeditionary 

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appropriations for fiscal year 1996 for military 

activities of the Department of Defense, to 

prescribe military personnel strengths for fiscal 

year 1996, and for other purposes. H.R. 1530. 104th 

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H.R. 3616, together with Additional, Dissenting, 

and Supplemental Views. 105th Cong., 2d session, 

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________. National Defense Authorization Act for 

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109-360.

________. Subcommittee on Military Construction 

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313

RCI Project Transaction Histories

(1) FORT CARSON (Colorado)

Major Transactions of the Fort Carson Family 

Housing, LLC, RCI Project

1999

•	 November 1: Department of the Army transfers

ownership and operation of 1,823 homes to J.A.

Jones.

•	 $147.0M private loan funded.

•	 $9.2M private equity invested.

•	 $0.0M government equity invested.

•	 $10.131M government loan guarantee contributed.

•	 IDP (Initial Development Period) End Date =

November 2004

•	 IDP End State = 2,663 homes

2003

•	 November: J.A. Jones sells its interest in the project to GMH Military Housing, LLC (now Balfour

Beatty Communities).

2004

•	 November: IDP completed.

•	 IDP End State = 2,664 homes (one additional

home constructed)

2005

•	 December 21: Project becomes Fort Carson Family Housing, LLC, with the Army as a limited

member.

2006

•	 November 29: Project assumes additional debt to

fund the first phase of its ODP (out-year development period).

•	 $118.6M private loan funded.

•	 Revised End State = 3,060 homes

2010

•	 April: Army invests $98.3M in FY08 GTA scoring for the construction of 308 homes to help
314 Privatizing Military Family Housing 315

APPEN D I X

eliminate the housing shortfall. Revised end

state is 3,368 homes.

•	 September 8: OMB approves an Army investment

of $37.6M in FY09 GTA funds for the construction of 88 replacement and 88 additional homes.

Modified Scope Plan in development; Congressional notification made; awaiting funds transfer.

•	 Current End State = 3,456 homes

(2) FORT HOOD (Texas)

Major Transactions of the Fort Hood Family 

Housing, LP, RCI Project

2001

•	 October 1: Department of the Army transfers

ownership and operation of 5,622 homes to

Actus Lend Lease to form Fort Hood Family

Housing, LP.

•	 $185.6M private loan funded.

•	 $20.3M private equity invested.

•	 $52.0M government equity invested.

•	 IDP End Date = June 2006

•	 IDP End State = 5,912 homes

2005

•	 October 27: Local Major Decision is approved

to postpone the demolition of Walker Village

indefinitely, due to strong demand for on-post

housing.

•	 December 16: Project assumes $26.3M in additional debt to help buy out JP Morgan’s equity

interest.

2006

•	 June 30: Project fulfills its IDP scope, consisting of 974 new homes and 1,624 major/medium

renovations.

2007

•	 May 25: Project assumes $69.0M in additional

debt to accelerate the out-year replacement of

232 homes at Patton Park/Wainwright Village.

•	 Walker Village demolition schedule formalized,

with land to be returned to the Army no later

than December 31, 2011.

2009

•	 December 9, 2009: Major Decision is approved

to: (1) Accelerate the replacement construction of

approximately 100 homes at Chaffee Village, (2)

Amend the ground lease, in order to add Walker

Village to the permanent leasehold, and (3)

Utilize a “selective demolition” approach in the

Walker Village and Chaffee Village housing areas,

to reduce the number of homes in the project’s

official end-state inventory.

•	 Current End State = 5,912 homes

(3) JOINT BASE LEWIS-MCCHORD

(Washington State)

Major Transactions of the Lewis-McChord 

Communities, LLC, RCI Project

2002

•	 April 1: Department of the Army transfers ownership and operation of 3,637 homes to Equity

Residential (EQR) to form Fort Lewis Communities, LLC.

•	 $150.0M private loan funded.

•	 $10.0M private equity invested.

•	 $0.0M government equity invested.

•	 IDP End Date = April 2012

•	 IDP End State = 3,987 homes

2004

•	 June 7: Project assumes $75.0M (2nd tranche) of

additional private debt.

•	 September 23: Memorandum of Agreement is

signed by EQR and Lewis Residential Communities Office, regarding switching to modular

construction technology for all remaining new

construction.

•	 Revised IDP End Date = December 2012

•	 Revised IDP End State = 4,023 homes

2008

•	 July 8: McChord Wing Commander approves

McChord CDMP.

•	 July 24: SAF/IEI and DASA, E&P approve

McChord CDMP.

•	 October 1: Ownership and operation of 978

homes at McChord AFB transfers to LewisMcChord Communities, LLC.

•	 December 4: Dual-financial closing. Assumes

$125.0M in additional debt for: (1) Funds needed

for Fort Lewis to complete its IDP within the

required timeframe, and (2) Complete the

McChord IDP.

•	 $16.2M government equity invested (from Air

Force).

•	 $2.4M private equity invested.

•	 Revised IDP End Date = September 2016

•	 Revised IDP End State = 4,595 homes

2009

•	 April 2009: New Davis-Bacon wage determination

is published, which contains significant increases

in wage rates for all construction trades.

•	 Sept 2009: Major Decision is approved by DASA,

I&H, to mitigate the effects on the project of the

Davis-Bacon wage increases.

•	 Revised IDP End State = 4,699 homes

2010

•	 December 28: Project leverages $72.7M of FY08

GTA funds to assume $39.0M of additional

private debt. Funds will provide for the construction of 265 additional homes to help eliminate

the housing shortfall. OMB approval received

on August 30; Congressional notification made;

awaiting funds transfer.

•	 Revised IDP End State = 4,964 homes

(4) FORT MEADE (Maryland)

Major Transactions of the Meade 

Communities, LLC, RCI Project

2002

•	 May 1: Department of the Army transfers ownership and operation of 2,612 homes to Picerne

Military Housing to form Meade Communities,

LLC.

•	 $325.0M private loan funded.

•	 $10.0M private equity invested.

•	 $0.0M government equity invested.

•	 IDP End Date = December 2011

•	 IDP End State = 3,170 homes

2005

•	 April 26: Project’s ground lease is amended to

include Old Meade Heights area (26 acres) after

the demolition of 250 existing homes on the site.

2006

•	 May 31: Housing Market Analysis (HMA) finalized, which sets on-post housing requirement at

2,627 homes.

•	 November: Major Decision is approved to

restructure project through reduction of project end state from 3,170 homes to 2,627 homes,

execution of more renovations and fewer
316 Privatizing Military Family Housing 317

APPEN D I X

replacements, and revision of Picerne equity

and fee structure. (In January 2007, $14.3M of

invested equity and accumulated return was

disbursed to Picerne.)

•	 Revised IDP End State = 2,627 homes

2008

•	 March 10: Project team receives authorization

from lender to utilize full $40.0M of restricted

original loan proceeds for development. 

•	 August 24: Modified Scope Plan is approved to

enhance development scope, using $40.0M of

previously restricted loan proceeds.

2009

•	 August 5: Major Decision taken to convey

approximately one acre from project’s ground

lease footprint back to the installation to give to

the Anne Arundel County Public Schools.

2011

•	 January 14: Modified Scope Plan is approved

with two-phase development plan, contingent

upon resolution of issues with Ambac Assurance

Corporation regarding enhancement of scope,

utilizing $35.3M of projected surplus funds.

•	 IDP End State = 2,627 homes

(5) FORT BRAGG (North Carolina)

Major Transactions of the Bragg 

Communities, LLC, RCI Project

2003

•	 August 1: Department of the Army transfers ownership and operation of 4,746 homes to Picerne

Military Housing to form Bragg Communities,

LLC.

•	 $296.0M private loan funded.

•	 $6.0M private equity to be invested in $2.0M

amounts in 2010, 2011, and 2012.

•	 $49.437M government equity invested.

•	 IDP End Date = December 2013

•	 IDP End State = 5,578 homes

2007

•	 September 1: Ownership and operation of 627

homes at Pope AFB transfers to Bragg Communities, LLC.

•	 December 19: Modified Scope Plan is approved

for Family Housing project that incorporates

additional loan proceeds, Pope AFB family housing inventory, and operational and developmental performance since Pope’s financial closing.

•	 December 20: Project assumes $169.3M of additional private debt that is allocated to Family

Housing ($123.3M) and UPH ($46.0M).

•	 December 20: Decision made to move forward

with UPH project to provide 312 garden-style

apartments (120 one-bedroom and 192 two-bedroom) for single soldiers in ranks E-6 to O-3.

•	 UPH IDP End Date = June 2010

•	 Revised IDP End State = 6,205 Family Housing

homes; 312 UPH homes

2010

•	 June 9: Modified Scope Plan is approved to

construct 13 executive homes, utilizing $5.4M in

FY10 BRAC 2005 funds. Revised Family Housing

end state is 6,218 homes. OMB approval received

on August 30; Congressional notification made;

awaiting funds transfer.

•	 August: Ground lease supplement approved to

convey 20 acres into the project’s footprint for

executive homes site.

•	 September 24: OMB approves additional Army

equity contribution of $44.4M in FY08 GTA

funds to construct 20 additional homes and 190

replacement homes to better align end-state

inventory with 2008 HMA requirements. Modified Scope Plan in development; Congressional

notification made; awaiting funds transfer.

•	 Revised IDP End State = 6,238 Family Housing

homes; 312 UPH homes

(6) PRESIDIO OF MONTEREY

(California)

Major Transactions of the Monterey Bay 

Military Housing, LLC, RCI Project

2003

•	 October 1: Department of the Army transfers

ownership and operation of 2,268 homes to

Clark/Pinnacle to form Monterey Bay Military

Housing, LLC.

•	 $355.0M private loan funded.

•	 $7.0M private equity to be invested.

•	 $0.0M government equity invested.

•	 IDP End Date = September 2013

•	 IDP End State = 2,209 homes

2007

•	 April: Clark delivers the 732nd new home, at

which point construction is halted in anticipation of completing a Modified Scope Plan.

2008

•	 August: Army completes a land exchange with

City of Seaside to take control of the “kidney parcel” that is adjacent to the RCI land. This parcel

is identified in the Modified Scope Plan under

negotiation as the future site of the Doe Park

neighborhood.

•	 December 16: DASA, E&P approves the Modified

Scope Plan for the Monterey Bay Military Housing project. 

•	 Revised IDP End Date = October 2013

•	 Revised IDP Military End State = 1,565 homes

•	 IDP Occupied Surplus = 732 homes

2010

•	 March: Army approves a change to the property

management incentive fee metrics to better align

Pinnacle’s interests with the goals of the project.

•	 June: Army approves acceleration of construction of Phase I of the Ord Recreation Center and

approves construction of Phase II simultaneously.

•	 August: Project amends the loan documents to

reflect the homes’ online schedule, based on the

2008 Modified Scope Plan. Action will allow the

project to receive $50M from the CAP-I account.

•	 IDP Military End State = 1,565

•	 IDP Occupied Surplus = 732 homes

(7) FORT STEWART AND HUNTER ARMY

AIRFIELD (Georgia)

Major Transactions of the Stewart Hunter 

Housing, LLC, RCI Project

2003

•	 November 1: Department of the Army transfers

ownership and operation of 2,926 homes (2,438

at Fort Stewart and 488 at Hunter Army Airfield)

to GMH Military Housing (now Balfour Beatty

Communities or BBC) to form Stewart Hunter

Housing, LLC.

•	 $246.5M private loan funded.

•	 $8.9M private equity to be invested.

•	 $37.374M government equity invested.

•	 IDP End Date = November 2011

•	 IDP End State = 3,702 homes (3,027 at Fort Stewart and 675 at Hunter Army Airfield)
318 Privatizing Military Family Housing 319

APPEN D I X

2008

•	 January 10: Project assumes $33.37M for UPH

pilot project.

•	 $1.5M in additional private equity to be contributed; no additional Army equity will be provided.

•	 UPH IDP End Date = January 2010

•	 UPH IDP End State = 334 apartments for a total

of 370 beds

2009

•	 March 31: Headquarters receives first official version of the Family Housing Modified Scope Plan.

•	 April 28-29: ODASA, I&H Program Manager

conducts visit to Fort Stewart and Hunter Army

Airfield to meet with the project team and discuss the proposal.

•	 May 15: ODASA, I&H receives the second version of the Modified Scope Plan, which shows

an additional reduction of 24 new homes at Fort

Stewart.

•	 August 20: Final Modified Scope Plan Development Review report published.

•	 September 8: ODASA, I&H receives the third

version of the Modified Scope Plan, which shows

an additional 248 demolitions scheduled at

Marne Terrace, pending additional Army equity

of $5.201M.

•	 November 16: ODASA, I&H sends a formal

request to BBC to submit a plan for the UPH

component due to the poor performance of the

UPH Project caused by low occupancy rates.

•	 November 23: ODASA, I&H receives a detailed

renovation scope plan to review.

•	 December 9: Modified Scope Plan is put on hold

until the ROA requirements at Hunter Army

Airfield are completed.

2010

•	 October 21: DASA, IH&P approves Modified

Scope Plan to reduce the end state from 3,702

homes to 3,629 homes. The Modified Scope Plan

provides for the completion of 1,663 new homes,

1,729 renovations, 954 demolitions, 4 community

centers, and 39 playgrounds by the new IDP end

date of December 31, 2012. The Modified Scope

Plan includes the additional Army investment

of $5.201M in reallocated FY09 funds for the

demolition of 248 Marne Terrace homes. OMB

approval received on July 30; Congressional notification made; awaiting funds transfer.

•	 Revised IDP End Date = December 2012

•	 Revised IDP End State = 3,629 homes (2,931 at

Fort Stewart and 698 at Hunter Army Airfield)

(8) FORT CAMPBELL (Kentucky)

Major Transactions of the Fort Campbell 

Family Housing, LLC, RCI Project

2003

•	 December 1: Department of the Army transfers

ownership and operation of 4,235 homes (this

includes the one home found post-closing) to

Actus Lend Lease to form Fort Campbell Family

Housing, LLC.

•	 $154.0M private loan

•	 $6.0M private equity to be invested.

•	 $60.11M government equity invested.

•	 IDP End Date = November 2009

•	 IDP End State = 4,257 homes

•	 HMA projects a deficit of 706 homes in FY 2005.

2007

•	 May 8: Project receives additional scoring that is

used to enhance the development scope.

•	 $28.0M additional Army equity invested ($88.1M

total).

•	 $70.21M private loan funded ($224.2M in total).

•	 Revised IDP End Date = December 2010

•	 Revised IDP End State = 4,457 homes

2008

•	 2008 HMA projects a current deficit of 2,136

homes and FY 2012 surplus of 617 homes.

•	 November 19: ODASA, I&H approves the reconveyance of six homes in the Hedgerow Court

neighborhood back to the Army at the request of

the garrison.

2009

•	 August 28: ODASA, I&H approves the proposed

revisions to the project’s incentive fee metrics.

•	 November 12: ODASA, I&H approves $412K of the

requested $5.7M to be moved from the development contingency budget to the development

general contingency budget for parking aprons

in Pierce Village and amenities in the Lee Park II

neighborhood.

•	 November 17: ODASA, I&H approves the project’s request to move $99K from the Senior Loan

Reserve Subaccount to the Utility Reserve Subaccount in order to help mitigate the impact of

increases in the cost of utilities.

2010

•	 October 7: DASA, IH&P approves the request to

extend the IDP for an additional 90 days to allow

for full IDP completion, including not only the

last phase of new home construction, but also

construction of the last two community centers.

Inability to complete by December 2010 is caused

by excusable delays.

•	 Revised IDP End Date = March 2011

•	 IDP End State = 4,457 homes

(9) FORT BELVOIR (Virginia)

Major Transactions of the Belvoir Land, LLC, 

RCI Project

2003

•	 December 1: Department of the Army transfers

ownership and operation of 2,070 homes at Fort

Belvoir, Virginia, to Clark Pinnacle Belvoir, LLC,

to form Belvoir Land, LLC.

•	 $434.1M private loan funded.

•	 $5.9M private equity to be invested.

•	 $0.0M government equity invested.

•	 IDP End Date = November 2011

•	 IDP End State = 2,070 homes

2005

•	 2005 refinance nets $22.1M in projected incremental benefit to enlarge the scope of the project.

•	 $4.6M in incremental bond proceeds added to

the project.

•	 $6.7M debt service reserves released to the project’s construction account.

•	 $10.8M in incremental GIC earnings added to the

project.

2009

•	 May 28: DASA, I&H approves Modified Scope

Plan, which provides a blueprint for completing

the project within IDP with the help of sufficient

budgeted funds.

•	 Number of homes to be renovated increased

from 170 to 694.

•	 Total new construction reduced from 1,630 to

1,190 homes. 

•	 Planned recreation and fitness center to be

replaced with an outdoor pool and fitness center,
320 Privatizing Military Family Housing 321

APPEN D I X

and planned vehicle garage construction project

deferred.

•	 Revised IDP End State = 2,106 homes

2010

•	 August 16: DASA, I&H approves the execution of

real-estate due diligence necessary for the return

of three parcels of land to the Army and the addition of three more parcels to the ground lease to

support out-year development.

•	 November 10: DASA, IH&P directs project to stop

environmental and legal due diligence efforts

until Army is briefed on further justification for

the action.

•	 IDP End State = 2,106 homes

(10) FORT IRWIN, MOFFETT FEDERAL

AIRFIELD, AND PARKS RFTA (California)

Major Transactions of the California Military 

Communities, LLC, RCI Project

2004

•	 March 1: Department of the Army transfers

ownership and operation of 2,290 homes (2,046

at Irwin, 231 at Moffett, and 13 at Parks) to Clark/

Pinnacle to form California Military Communities, LLC.

•	 $419.0M private loan funded.

•	 $4.0M private equity to be invested.

•	 $0.0M government equity invested at that time.

•	 IDP End Date = March 2012

•	 IDP End State = 2,806 Family Housing homes;

200 UPH homes (at Fort Irwin)

2006

•	 August: Army invests $26.7M in FY06 AMF funds

to construct 120 homes. 

•	 Revised IDP End State = 2,926 Family Housing

homes; 200 UPH homes (at Fort Irwin)

2007

•	 The project experiences low occupancy rates and

significant construction cost escalations.

•	 Late 2007: Major Decision is approved to reallocate funds for 126 FGO renovations and

increased amenities. Additionally, 120 homes are

removed from the development scope, reducing

the end state.

•	 Revised IDP End State = 2,806 Family Housing

homes; 200 UPH homes (at Fort Irwin)

2009

•	 Army programs $31.0M in FY07 AMF funds to

construct additional homes at Fort Irwin to help

eliminate the housing shortfall.

•	 Late 2009: Modified Scope Plan is approved to

utilize the $31.0M in AMF funds to construct 94

Senior NCO (SNCO) homes.

•	 $57.7M government equity invested to date.

•	 Revised IDP End State = 2,900 Family Housing

homes; 200 UPH homes

2010

•	 September 8: OMB approves an Army investment of $30.0M in FY10 AMF funds to construct

82 CGO homes. Modified Scope Plan under

review; Congressional notification made; awaiting funds transfer.

•	 Revised IDP End State = 2,982 Family Housing

homes (2,552 at Irwin, 316 at Moffett, and 114 at

Parks); 200 UPH homes

(11) FORT HAMILTON (New York)

Major Transactions of the Fort Hamilton 

Housing, LLC, RCI Project

2004

•	 June 1: Department of the Army transfers ownership and operation of 293 homes to GMH Military Housing (now Balfour Beatty Communities)

to form Fort Hamilton Housing, LLC.

•	 $52.0M private loan funded.

•	 $2.2M private equity invested.

•	 $2.175M government equity invested.

•	 IDP End Date = May 2008

•	 IDP End State = 228 homes

2007

•	 June 1: IDP extended to completed renovation

scope.

•	 September 21: Partnership reaches a settlement

agreement to replace Jeffrey M. Brown Associates

as renovation contractor, due to problems with

performance and timeliness.

•	 November 2: Partnership approves a Modified

Scope Plan to reduce renovation scope for the

remaining 24 homes.

•	 Revised IDP End Date = October 2008

2008

•	 October 1: Final remaining historic renovation

(Unit 201-A) takes place.

•	 October 1: IDP extended until requirements

identified in the trust indenture are complete.

•	 Revised IDP End Date = September 2009

2009

•	 February 1: Partnership opens “tenant waterfall”

to Department of Defense and Federal Agency

civilians.

•	 November 20: Major Decision approved by

DASA, I&H to close IDP.

•	 Current End State = 228 homes

2010

•	 September 17: OMB approves Army investment of $3.0M in reallocated FY09 funds for the

renovation of 21 homes. Modified Scope Plan in

development; Congressional notification made;

awaiting funds transfer.

•	 Current End State = 228 homes

(12) FORT DETRICK (Maryland)

Major Transactions of the Fort Detrick/

Walter Reed Army Medical Center Family 

Housing, LLC, RCI Project

2004

•	 July 1: Department of the Army transfers ownership and operation of 410 homes (189 at Fort

Detrick, 221 at Walter Reed) to GMH Military

Housing (now Balfour Beatty Communities) to

form Fort Detrick/Walter Reed Army Medical

Center (WRAMC) Family Housing, LLC.

•	 $83.2M private loan funded.

•	 $6.5M private equity invested.

•	 $1.285M government equity invested.

•	 IDP End Date = July 2008

•	 IDP End State = 599 homes

2008

•	 October 27: After a concept paper is submitted

by the project, ODASA approves the addition of

Nallin Pond Farmhouse as a permanent home

into the Fort Detrick RCI inventory.

•	 November 14: ODASA, I&H approves the extension of the IDP to December 31, 2008, due to
322 Privatizing Military Family Housing 323

APPEN D I X

inability to complete the IDP renovation scope as

stated at financial closing.

•	 By the revised IDP end date, the project has

delivered 407 new homes as planned, but has

only completed one of the two historical renovations and 14 of the 153 planned medium renovations. The project also completes 173 unplanned,

minor, exterior-only renovations.

•	 IDP End State reduced to 597 homes (242 at

WRAMC—240 at Glen Haven and 2 at Main

Gate; and 355 at Fort Detrick).

•	 Revised IDP End Date = December 2008

2009

•	 April 15: ODASA, I&H approves the re-conveyance of six homes located within the WRAMC

main gate back to the Army. Five of these homes

are located on the back loop of the installation

and were always programmed to be reconveyed

prior to IDP completion. Because of the BRAC

announcement, the project is trying to minimize its main-gate exposure and therefore also

requests the transfer of an additional main-gate

home that is to remain in the project. The project

has two main-gate executive homes remaining.

•	 June 19: ODASA, I&H receives a request from

the project to divest itself of the two remaining main-gate homes. This request is still open,

pending more information about BRAC impact

and local implications.

2010

•	 February 2: ODASA, IH&P receives a request for

2010 ODP renovation development. Project team

continues to work on Modified Scope Plan.

•	 May 19: ODASA, IH&P approves the 2010 ODP

renovation plan, which includes 14 additional

renovations in the Glick/Bullene neighborhood.

•	 October 12: Project submits its first draft of a full

5-year ODP.

•	 November 1: DASA, IH&P approves the project’s

request to study available options for disposition of the remaining two GFOQs at WRAMC

main gate.

•	 November 29: Project submits a revised draft

ODP that expands the CR&R scope and funding

to account for HVAC work and other larger cost

items in order to correctly categorize development initiatives. The current proposal includes

conversions and renovations at Detrick only.

2011

•	 February 3: DASA, IH&P approves a request to

amend the end state from 599 to 597 homes.

•	 IDP End State = 597 homes

(13) FORT POLK (Louisiana)

Major Transactions of the Polk Communities, 

LLC, RCI Project

2004

•	 September 1: Department of the Army transfers

ownership and operation of 3,466 homes to

Picerne Military Housing to form Polk Communities, LLC.

•	 $165.0M private loan funded.

•	 $6.0M private equity to be invested.

•	 $53.7M government equity invested at this time.

•	 $10.3M government loan guarantee contributed.

•	 IDP End Date = February 2015

•	 IDP End State = 3,821 homes

2007

•	 Since inception, the project has experienced construction cost increases greater than pro forma

expectations, as well as low occupancy rates due

to deployments.

•	 December: Modified Scope Plan approved to

reduce end state by 160 homes and adjust new

home and renovation delivery counts. 

•	 Revised IDP End State = 3,661 homes

2010

•	 FY 2009 HMA is finalized, increasing the on-post

housing requirement to 3,853 homes.

•	 September 14: OMB approves additional Army

equity contribution of $18.392M in FY10 GTA

funds to construct 112 deficit homes. Modified

Scope Plan in development; Congressional notification made; awaiting funds transfer.

•	 Revised IDP End State = 3,773 homes

(14) ARMY HAWAII (Hawaii)

Major Transactions of the Army Hawaii 

Family Housing, LLC, RCI Project

2004

•	 October 1: Department of the Army transfers

ownership and operation of 8,132 homes to Actus

Lend Lease to form Army Hawaii Family Housing, LLC.

•	 $1,643.7M private loan funded.

•	 $8.0M private equity to be invested.

•	 $0.0M government equity invested.

•	 IDP End Date = October 2014

•	 IDP End State = 7,894 homes

2005

•	 May: Project closes financially. The deal consists

of 3 tranches of debt: a fixed-rate tranche of

$1,191.2M, a floating-rate tranche of $250.0M, and

a tranche of Auction Rate Securities of $202.5M.

•	 The total private loan funded is $1,643.7M.

2008

•	 December: Army purchases parcels 7 and 9

from the James Campbell Company. Parcels 7

and 9 consist of 2,401 acres adjacent to Armyowned land near Schofield Barracks. The land

is available to the project for future development but is temporarily leased to the Monsanto

Corporation in order to have a net $0 financial

impact on the project.

2009

•	 The Army is working closely with Actus to

formulate and validate a Modified Scope Plan.

The MSP will address several developmental and

operational challenges experienced since the

project’s financial closing. Additionally, the MSP

seeks the optimal development plan to make use

of all available land in order to increase the quality of life for soldiers and their families.

(15) FORT EUSTIS/FORT STORY

(Virginia)

Major Transactions of the Fort Eustis/Fort 

Story Housing, LLC, RCI Project

2004

•	 December 1: Department of the Army transfers

ownership and operation of 1,115 homes (952 at

Fort Eustis and 163 at Fort Story) to GMH Military Housing (now Balfour Beatty Communities)

to form Fort Eustis/Fort Story Housing LLC.

•	 $125.0M privately funded.

•	 $3.6M private equity to be invested.

•	 $14.8M government equity invested.

•	 IDP End Date = November 2010

•	 IDP End State = 1,124 homes
324 Privatizing Military Family Housing 325

APPEN D I X

2005

•	 Fort Eustis/Fort Story Housing LLC commits to

building two one- and two-star General Officer homes. The requirement for these homes

changes due to BRAC. Once the BRAC requirement is known, a Major Decision is approved to

remove the requirement of building the initial

two homes during the IDP and to build all eight

executive homes at one time in one neighborhood during the ODP.

•	 Revised IDP End State = 1,122 homes

2009

•	 October 1: Modified Scope Plan is approved to

conduct replacements instead of renovations at

Marseilles Village. Phase 2 funding ($20.0M in

FY11) will be used to replace the townhomes.

2010

•	 May 25: DASA, IH&P approves a Modified Scope

Plan for an Army investment of $6.5M in FY10

BRAC 2005 funds for the construction of eight

executive homes to be delivered in 4th quarter

of 2011. OMB approval received on August 6;

Congressional notification made; awaiting funds

transfer.

•	 Army is preparing to invest $20.0M in FY11 GTA

funds for the replacement of 84 homes; receives

provisional OMB approval on August 6.

•	 Revised IDP End State = 1,130 homes

(16) FORT LEONARD WOOD (Missouri) 

Major Transactions of the Fort Leonard Wood 

Family Housing, LLC, RCI Project 

2005

•	 March: Department of the Army transfers ownership and operation of 2,496 homes to American

Eagle to form Fort Leonard Wood Family Housing, LLC.

•	 May: Project closes financially with the funding

of a $213.0M private loan.

•	 $209.7M private loan funded.

•	 $8.0M private equity to be invested.

•	 $29.0M government equity invested.

•	 IDP End Date = February 2014

•	 IDP End State = 2,242 homes

2006

•	 During annual site visit, Army identifies the illegitimate use of construction funds to fund debt

service.

•	 Army conducts lockbox and development

reviews to investigate project operation.

•	 Revised HMA indicates an end-state requirement

of 1,806 homes.

2007

•	 American Eagle indicates intention to sell its

interest in the partnership.

•	 American Eagle issues request for proposals to

sell its interest.

•	 The project selects Balfour Beatty Communities (BBC) as a potential purchaser of American

Eagle’s interest and a joint venture partner for the

Army. Negotiations begin simultaneously for the

sale of the project and a revision of the development scope.

2008

•	 April: BBC submits a Modified Scope Plan to the

Army.

•	 May: DASA, E&P briefs the garrison commander

and the Army chain of command.

•	 Proposed MSP indicates that current project constraints require substantial reduction in scope

of new home construction and redemption of

project debt.

•	 June: DASA, E&P approves the Leonard Wood

MSP.

•	 Concurrently, BBC joins the partnership in place

of American Eagle and the project redeems

$79.5M of debt and reduces private equity contribution by $4M.

•	 Revised IDP End Date = April 2014

•	 Revised IDP End State = 1,806 homes

2010

•	 Project adjusts the construction (renovation/

conversion) delivery schedule via Major Decision

because the completion rate of the new home

scope of work is greater than was expected at the

time of the project sale.

•	 June 23: OMB approves the Army’s investment

of $15.75M in reallocated FY09 funds for the construction of 81 new homes in lieu of renovations/

conversions. Modified Scope Plan in development; Congressional notification made; awaiting

funds transfer.

•	 IDP End State = 1,806 homes

(17) FORT SAM HOUSTON (Texas)

Major Transactions of the Fort Sam Houston 

Family Housing, LP, RCI Project

2005

•	 March 1: Department of the Army transfers ownership and operation of 925 homes to Lincoln

Military Housing, LLC, to form Fort Sam Houston Family Housing, LP.

•	 $85.0M private loan funded.

•	 $1.8M private equity invested to coincide with the

end of the IDP.

•	 $6.6M government equity invested.

•	 IDP End Date = February 2010

•	 IDP End State = 925 homes

2009

•	 September 16: Major Decision is made to adjust

the remaining construction and development

scope to build 133 carport spaces in the Artillery

Post/Hancock and Patch Chafee villages instead

of replacing 79 detached garages as originally

planned. To provide the detached garages as originally planned would have cost the Project $2.4M

above the budgeted amount ($1.2M) identified in

the IDP.

2010

•	 February 28: IDP is completed. The Major Decision process for officially closing out the IDP

financially is currently under discussion with

ODASA, I&H.

•	 IDP End State = 925 homes

(18) FORT DRUM (New York)

Major Transactions of the Fort Drum 

Mountain Community Homes, LLC, RCI 

Project

2005

•	 May 1: Department of the Army transfers ownership and operation of 2,272 homes to Actus Lend

Lease to form Fort Drum Mountain Community

Homes, LLC.

•	 $232.7M private loan funded.

•	 $5.0M private equity to be invested.

•	 $52.0M government equity invested.

•	 IDP End Date = October 2010

•	 IDP End State = 3,115 homes
326 Privatizing Military Family Housing 327

APPEN D I X

2007

•	 July 27: Project reaches financial closure on the

second UPH transaction under RCI, to include

192 end-state apartments for single soldiers.

•	 $26.2M private loan funded for the UPH IDP.

•	 UPH IDP End Date = May 2009

•	 Revised IDP End State = 3,115 Family Housing

homes; 192 UPH homes

2008

•	 June 11: Project reaches closure on its Additional

Government Equity Modified Scope Plan to build

an additional 554 new homes and help reduce

the family housing deficit.

•	 $96.8M private loan funded.

•	 $75.0M additional government equity invested.

•	 Revised IDP End State = 3,669 Family Housing

homes; 192 UPH homes

2009

•	 October 16: Major Decision is approved by

DASA, I&H to construct a community center and

amenities for the UPH Project. 

•	 November 23: Major Decision is approved by

DASA, I&H to extend the family housing IDP

completion date to March 2011, due to discovery

of an endangered species, which delayed the

commencement of site work for the final new

neighborhood.

•	 Revised IDP End Date = March 2011

•	 IDP End State = 3,669 Family Housing homes;

192 UPH homes

(19) FORT BLISS/WHITE SANDS MISSILE 

RANGE (WSMR) (Texas)

Major Transactions of the Fort Bliss/WSMR 

Housing, LP, RCI Project

2005

•	 July 1: Department of the Army transfers ownership and operations of 3,315 homes (2,754 at Bliss

and 561 at White Sands) to GMH Military Housing (now Balfour Beatty Communities—BBC)

to form Fort Bliss/White Sands Missile Range

Housing, LP.

•	 $350.6M private loan funded.

•	 $7.0M private equity to be invested.

•	 $38.0M government equity invested.

•	 New construction scope to include 1,659 new

homes at Bliss and 129 at WSMR.

•	 Renovations and no-work homes (homes on

which no work will be done) comprise the

remaining scope for end states of 2,962 and 315

homes at Bliss and WSMR respectively.

•	 IDP End Date = June 2011

•	 IDP End State = 2,917 homes (3,154 with planned

transfers of 48 WSMR MILCON homes and 189

Bliss Aero Vista homes)

2006

•	 March: 48 FY04 WSMR MILCON homes transferred to the project, plus 60 homes slated for

immediate demolition.

•	 April: FY05 MILCON project cancelled. Army

contributes $34.96M in additional scoring to

construct 123 additional homes to help eliminate

the housing shortfall.

•	 October: Major Decision reduces WSMR new

construction from 267 to 156 homes and end

state from 315 to 205 homes, per updated HMA.

•	 Revised IDP End State = 2,978 homes (3,167 with

planned transfer of 189 Aero Vista homes)

2007

•	 February: 189 Aero Vista homes transfer into the

project.

•	 February: 158 homes in the Logan Heights neighborhood at Bliss to be renovated versus replaced.

•	 June: 20 homes in the Pershing Heights neighborhood at Bliss will be renovated rather than

replaced (178 additional homes to help eliminate

the housing shortfall to be constructed elsewhere); 130 homes in Hayes neighborhood at

Bliss originally scheduled for minor renovation

will receive no work.

•	 August: Convey to project two DVQs at Bliss.

•	 October: 29 homes conveyed to Texas DOT for

demolition; 495 homes in North and South Main

Post neighborhoods at Bliss to be renovated

versus replaced; construction of 386 homes postponed; FGO homes increased by seven; 55 new

homes originally scheduled for Paso Del Norte

not constructed.

•	 Revised IDP End State = 3,408 homes

2009

•	 July: Army approves Major Decision to increase

costs for utility infrastructure.

•	 December: Army contributes $48.2M in FY07

Phase II and FY08 GTA funding to reduce the

HMA deficit and build 202 Junior NCO (JNCO)

townhomes.

•	 December: Army approves Major Decision to

utilize construction cost savings to demolish all

299 homes in Van Horne by the end of the IDP

as planned, renovate seven historic homes, and

redesignate one home in Logan Heights as a

neighborhood center.

•	 Revised IDP End State = 3,609 homes

2010

•	 August 30: OMB approves the Army investment

of $127.0M in FY09 GTA funds for the construction of 800 additional homes to help eliminate

the housing shortfall. Modified Scope Plan in

development; Congressional notification made;

awaiting funds transfer.

•	 November: Army approves Major Decision to disburse $1.7M from the Operating Reserve Account

to BBC to cover unfunded operating expenses

from 2005 through 2009.

•	 November: Army approves Major Decision to

increase by $129K the renovation scope for the

Commanding General’s home at WSMR.

•	 November: Army approves Major Decision to

renovate two former DVQs that were previously

transferred to the project in 2007, at a cost of

$355K.

•	 Revised IDP End State = 4,409 homes

(20) FORT BENNING (Georgia and 

Alabama)

Major Transactions of the Fort Benning 

Family Communities, LLC, RCI Project

2006

•	 January 1: Department of the Army transfers

ownership and operation of 3,945 homes to Clark

Pinnacle Benning, LLC, to form Fort Benning

Family Communities, LLC.

•	 $464.9M private loan funded.

•	 $2.0M private equity invested; an additional

$4.0M to be invested to coincide with the end of

the IDP.

•	 $55.15M government equity invested.

•	 IDP End Date = December 2016

•	 IDP End State = 4,200 homes
328 Privatizing Military Family Housing 329

APPEN D I X

2008

•	 May 20: Department of the Army approves three

Major Decisions.

•	 First, the project is to enter into a sublease

agreement with AAFES to bring retail into the

McGraw Village neighborhood.

•	 Second, the project is to retain Parcel A-1 and L-1

within the existing family housing ground lease

at the conclusion of the IDP. (Originally, these

parcels were to be returned to the Army at the

end of the IDP after the project had demolished

the preexisting inventory, but the plan changed

when the Army no longer needed the land.)

•	 Finally, the project requested approval to alter

the definition of NOI to more closely reflect the

definition found throughout the Army portfolio.

“Net Operating Income” shall mean the amount

by which Operating Income earned in such periods exceeds operating expenses in such periods.

2009

•	 September 16: To address current and projected

sources and uses variance, Fort Benning Family

Communities, LLC, approves a Modified Scope

Plan. Since inception, the project has experienced various operating challenges arising out

of deployments, greater-than-expected operating costs, and lower-than-expected yields on

investments as a result of AIG’s downgrade. The

combined effect of these challenges makes the

original project scope unattainable.

•	 In the 4th quarter, a tender offer to repay $96.2M

of debt at 78 percent of par is complete. The debt

repayment will allow the project to reach healthy

financial levels in debt coverage as well as to add

additional scope during the years remaining in

the IDP.

•	 Revised IDP End Date = December 2015

•	 Revised IDP End State = 4,000 homes

2010

•	 July 13: As a continuation to the Modified Scope

Plan, Fort Benning Family Communities, LLC,

approves follow-on scope to the approved 2009

MSP. Due to debt repayment surplus and a revision of operating assumptions, the project projects a $59.0M surplus. The result is that 270 new

homes (in lieu of renovations) and an increase

in renovation scope are now programmed as an

adjustment to the MSP.

•	 IDP End State = 4,000 homes

(21) FORT LEAVENWORTH (Kansas)

Major Transactions of the Fort Leavenworth 

Frontier Heritage Communities, LLC, RCI 

Project

2006

•	 March 1: Department of the Army transfers ownership and operation of 1,578 homes to Michaels

Military Housing to form Fort Leavenworth

Frontier Heritage Communities, LLC.

•	 New home scope includes 708 homes and a mix

of renovations and no-work homes.

•	 $221.5M private loan funded.

•	 $3.5M private equity to be invested.

•	 $15.0M government equity invested.

•	 IDP End Date = December 2014

•	 IDP End State = 1,583 homes

2008

•	 October: Army approves a Modified Scope Plan

that modifies phasing schedule, removes two

neighborhood centers, and transfers renovation scope from Clark Construction to Prestige

Renovations. Prestige is a Michaels-affiliated

company. Approved pro forma includes an

$11.4M shortfall of funds to be revisited within 18

months.

2010

•	 April: Army approves a Major Decision to replace

the 2008 Modified Scope Plan pro forma with

an updated one that reflects the significantly

improved financial strength of the partnership.

The new pro forma confirms a closing scope

of 708 new homes and an end state of 1,583

new homes, due primarily to an 8 percent BAH

increase in 2010.

•	 IDP End State = 1,583 homes

(22) FORT RUCKER (Alabama) 

Major Transactions of the Rucker 

Communities, LLC, RCI Project

2006

•	 April 1: Department of the Army transfers ownership and operation of 1,512 homes to Picerne

Military Housing to form Rucker Communities,

LLC.

•	 $107.0M private loan funded.

•	 $2.0M private equity to be invested.

•	 $24.0M government equity invested.

•	 IDP End Date = December 2013

•	 IDP End State = 1,476 homes

2007

•	 June: DASA, P&P approves a Major Decision to

reclassify 399 major renovations as new construction.

•	 This change increases the new construction

scope from 547 to 946 homes.

•	 The scope for the reclassified homes involves

demolishing a duplex to the slab, splitting the

slab into two single family homes, adding an

addition on the back, and rebuilding.

2009

•	 November 23: DASA, I&H approves a Modified

Scope Plan for the Rucker project.

•	 The MSP decreases the number of new homes

from 946 to 791.

•	 The new plan calls for 552 medium renovations

and 133 minor renovations.

2010

•	 February: Final changes to the legal documents

required by the MSP are approved by DASA,

I&H.

•	 IDP End State = 1,476 homes

(23) FORT GORDON (Georgia)

Major Transactions of the Fort Gordon 

Housing, LLC, RCI Project

2006

•	 May 1: Department of the Army transfers ownership and operation of 876 homes to GMH Military Housing (now Balfour Beatty Communities)

to form Fort Gordon Housing, LLC.

•	 $79.4M private loan funded.

•	 $5.0M private equity to be invested.

•	 $9.0M government equity invested.

•	 IDP End Date = April 2012

•	 IDP End State = 887 homes

2009

•	 October: Major Decision is approved by the

DASA, I&H to increase the end state to 1,080

homes.

•	 The project will not convert homes as originally

anticipated to reach the end state.
330 Privatizing Military Family Housing 331

APPEND I X

•	 Current IDP scope includes 310 new homes, 577

renovations, and 193 homes requiring no work.

•	 Revised IDP End State= 1,080 homes

(24) CARLISLE BARRACKS 

(Pennsylvania)/PICATINNY ARSENAL

(New Jersey)

Major Transactions of the Carlisle/Picatinny 

Family Housing, LP, RCI Project

2006

•	 May 1, 2006: Department of the Army transfers

ownership and operation of 429 homes to GMH

Military Housing (now Balfour Beatty Communi-

ties) to form Carlisle/Picatinny Family Housing,

LP.

•	 $30.1M private loan funded.

•	 $3.0M private equity invested.

•	 $39.43M government equity invested.

•	 IDP End Date= April 2011

•	 IDP End State= 348 homes

2009

•	 December 29: Project receives DASA, I&H

approval to delay the minor renovation of 36

homes and demolition of 15 homes at Carlisle

Barracks, pending approval of $15.0M in FY11

funding.

2011

•	 The Army programs $15.0M in FY11 funds to

replace 56 homes in the College Arms neighbor-

hood at Carlisle Barracks.

•	 Currently, the project is working ona Modified

Scope Plan to utilize these funds.

•	 IDP End State= 348 homes

(25) FORT RILEY (Kansas)

Major Transactions of the Fort Riley 

Communities LP, RCI Project

2006

•	 July 1: Department of the Army transfers owner-

ship and operation of 3,114 homes to Picerne Mili-

tary Housing to form Fort Riley Communities, LP.

•	 $283.6M private loan funded.

•	 $4.0M private equity to be invested.

•	 $123.0M government equity invested.

•	 IDP End Date= June 2016

•	 IDP End State= 3,514 homes

2008

•	 February 1: DASA, I&H approvesa Major Deci-

sion that accelerates construction during 2008,

resulting in the delivery of 40 more new homes

and 24 more renovations than indicated in the

pro forma for 2008.

2011

•	 January 11: DASA, IH&P approvesa Major Deci-

sion that increases the end state by 313 homes to

3,827, to meet the HMA requirement.

•	 IDP End State= 3,827 homes

(26) REDSTONE ARSENAL (Alabama)

Major Transactions of the Redstone 

Communities, LLC, RCI Project

2006

•	 October 1: Department of the Army transfers

ownership and operation of 453 homes to Hunt

Building Corporation to form the Redstone Com-

munities, LLC.

•	 $22.0M private loan funded.

•	 $0.50M private equity to be invested.

•	 $0.59M government equity invested.

•	 IDP End Date= March 2009

•	 IDP End State= 350 homes

•	 Year 17 End State= 230 homes

2008

•	 March 28: DASA, I&H approves Major Decision

to mitigate the effects on the project of higherthan-expected operating expenses since project

inception.

•	 July 1: Property manager formally changed from

HBC Property Managers to Pinnacle.

2009

•	 December 17: IDP close-out legal documentation

submitted to the Army.

2010

•	 Army provides concurrence with legal docu-

ments submitted for IDP close-out.

•	 February 12: Garrison commander provides for-

mal concurrence via memo.

•	 Partner continues to refine 5-year plan for ODP

with Army, as the mixture of ranks on the post is

changing.

•	 Final ODP plan and pro forma not expected until

2011.

•	 Current End State= 350 homes

•	 Year 17 End State= 230 homes

(27) FORT KNOX (Kentucky)

Major Transactions of the Knox Hills, LLC, 

RCI Project

2006

•	 December 1: Department of the Army transfers

ownership and operation of 2,998 homes to

Actus Lend Lease to form Knox Hills, LLC.

•	 The project assumes $12.5M as an interim loan to

fund operations through financial closing.

•	 $178.9M private loan funded (excludes $12.5M

interim loan).

•	 $3.0M private equity to be invested.

•	 $31.0M government equity invested.

•	 IDP End Date= January 2015

•	 IDP End State= 2,527 homes

2007

•	 February 1: Project closes financially.

•	 $178M private loan funded.

•	 November 13: Project transfers $4.8M of funds

programmed for development to the Capitalized

Interest Account asa result of low occupancy and

NOI.

2009

•	 January 16: DASA, I&H approves an amendment

to the ground lease.

•	 February 9: DASA, I&H approvesa new bench-

mark pro forma to more closely reflect actual

performance to date.

•	 February 12: DASA, I&H approves revised incen-

tive fee metrics for the project.

•	 September 1: Project pro forma is updated to

reflect revised terms of the swap agreement with

Ambac Financial Group, Inc., headquartered in

New York City,a holding company whose affili-

ates provided financial guarantees and financial
332 Privatizing Military Family Housing 333

APPEN D I X

services to clients in both the public and private

sectors around the world.

2010

•	 August 30: Swap documents are amended to

reflect revised terms associated with Ambac;

the project pro forma will be updated as part of

a Modified Scope Plan that is expected to close

later this year.

•	 October 29: Financial closing takes place for

$26.7M in FY10 Phase II funding for the replacement vs. renovation of existing homes and

$13.995M in FY10 GTA funding for additional

home construction. OMB approval received on

July 13; Congressional notification is made and

funding transferred.

•	 Revised IDP End State = 2,563 homes

(28) FORT LEE (Virginia)

Major Transactions of the Fort Lee 

Commonwealth Communities, LLC, RCI 

Project

2007

•	 April 1: Department of the Army transfers ownership and operation of 1,206 homes to East Army

Properties to form Fort Lee Commonwealth

Communities, LLC (FLCC).

•	 $126.3M private loan funded.

•	 $4.0M private equity to be invested.

•	 $32.77M government equity invested.

•	 IDP End Date = December 2011

•	 IDP End State = 1,493 homes

2010

•	 March 9: DASA, I&H approves Major Decision to

increase the end state by 12 homes.

•	 The development plan will no longer mandate

the demolition of these 12 homes; instead they

will be renovated early in the out-years.

•	 August: FLCC prepares paperwork to declare

$30.5M in savings from the three phases of IDP

construction.

•	 November: Project moves forward with arbitration process as the design-builder and the Army

do not agree on calculation of savings split.

•	 December: FLCC requests Major Decision

approval to remove Pinnacle both as a partner in

Fort Lee Family Housing, LLC, and as the property manager.

•	 December 21: DASA, IH&P approves transferring Pinnacle’s 25 percent ownership interest to

Hunt Companies, Inc. (formerly Hunt Building

Corporation) and releasing them from the equity

guaranty.

•	 Revised IDP End State = 1,505 homes

2011

•	 January: Capital Ventures Directorate (CVD)

sends memo to Hunt outlining the terms and

conditions of the interim transition of property

manager from Pinnacle to Hunt, commencing

July 1, 2011.

•	 Negotiations continue with regard to the savings

split.

•	 IDP End State = 1,505 homes

(29) WEST POINT (New York)

Major Transactions of the West Point 

Housing, LLC, RCI Project

2008

•	 August 1: Department of the Army transfers

ownership and operation of 961 homes to Balfour

Beatty Communities (BBC) to form West Point

Housing, LLC.

•	 $134.0M private loan funded.

•	 $3.3M private equity to be invested.

•	 $22.0M government equity invested.

•	 December 16: DASA, E&P approves a Major

Decision to waive the RCI construction standard

requiring sidewalks on both sides of the street in

the Stony I neighborhood.

•	 IDP End Date = July 2016

•	 IDP End State = 824 homes

2009

•	 March 4: DASA, E&P approves a Major Decision

to bring Building 733 into the project footprint

for use as a maintenance facility.

•	 August 6: DASA, I&H approves a Major Decision

for $100K in additional scope to be allocated to

the renovation of Quarters 60.

•	 October 2: DASA, I&H approves a Major Decision adding $139K to the renovation scopes of

Quarters 21 A/B/C.

2010

•	 March 9: DASA, I&H approves the exclusion

from the ground lease of a sidewalk to be constructed by the installation for the benefit of the

Child Development Center.

•	 July: DASA, I&H approves a change to the renovation agreement, making it possible to hire a

new historic architect to replace John Cullinane.

•	 August: DASA, I&H approves an additional $419K

in renovation funds for Quarters 60.

•	 IDP End State = 824 homes

(30) FORT JACKSON (South Carolina)

Major Transactions of the Fort Jackson 

Housing, LLC, RCI Project

2008

•	 August 1: Department of the Army transfers ownership and operation of 1,162 homes to Balfour

Beatty Communities (BBC) to form Fort Jackson

Housing, LLC.

•	 October 30: Project closes financially.

•	 $103.5M private loan funded.

•	 $3.0M private equity to be invested.

•	 $58.9M government equity invested.

•	 IDP End Date = October 2013

•	 IDP End State = 850 homes

2009

•	 July 16: DASA, I&H approves the substitution of

the geothermal HVAC system for a conventional

HVAC system.

2010

•	 January 15: DASA, I&H recommends that the

project move forward with developing a marketing plan to sell the six parcels of land that are

part of Fort Jackson.

•	 Marketing plan is completed and reaction from

possible buyers is that all six parcels could be

sold for $800,000.

•	 DASA, I&H must decide if the project should

move forward so that the parcels can be sold and

the proceeds used for renovating homes that are

currently receiving no work during the IDP.

•	 June: Project submits concept paperto approve

change order for $4.7M related to additional

asbestos removal costs forremaining demolitions.
334 Privatizing Military Family Housing 335

APPEN D I X

•	 October: DASA, IH&P approves Modified Scope

Plan to reduce 41 major/medium renovations to

no work during the IDP.

•	 IDP End State = 850 homes

(31) FORT SILL (Oklahoma)

Major Transactions of the Sill Communities, 

LLC, RCI Project

2008

•	 November 1: Department of the Army transfers ownership and operation of 1,411 homes to

Picerne Military Housing to form Sill Communities, LLC.

•	 An operational-only financial closing takes place,

due to adverse capital market conditions.

•	 $30.5M government equity invested.

•	 IDP End Date = December 2016

•	 IDP End State = 1,650 homes

2009

•	 September: Turnover rate and costs per home

are much higher than anticipated. DASA, I&H

approves $1.51M increase to the 2009 operating

budget to cover additional costs.

•	 Partnership continues to monitor capital market

conditions.

•	 November 6: OACSIM sends memorandum to

ODASA, I&H, requesting action to transfer FY10

GTA funding of $20.32M in conjunction with

financial closing.

2010

•	 June 1: Project closes financially; the development plan includes an increase in end state by 78

homes to 1,728.

•	 $107.8M private loan funded.

•	 $2.83M private equity to be invested.

•	 At financial closing, Army commits to contributing an additional $20.32M in FY10 GTA funds for

the end-state increase. OMB approval received

on July 13; Congressional notification made;

funding transferred in November.

•	 Army prepares to invest $26.7M in reallocated

FY09 funds for the replacement of 78 homes in

lieu of enhanced historic and nonhistoric renovations. OMB approval received on September 20.

•	 Revised IDP End State = 1,728 homes

(32) FORT HUACHUCA/YUMA PROVING

GROUND (Arizona)

Major Transactions of the Fort Huachuca/

Yuma PG Communities II, LLC, RCI Project

2009

•	 April 1: Department of the Army transfers ownership and operation of 1,570 homes to Michaels

Military Housing to form Fort Huachuca-Yuma

PG Communities II, LLC.

•	 April 27: Project closes financially.

•	 $82.0M private loan funded.

•	 $1.6M private equity to be invested.

•	 $0.0M government equity invested.

•	 IDP End Date = March 2014

•	 IDP End State = 1,169 homes

(33) FORT WAINWRIGHT (Alaska)

Major Transactions of the North Haven 

Communities, LLC, RCI Project 

2009

•	 April 1: Department of the Army transfers ownership and operation of 1,866 homes to Actus Lend

Lease to form North Haven Communities, LLC.

•	 Operational-only closing takes place due to

adverse capital market conditions.

•	 $50.0M government equity invested to fund

“mini-scope.”

•	 Army prepares to invest an additional $43.5M in

reallocated FY09 funds. OMB approval received

on September 21; Congressional notification

made; awaiting funds transfer.

•	 IDP End Date = October 2017

•	 IDP End State = 1,815 homes

2010

•	 September 27: Project closes financially.

•	 $159.4M permanent loan funded.

•	 $2.0M private equity to be invested.

•	 $9.59M government loan guarantee provided.

•	 Additional $31.61M government equity invested

for initial privatization.

•	 At financial closing, Army commits to contributing an additional $52.0M in FY10 Phase III funds.

OMB approval received on August 25; Congressional notification made; funding transferred in

October.

•	 IDP End State = 1,815 homes

(34) ABERDEEN PROVING GROUND

(Maryland)

Major Transactions of the Aberdeen Proving 

Ground Communities, LLC, RCI Project

2009

•	 December 17: Department of the Army transfers ownership and operation of 1,006 homes

to Picerne Military Housing to form Aberdeen

Proving Ground Communities, LLC.

•	 $53.6M private loan funded.

•	 $1.0M private equity to be invested.

•	 $14.0M government equity invested.

•	 IDP End Date = February 2016

•	 IDP End State = 372 homes
337

Index

Page references in italics refer to illustrations.

1

1st Armored Cavalry, 98

1st Brigade, 102

1st Cavalry Division, 98

1st Special Forces, 103

10th Mountain Division, 252

2

2nd Battalion, 102

2nd Infantry Division, 103

25th Infantry Division, 102

3

3rd Brigade, 102

319th Signal Battalion, 197

4

4th Brigade Headquarters, 197

4th Mechanized Infantry, 98

7

7th Infantry Division, 15

75th Ranger Regiment, 102

A

Aberdeen Proving Ground, Md., 166, 265, 270

ACHP. See Advisory Council on Historic Preservation 

(ACHP).

Actus Corporation, 100, 251

Actus Lend Lease, xx, 100, 101, 136, 138, 139, 141, 142, 160, 191, 

231, 247, 248, 251, 252, 277, 284, 286

Advisory Council on Historic Preservation (ACHP), 111, 148, 

149, 221, 223–225, 233

Affordable Housing Initiative, 59

AFH. See Army family housing (AFH).

AHA. See Army Housing Authority (AHA).

Air Defense Artillery School, 272

Aliamanu Military Reserve, Hawaii, 246, 249, 250

American Eagle Communities, 231

Americans with Disabilities Act (ADA), 101
338 Privatizing Military Family Housing 339

INDEX

AMF. See Army Modular Force (AMF).

Ancillary facilities at RCI sites, 91, 99–101, 103, 114, 217

Andrews Air Force Base, Md., 259

Andrews, Dale, xx

Anne Arundel County School Board, 114

Anne Arundel School District, 114

Apgar, Sandy, xiv, xv, xix, 2, 65, 71, 73, 74, 75–77, 79–86, 91, 

92, 94–97, 99–101, 103, 107–112, 116–118, 127, 136, 138, 145, 

146, 158, 185, 204, 217, 296–298

Archstone Communities, 107

Argonne Hills neighborhood, Fort Meade, 105, 161

Armbruster, William, xix, 127, 128, 150, 151, 171, 185, 189, 214, 

215, 244, 245, 253, 254, 258, 260, 284, 285, 298

Army and Air Force Exchange Services (AAFES), 100, 212, 

217, 219, 220, 222, 233, 284, 285

Army conflicts with Congress. See Congress.

Army Corps of Engineers, Fort Worth District, Tex., 98

Army Corps of Engineers, Norfolk District, Va., 49, 83, 172, 

201, 210

Army Corps of Engineers, Omaha District, Nebr., 57–65, 78

Army culture. See Military culture.

Army family housing (AFH), 18, 29, 41, 49, 64, 73, 113, 184, 

255, 287, 299

Army headquarters (HQDA), 4, 103, 113, 116, 137, 160, 171, 189, 

297, 298

Army Housing Authority (AHA), 41

Army Housing Division, 3, 55

Army Housing Office, 48, 58, 59

Army Modular Force (AMF), xvii, 256

ASA, I&E. See Assistant Secretary of the Army, Installations 

and Environment (ASA, I&E).

Asset management of RCI projects, 170, 185, 253, 298. See

also Portfolio and Asset Management (PAM) program.

Assistant Chief of Staff for Installation Management 

(ACSIM), xv, 3, 4, 17, 30, 38, 41, 72, 77, 82, 83, 101, 112, 128, 

171, 241, 252–254, 260, 279, 296

Assistant Secretary of the Army, Installations and 

Environment (ASA, I&E), 91, 127, 132, 148, 150, 151, 155, 

184, 189, 241, 252, 280

Australian Defense Housing Authority, 28, 29, 41

B

BAH. See Basic Allowance for Housing (BAH).

Bain, Louis, 93, 103, 111, 142, 143, 147, 297

Baker, Pat, xx, 230

Baldwin, William C., xx, 8, 14, 16, 32

Balfour Beatty Communities (BBC), xx, 4, 268, 275, 277, 278

Balfour Beatty PLC, 208, 274, 275, 281

Ball, John, 209

Bank of America, 248, 286

Bankruptcies, 129, 131, 132, 158, 173, 266

BAQ. See Basic Allowance for Quarters (BAQ).

Barbee, George, 93, 104, 106, 108, 114, 157–159, 162

Barnes, Nancy, 144

Barracks privatization, 161, 191, 231, 232, 242, 243, 247, 249, 

255, 274, 275, 279, 280, 282

Barracks Privatization Initiative (BPI), 282

Base Realignment and Closure (BRAC), xvii, 16, 48, 49, 51, 

54, 128, 132, 149, 153, 203, 210, 211, 254–256, 275, 287

Basic Allowance for Housing (BAH), 14, 38, 40, 42, 60, 79, 

92, 112–116, 131, 134, 135, 139, 143, 148, 149, 154, 161, 165, 167, 

169, 184, 193, 194, 212, 273, 279, 281, 295

Basic Allowance for Quarters (BAQ), 8, 9, 50, 55

Bayer, Robert E., 32, 37, 38, 41

BBC. See Balfour Beatty Communities (BBC).

Bennett, Ron, xx, 229

Bingaman, Jesse, 37

Black, Shundilina, 140

Blair, Ladye, xx, 160

Boisvert, Robert, xx, 156

Bolden, Ivan, xv, xix, 112, 131, 132, 215, 253, 296

BOP. See Business Occupancy Program (BOP).

Borges, Dianne, xx

BPI. See Barracks Privatization Initiative (BPI).

BRAC. See Base Realignment and Closure (BRAC).

Brigham, David, 226, 229, 230

Brostrom Park neighborhood (Bay View), Fort Ord, 15, 16

Bulls, Herman, 99

Burns, Conrad, 95

Bush, George W., 117, 118, 128, 244, 245, 293–295, 298

Business Occupancy Program (BOP), 28, 72

C

Calcara, Joseph F., xi, 296

Caldera, Louis, 85, 103

Calthorpe Associates, 76

Camp Lejeune, N.C., 32

Camp Parks, Calif., 8, 75, 196, 202, 232, 258

Capehart housing program, 10, 11, 16, 20, 32, 34, 74, 98, 103, 

145, 148, 149, 258, 293, 294

Capehart, Homer, 10

Capital Venture Initiatives (CVI) Program, 2, 7, 27, 38, 39, 

41, 42, 47, 50, 52, 54–60, 65, 72, 73, 75, 77, 78, 93, 98, 99, 

106, 115, 129, 172, 203, 296, 299

Birth of CVI Program at Fort Carson, 40

CVI compared to RCI, 76, 80, 82, 83, 173, 217

End of CVI program, 80, 91, 204

Fort Hood, 97

Fort Lewis, 103

Fort Meade, 105

Capital Ventures Directorate, 254

Cardin, Benjamin, 157

Career Compensation Act of 1949, 9

Carlisle Barracks, Pa., 231

Carr, Donald, 214

Castle & Cooke, 259

Catlin, Leslie, 140

CBO. See Congressional Budget Office (CBO).

CDMP. See Community Development and Management 

Plan (CDMP).

Chamber of Commerce, 51

Champion Homes, 150, 151

Chaplin, Robert, 204

Cheney, Richard, 109, 117

CICA. See Competition in Contracting Act (CICA).

Cicchini, James, xx

Clark Pinnacle, xx, 194, 197–199, 202, 203, 205, 206, 212, 213, 

215–217, 219, 221, 222, 231, 279, 298

Clark Realty Capital, xx, 8, 190, 191, 194, 199, 217

Clark, Ian “Sandy”, xiv, xv, xix, 16, 170, 171, 172, 254

Clinton, Bill, 16, 20, 27, 36–38, 58, 74, 294, 295, 298

CNU. See Congress for the New Urbanism (CNU).

Cohen, William, 41, 92

Cold Climate Housing Research Center, 251, 277

Cold War, 8, 16, 21, 49, 294

Cole, Harrison, 62, 129, 131, 143

Cole, Laura, xx

Collier, Brad, 275

Columbia Work Group, 76

Columbia, Md., as model for RCI, 76, 79, 84

Combining small installations into RCI projects, 149, 154, 

183, 192–194, 199, 203, 207, 208, 212, 232, 255, 275

Community centers

Fort Bragg, 166

Fort Hood, 135, 147

Fort Huachuca, 259

Fort Irwin, 201

Fort Lewis, 153, 157

Fort Meade, 158, 170, 217

Fort Sam Houston, 225

Community Development and Management Plan (CDMP), 

78, 79, 93, 96, 100–103, 108, 110, 111, 113, 116, 117, 134–137, 

140–147, 149, 150, 152, 156–160, 162, 167–170, 188–191, 194, 

197, 198, 203, 205, 208–211, 214–217, 219, 221, 222, 226–228, 

270, 272

Community events, 166

Fort Carson, 275

Fort Hood, 140

Fort Knox, 252

Fort Lewis, 153

Fort Meade, 170

Presidio of Monterey, 206

Community involvement in RCI projects, 47, 53, 60, 213

Community Partnership LLC, 107

Competition in Contracting Act (CICA), 59
340 Privatizing Military Family Housing 341

INDEX

Congress for the New Urbanism (CNU), 75, 219

Congress, conflicts with the Army over privatization, 59, 65, 

71, 73, 80–82, 84, 86, 91–94, 97, 99, 101, 108, 118, 284

Congressional Budget Office (CBO), 19, 241–245, 258

Connor, Mark, xv, 111

Construction Standards for RCI housing, 150, 153, 189, 191, 

232

Consultants to the RCI program, 60, 62, 76, 79, 93–95, 96, 

97, 100, 112, 157, 170, 171, 188, 192, 198, 232, 245, 247, 248, 

265, 295

Apgar, Sandy, 71

Baldwin, William C., xx

Hertzler, Conrad, 54

Jones Lang LaSalle, xv, xix

Kraeer, Tom, 55

Sanders, Tom, 55

Scribner, Barry, 74

Washington, Caryn, 159

Contamination in RCI housing, 209, 215

Chlordane, 136, 173

Insecticides, 136

Methane, 163, 173

Mold, 106, 148, 160, 173

Trichloroethylene, 198

Corpus Christi Naval Air Station, Tex., 23

Court of Federal Claims, 62

Craig, Richard, 99

Curb appeal of homes, 168

CVI. See Capital Venture Initiatives (CVI) Program.

D

Dausen, Peter, 204, 205

Davies, Jeff, 209

Davis, Tom, 214

Davis, Vicki, xx

Davis-Bacon Act, 30, 99

Dean, Arthur, 54

Defense Housing Authority Working Group, 41

Delta Research Corporation, 20, 22, 55, 58

Department of Defense Military Unaccompanied Housing 

Improvement Fund, 36

Dependents Assistance Act of 1950, 9

Deployments of soldiers, xi, xvii, 28, 33, 76, 137, 196, 226, 

228, 266, 267, 269, 273, 277, 278, 284, 299

Deployed Spouses Program, 259

Deputy Assistant Secretary of the Army, Privatization and 

Partnerships, 128, 171

Desert Storm, xvii, 128

Developers

Army conflicts with, 10

Army support, xvi

CVI housing, 27

Fort Carson, 52

Fort Hood, 99

Fort Ord, 16

Funds for continuous development, xiii

Incentives, 32

Long-term leases, 13

Mortgage insurance, 9

Operation and maintenance of housing, 7, 14, 83

Protests and lawsuits, 62, 63, 72, 103, 107, 108, 143, 144, 

152, 153, 173

RCI involvement, xv

RFP Selection process, 57

RFQ selection process, 78

Dicks, Norman, 85, 95, 103, 149, 151, 295, 297

Disability issues

Disability lawsuits, 143, 152

Fort Belvoir, 199

Fort Hood, 101

Fort Lewis, 152, 153

Fort Sam Houston, 226, 228

Madigan Army Medical Center, 152

Dole, Bob, 37

Dubik, James, 154, 155

Dump site, 163

E

Eastin, Keith, xv, 185, 252

Economic Impact of RCI projects, 13, 96, 139, 140, 194, 281, 

295

Edwards, Chet, 1, 4, 85, 93, 95, 100, 136, 140, 141, 243, 293, 

295, 297

Eisenhower, Dwight D., 10

Ellison, David, 205, 206

Elmendorf Air Force Base, Alaska, 256, 287

Empire West Companies, 16

Endangered Species, 215

Enduring Freedom, 278

Environmental issues, 173, 193, 198, 203, 215, 222, 233

Environmental Protection Agency (EPA), 163, 198

EQR/Lincoln, 103, 143–156

Equity Resident Properties, 153

Equity Residential (EQR), 153, 226

Ernst & Young, 61, 110

Erwin, Robert, xx, 93, 98–101, 137–139, 142, 143

Everett Naval Station, Wash., 23

F

Faccone, Joseph, 110

Fagot, Elizabeth L., 16

Fair Housing Act, 152. See also Disability issues.

Fairchild Air Force Base, Wash., 150

Fairfax Village Neighborhood Center, Fort Belvoir, 286

Family Housing Improvement Fund, 33, 35, 36, 73

Family Housing Offices, 130

Fort Carson, 59, 143

Fort Hood, 137

Fort Lewis, 148

Fort Meade, 157

Fort Ord, 16

Fannie Mae, 41

FAR. See Federal Acquisition Regulation (FAR).

Fatz, Raymond L., 118

Federal Acquisition Regulation (FAR), 40, 53, 56, 57, 59, 62, 

63

Federal Housing Administration (FHA), 9, 10

Filipowski, Amanda, xx

Financial markets and RCI projects, xvi, 136, 154, 248, 257, 

269–271, 275, 281, 282

Fiori, Mario, xv, 127, 128, 144, 170, 171, 185, 189

Fisher Heck, 228

FORSCOM. See U.S. Army Forces Command (FORSCOM).

Fort Belvoir, Va., xx, 11, 39, 58, 76, 159, 183, 190, 193, 199, 211, 

212–222, 213, 216, 218, 220, 221, 223, 231, 233, 268, 279, 286, 

298

Fort Benning, Ala., 188, 199, 231, 243, 273

Fort Bliss, Tex., 48, 161, 231, 243, 256, 268, 272, 274, 275, 280, 

282

Fort Bragg, N.C., 15, 17, 39, 84, 166, 167, 185, 191, 231, 256, 281, 

283, 297

Fort Campbell, Ky., 39, 185, 191, 231, 245, 251, 252, 267

Fort Carson, Colo., xx, 27, 39, 40, 42, 46, 47–65, 49, 53, 64, 

71–73, 78, 82, 85, 91–95, 98, 109–111, 113–115, 118, 129, 130, 

131–133, 141, 142, 166, 172, 173, 191, 201, 217, 268, 274, 275

Fort Detrick, Md., xx, 131, 191–193, 206, 207, 208, 210, 211, 212, 

231, 232, 274, 275

Fort Devens, Mass., 49

Fort Drum, N.Y., 15, 231, 243, 251, 280, 281, 283

Fort Eustis, Va., 29, 39, 54, 213, 231, 232, 255, 256, 274, 275

Fort Gillem, Ga., 255

Fort Gordon, Ga., 231, 243, 272, 274, 275

Fort Greely, Alaska, 251, 270

Fort Hamilton, N.Y., 131, 150, 151, 159, 161, 191, 193, 207, 231, 

232, 274, 275

Fort Hood, Tex., xx, 1, 2, 4, 15, 32, 39, 57, 82, 84, 85, 92, 93, 

95, 97, 97–102, 103, 104, 110, 111, 116, 117, 129, 133–143, 133, 

135, 136, 138, 139, 140, 142, 143, 144, 147, 154, 156, 157, 160, 

161, 167, 171–173, 191, 230, 251, 298

Fort Huachuca, Ariz., 39, 259, 265

Fort Hunter Liggett, Calif., 16

Fort Irwin, Wash., xx, 77, 160, 183, 191, 193, 194, 195, 196, 198, 

199, 201, 203, 208, 219, 231, 232, 246, 256, 257, 279, 280, 

283

Fort Jackson, S.C., 4, 250, 270, 274, 275
342 Privatizing Military Family Housing 343

INDEX

Fort Knox, Ky., 231, 243, 251, 252

Fort Leavenworth, Kans., 231, 232, 243, 246, 259

Fort Leonard Wood, Mo., 161, 231, 275

Fort Lewis, Wash., xx, 82, 84, 85, 92, 93, 95, 102, 103, 104, 111, 

129, 141, 142, 143–157, 144, 146, 150, 151, 155, 157, 173, 217, 

256, 297. See also Joint Base Lewis-McChord, Wash.; 

McChord Air Force Base, Wash.

Fort McPherson, Ga., 255

Fort Meade, Md., xx, 82, 92, 93, 103–108, 105, 106, 107, 109, 

111, 114, 129, 141, 157–170, 160, 162, 164, 165, 169, 170, 173, 

184, 192, 217, 272, 295

Fort Monmouth, N.J., 255

Fort Monroe, Va., 213, 255

Fort Myer, Va., 20

Fort Ord, Calif., 15, 16, 170, 203, 204, 273

Fort Polk, La., 13, 15, 128, 166, 191, 231, 232, 246, 268

Fort Richardson, Alaska, 256, 269, 287

Fort Riley, Kans., 23, 49, 166, 167, 231

Fort Rucker, Ala., 166, 231, 243

Fort Sam Houston, Tex., xx, 183, 193, 212, 223–225, 226, 227, 

228–231, 233, 243, 256

Fort Shafter, Hawaii, 161, 191, 231, 247, 249

Fort Sill, Okla., 39, 54, 166, 192, 250, 265, 271, 272, 285

Fort Stewart, Ga., 23, 82, 92, 131, 161, 185, 191, 208, 231, 266, 

274, 275, 277, 278, 280, 281, 283

Fort Story, Va., 213, 231, 232, 255, 256, 274, 275

Fort Wainwright, Alaska, 270, 277

Foster, Shannon, xv

Fourth Circuit Court of Appeals, 62

Frankel, B.J., 16

French Marcum, Angela, xx

Friedberg, Jean, 76

Frontier Heritage Communities, LLC, 259

G

Gansler, Jacques, 80, 111

GAO. See General Accounting Office (GAO).

GE Capital Real Estate, 72

General Accounting Office (GAO), 65, 72, 96, 103, 107, 108, 

161, 171, 260, 272, 274

Georgalis, George, 51, 55

Geren, Pete, 268

Gersch, Cindy, xx

Global War on Terrorism, 266, 294

GMH Military Housing, LLC, 131, 132, 150, 191, 207–209, 211, 

212, 231, 274, 275, 281

Goldman Sachs, 248

Goldwater-Nichols Department of Defense Reorganization 

Act, 83

Goodman, John B., 71, 72

Gotbaum, Joshua, 32, 34

Green status (environmental rating), 135, 147, 190, 191, 249, 

251, 286. See also Environmental issues.

Griffin, Robert H., 62, 64

Griffith, Rebecca, 99

Groff, Hallie, xx

Grone, Phillip, 30, 53, 132, 243

Gross, David, 204

Ground lease for privatized housing, 33, 34, 58, 60, 64, 79, 

172, 188, 198, 211, 260

Grow-the-Army initiative, 267

Grow-the-Force initiative, 267

Guaranteed Investment Contracts (GIC), 271

H

Hall, David, 98

Hamilton, Russ, 57, 130, 191

Hamre, John, 21

Hanson, Lori, 158

Hausherr, Mark, 285

Have/have-not sentiment among residents

Fort Carson, 131

Fort Detrick, 212

Fort Hood, 138

Fort Lewis, 154

Fort Meade, 164, 173

Hayes, Hal B., 10

Hayes, Rhonda, xiv, xv, xvi, xvii, xix, 72, 83, 93, 183– 185, 185, 

187, 188, 254, 255, 272, 279, 285, 286, 296

Hefley, Joel, 30, 31, 37, 39, 48, 53, 60, 80, 82, 95, 114, 295

Helemano Military Reserve, Hawaii, 247, 249

Helwig, Robert, 243

Herndon, Robert, 30, 73

Hertzler, Conrad, 54

Hess, Mike, 51

Hill, James, 93, 103, 144, 146

Hill, Thomas, 84

Hill-Lienweber, Jennifer, xv

Historic housing and preservation, 193

Fort Belvoir, 199, 213, 221, 222, 223

Fort Carson, 111

Fort Hood, 173

Fort Leavenworth, 259

Fort Lewis, 103, 104, 144, 147–149, 153

Fort Meade, 105, 106, 158, 162, 170

Fort Sam Houston, 183, 223–226, 229, 230

Presidio of Monterey, 205

State negotiations, 111

Vendor experience, 108

Walter Reed Army Medical Center, 207, 209

Historic Properties Component (HPC), 225

Historical Research Associates, Inc., xvii

HMA. See Housing Market Analysis (HMA).

Hobson, David, 65, 81, 82, 84, 92– 96, 101, 108, 118, 243, 297

Hoffman, David, xv

Holzmann, Phillipp, 131

House Subcommittee on Military Construction 

Appropriations, 65, 80, 82, 93, 95, 96

Housing allowance, 9, 10, 12, 14, 16, 19, 23, 33, 58, 139, 198. 

See also Basic Allowance for Housing (BAH).

Housing Market Analysis (HMA), 16, 78, 92, 99, 132, 149, 161, 

168, 169, 197, 198, 209, 212, 224

Housing Revitalization Support Office (HRSO), 37– 41, 55, 

60, 76, 77

Housing shortages

During the RCI program, 128, 147, 161, 170, 194, 195, 209, 

245, 279, 281, 282, 293, 295

Pre-RCI, 2, 8–12, 14, 16, 21–23, 48

Housing types

apartments, 16, 170, 194, 203, 209, 212, 216, 219, 252, 

279–281, 283

barracks, 161, 231, 232, 242

enlisted & NCO, 19, 98, 99, 105, 161, 163, 164, 194, 279, 

282, 283

family, 8, 23, 48, 53, 58, 109, 140, 162, 167, 203, 219, 232, 

247, 249, 275, 294

historic, 103, 104, 105, 106, 111, 144, 147–149, 153, 158, 162, 

183, 199, 205, 207, 213, 221, 222, 223, 224, 229, 259

NCO & officer, 166, 194, 232, 279, 280, 282

off-base / off-post, 12, 19, 21, 22, 50, 52, 92, 100, 113, 115, 

137, 159, 161, 255, 282

officer, 18, 163, 199, 229, 230

officer, four-star, 256

officer, unaccompanied, xxii, 279, 283

single-family homes, 74, 193, 215

townhomes, 135, 163, 164

Howard, Clarke, xiv, 170

HPC. See Historic Properties Component (HPC).

HQDA. See Army headquarters (HQDA).

HRSO. See Housing Revitalization Support Office (HRSO).

Hunt Building Corporation, 62

Hunter Army Airfield, Ga., 131, 191, 208, 231, 274, 275, 278

Hunter, Todd, xvi, 296

I

IMA. See Installation Management Agency (IMA).

IMCOM. See Installation Management Command 

(IMCOM).

Impact aid for schools, 60, 110, 114, 115, 141. See also School 

districts.

Incentive fees for developers, 9, 14, 60, 80, 116, 130, 137, 138, 

165

Industry forum, 38, 60, 99, 103, 107

Information sharing problems in RCI projects, 142, 143

lawsuits, 63
344 Privatizing Military Family Housing 345

INDEX

Ingleside Naval Station, Tex., 23

Insignia Residential Group, 62

Installation Management Agency (IMA), 128, 129, 250

Installation Management Command (IMCOM), 250, 252, 

260

Installation Status Report (ISR), 135, 147

Integrated Process Team (IPT) of RCI, 96, 111–118, 137, 185, 

189, 296

Intercontinental Hotels, 286. See also Privatization of Army 

Lodging (PAL) program.

Internet service at RCI projects, 206, 233

IPT. See Integrated Process Team (IPT) of RCI.

Iraq War (Operation Iraqi Freedom), 140, 161, 195, 228, 269, 

274, 277, 294

Ives, John W., 160, 161, 168

J

J.A. Jones, 64, 92, 129–132, 231

John, Charles, 228

Johnson, Alan, 57

Johnson, Cleve, 216

Johnson, Paul W., 31, 39, 40

Johnson, Shirley, 202

Joint Base Lewis-McChord, Wash., 153, 154, 226, 270, 271, 

272, 287. See also Fort Lewis, Wash.; McChord Air Force 

Base, Wash.

Joint Ethics Regulations, 56, 111

Jones Lang LaSalle (JLL), xv, xix, 74, 93, 94, 96, 97, 99–101, 

103, 112, 157, 170–172, 188, 190, 192, 232, 245, 247, 248, 253, 

285, 296

JP Morgan, 248

K

Kaneohe Bay Marine Corps Air Station, Hawaii, 15

Kaplan, Marshall, 56

Kaston, Carren, xx

Kazmierski, Michael, 110

Keane, Jack, 72, 81, 84, 85, 117, 185, 186, 297, 299

Keating Development Company, 107

Keefe, John, 53, 58, 59, 60

Keep Carson campaign, 48

Keiser, Matthew, 101, 272

Keller/Catellus, 62, 63

Kelly, Patrick, xx, 188, 206

Kingsville Naval Air Station, Tex., 23

Knight, Thomas L., 151

Knollenberg, Joseph, 243

Koren, Tony, 48, 50–54, 57, 115

Kraeer, Tom, xiv, 50, 55, 254, 257

L

Lackland Air Force Base, Tex., 65

LaPorte, Leon, 84, 93, 98–100, 110, 117, 118, 136

LaSalle Partners, 99

Lead paint, 105, 162. See also Contamination in RCI housing.

Leadership in Energy and Environmental Design (LEED) 

Program, 190, 249, 286

Lean Six Sigma, 171, 252

Leedom, Steve, 151

Lend Lease Actus, 133

Lend Lease Group, xx

Lend Lease Projects, Inc., 100

Lessons-learned conferences and workshops, 94, 109–111, 113, 

142, 201

Lessons-learned from RCI projects, 108, 111, 127, 142–144, 156, 

157, 172, 173, 183, 188, 293

Life cycle cost analysis (LCCA), 282

Limited Liability Company (LLC), 171, 192, 210, 245, 246

Limited Partnership (LP), 7, 21–23, 27, 30, 31, 33, 35, 56, 98, 

101, 133, 135, 137, 171

Lincoln Military Housing, 224–226, 228, 229, 231

Lincoln Property Company, xx, 153, 224

Lipham, Ted, xv, 28, 39, 40, 72, 73, 76, 77, 81, 83, 85, 99, 102, 

104, 108, 110, 112, 113, 118, 134, 170, 183, 185, 296

Little, John H., 30

LLC. See Limited Liability Company (LLC).

Logistics Management Institute (LMI), 23

Lonnquest, John, xx

LP. See Limited Partnership (LP).

Lucas, Boyd, 150, 156

M

MacDill Air Force Base, Fla., 259

Madigan Army Medical Center, Wash., 152

Maintenance of RCI housing, xvi, 79, 83, 100, 101, 110, 132, 

134, 135, 137, 142, 147, 150, 155, 159, 162, 165, 173, 191, 275, 

293, 298

Malka, Amos, 85

Marsh, John, 28

MC Partners, LLC, 108, 157, 158

McCain, John, 34

McCarley, Michael, 188

McCarthy, James, 32

McChord Air Force Base, Wash., 154, 156, 256. See also Fort 

Lewis, Wash.; Joint Base Lewis-McChord, Wash.

McCreedy, Kenneth, 170

McGarrity, Timothy, xv, 170, 171

McGlinn Doctrine, 130

McKay, Allison, xx, 225, 229

McLaughlin, Patrick, 215

McNamara, Robert, 11

McNeill, Dan, 84

MDW. See Military District of Washington (MDW).

Meade Communities, 157, 160, 167

Merritt, Elizabeth, 222

Meyer, Bob, 55

MHPI. See Military Housing Privatization Initiative (MHPI).

Michaels Military Housing, 231, 259

Military Construction (MILCON), 9–11, 13, 14, 18, 23, 29, 30, 

34, 40, 42, 48, 53, 57, 61, 73, 76, 78, 80–82, 85, 86, 91, 92, 

96, 98, 116, 128, 191, 242–244, 284, 294, 295, 297, 299

Military culture, 53, 59, 101, 112, 138, 140, 251, 279

Military District of Washington (MDW), 93, 104, 157, 159

Military Family Housing Revitalization Act, 32, 33, 35

Military Housing Authority, 28, 29, 41

Military Housing Corporation, 41

Military Housing Privatization Initiative (MHPI), 2, 7, 27, 

35, 36, 37, 38, 40–42, 47, 54, 58, 59, 72, 74, 81, 91, 92, 100, 

107, 114, 134, 192, 199, 203, 217, 241–246, 253, 279, 293, 298

Mixed-use construction in RCI projects, 216, 219

Modular home construction, 155

Fort Hamilton, 150

Fort Lewis, 151–153, 156, 173

Moffett Federal Airfield, Calif., 193, 194, 196, 197, 199, 231

Morale, Welfare and Recreation (MWR), 23, 100

Moran, Jim, 214

Morrisey Livingstone, Susan, 17

Mortgage guarantees by federal government, 52, 80

Mulvey, Bill, 160, 161, 164, 173

MWR. See Morale, Welfare and Recreation (MWR).

Mysliwiec, William, 272

N

National Aeronautics and Space Administration (NASA), 

196, 207

National Defense Authorization Act, 2, 22, 27, 31, 34, 35, 37, 

38, 58, 73, 92, 116, 245, 279, 284

National Environmental Policy Act of 1969, 145

National Historic Landmark designation, 223–225

National Historic Landmark District, 226

National Historic Preservation Act (NHPA), 148, 162, 221

National Housing Act of 1934, 9

National Register of Historic Buildings, 111

National Register of Historic Places, 103, 111, 148, 149

National Training Center (NTC), 195

National Trust for Historic Preservation, 80, 222

Naval Postgraduate School, Calif., 149, 193, 199, 203–205, 

206, 207, 231, 233, 272

Navy Housing Investment Board, 22

Neighborhood centers on RCI sites, 71, 163, 164, 165, 166, 217, 

298

Fort Belvoir, 286

Fort Carson, 133

Fort Irwin, 199

Fort Meade, 158, 163, 164, 165, 166, 170, 173
346 Privatizing Military Family Housing 347

INDEX

New Urbanism, 75, 76, 228, 293, 298

Fort Belvoir, 199, 212, 219, 298

Fort Hood, 298

Fort Irwin, 77

NHPA. See National Historic Preservation Act (NHPA).

Nix, Michael, 101

Nolan, Casey, xx, 190, 219, 222

North American Aerospace Defense (NORAD), 47.

O

O’Brien, Kevin, 57

OACSIM. See Assistant Chief of Staff for Installation 

Management (ACSIM).

Occupancy rates in RCI housing

Fort Benning, 273

Fort Bliss, 161

Fort Bragg, 284

Fort Carson, 130

Fort Detrick, 212

Fort Drum, 284

Fort Hamilton, 161

Fort Hood, 161

Fort Irwin, 283, 284

Fort Leonard Wood, 161

Fort Lewis, 154

Fort Meade, 157, 160–162, 164, 167, 168, 170, 173

Fort Shafter, 161

Fort Stewart, 161, 284

Schofield Barracks, 161

Office of Management and Budget (OMB), xi, 14, 15, 40–42, 

55, 56, 58, 74, 77, 80, 101, 102, 116, 134, 143, 147, 159, 190, 

201, 241, 245–247, 257, 258, 260, 282

Office of Personnel Management (OPM), 266

Office of the Judge Advocate General (OTJAG), 55, 56

Office of the Secretary of Defense (OSD), xi, 18, 21, 22, 29, 

37, 38, 41, 55, 77, 95, 96, 115–118, 128, 134, 147, 184, 186, 188, 

190, 194, 201, 204, 214, 242–246

OMB. See Office of Management and Budget (OMB).

OPM. See Office of Personnel Management (OPM).

Ortiz, Soloman, 31, 32, 243, 244

OSD. See Office of the Secretary of Defense (OSD).

OTJAG. See Office of the Judge Advocate General (OTJAG).

Overseas Contingency Operations, 266

P

Packard, Ron, 73

Palmer, Jim, 51

PAM. See Portfolio and Asset Management (PAM) program.

Parks Reserve Forces Training Area, Calif., 191, 193, 194, 196, 

197–199, 202, 203, 206–208, 212, 231, 233

Parks, Matthew, xix

Patriotism, xvi, 107

Patterson, Peggy, 55, 56, 141

Perez, Dean, xvi, 285

Perry, William J., 20, 21, 28, 30, 31, 34, 37, 41, 49, 52, 60, 71

Peterson Air Force Base, Colo., 47

PHMA. See Professional Housing Management Association 

(PHMA).

Picatinny Arsenal, N.J., 191, 193, 207, 231, 232, 243, 255, 275

Picerne Military Housing, xx, 109, 158, 160, 164, 165, 166, 167, 

173, 191, 192, 217, 231

Picerne Real Estate Group, 108, 157, 158, 166

Picerne, John, 108, 157, 158, 299

Pickler, John, 57

Pikes Peak Family Housing, 62

Pilot sites for RCI, 31, 82, 84, 86, 91–97, 100, 102, 103, 106–108, 

112–115, 118, 127, 129, 133, 137, 138, 141–144, 148, 153, 158, 161, 

166, 172, 173, 183, 185, 186, 188, 190, 217, 249, 251, 252, 280

Pinnacle Realty Management Company, 194

Pinon Canyon Maneuver Site, Colo., 48

Pope Air Force Base, N.C., 166, 255

Portfolio and Asset Management (PAM) program, 170–172, 

185, 189, 212, 253, 254, 260

Portfolio Manager, 137, 147, 150, 156, 170, 172. See also

Portfolio and Asset Management (PAM) program.

Presidio of Monterey, Calif., xx, 73, 149, 183, 185, 188, 189, 191, 

193, 194, 197, 199, 202, 203, 205, 206, 207, 210, 212, 231, 233, 

246, 272, 273, 294

Privatization of Army Lodging (PAL) program, 246, 260, 

284, 285, 286, 296

Procurement Integrity Act, 62

Professional Housing Management Association (PHMA), 

72, 73, 190

Property Management Program, 157

Prosch, Geoffrey, xv, 127, 128, 151, 163, 170, 253, 260

Q

Quality of life, xvi, xvii, 1, 21, 31, 36, 37, 84, 85, 98, 137, 138, 

160, 165, 170, 173, 191, 213, 214, 222, 259, 267, 268, 282, 286, 

295, 299

Quaranta, Dean, xx, 62, 132, 143

Quinney, Mack, xx, 138, 139, 172

R

R.L. Workman Homes, 259

Raines, Franklin, 41, 245

Rand Corporation, 12

RCI Primer, 187

RCI Project Office

Fort Carson, 130

Fort Hood, 138

Fort Meade, 159, 160

RCI Project Office, headquarters, 18, 160, 171, 172, 194, 212, 

217, 232, 247

RCO. See Residential Communities Office (RCO).

Reagan, Ronald, 12, 13, 172, 294

Real estate market impact on RCI projects, 50, 282, 294, 299

Rearick, Gay, xx

Redstone Arsenal, Ala., 231, 243, 284

Reenlistment, 12, 18, 23, 294

Rehabilitation Act, 152. See also Disability issues.

Reimer, Dennis, 48, 50, 51

Renegotiation Act of 1951, 10

Request for Proposals (RFP), 16, 38, 40, 55–57, 59–64, 71, 72, 

75, 77, 78, 94, 98, 99, 103, 115, 129

Request for Proposals (RFP) process, 63, 72, 75, 78

Request for Qualifications (RFQ), 77–81, 83, 94, 99, 100, 103, 

106, 107, 114, 117, 133, 162, 168, 186–188, 191–194, 205, 207, 

213, 215–217, 224, 232, 284

Request for Qualifications (RFQ) process, 81, 100, 186, 188, 

191, 194

Residential Communities Office (RCO), 143, 144, 147, 152, 

155, 156

Retail space in RCI projects, 71, 217, 219, 233

Fort Belvoir, 199, 212, 216

Retention of soldiers, 1. See also Reenlistment.

Retrofitted contracts, 272

Reversionary land ownership, 145

RFP. See Request for Proposals.

RFQ. See Request for Qualifications.

Robyn, Dorothy, 246

Roeder, Ray, 15

Roman, Ana, 140

Roosevelt, Franklin D., 8

Ross, David, xv

Rostker, Bernard, 29, 74, 81, 82, 93, 94, 107, 297

Rouse Company, 76

Rouse, James, 76

S

Sanders, Tom, 55

Sarbanes, Paul, 157

Satisfaction surveys of residents, 113, 172, 286

Fort Carson, 130

Fort Hood, 138

Fort Lewis, 152

Fort Meade, 165

Scanga, Joseph, 76

Schlabach, Steve, 101

Schmidt, Tom, 51

Schofield Barricks, Hawaii, 33, 161, 191, 231, 247, 249, 274

School districts and RCI projects, 110

Fort Carson, 53, 59, 60, 94, 141

Fort Hood, 140, 141, 173

Fort Lewis, 141
348 Privatizing Military Family Housing 349

INDEX

School districts and RCI projects—Continued

Fort Meade, 114, 115

Schreiber, Kimberlee, xx, 144, 152, 154

Schwartz, Thomas A., 40, 48, 50–53, 57, 84, 85, 98, 118, 297

Schwarz, Thomas A., 40

Scoring of RCI proposals, 40, 241. See also Office of 

Management and Budget (OMB).

Scribner, Barry, xv, 74, 232

Sears Roebuck Co., 150

Section 236 housing program, 12

Section 2667 housing program, 15, 16, 21, 34, 51, 204, 294

Section 801 housing program, 13–16, 20, 22, 32, 34, 40, 41, 

98, 294

Section 802 housing program, 13–16, 20, 22, 32, 34, 40, 41, 

294

Sedivy, Michael, 72

Senior Unaccompanied Housing (SUH), 166, 194

Shepko, Robert, xx, 209, 210, 275

Shinseki, Eric, 136, 185, 213

SHPO. See State Historic Preservation Offices (SHPO).

Sikes, Joseph, 37, 40, 41, 77, 85, 245

Sincere, Barbara, xiv, xvi, 137, 138, 285, 286

Size expectations regarding housing, 2, 21, 50, 54, 74, 161, 163

Skelton, Isaac, 243, 244

Skunk works team, 76

Slater, Gina, xx

Smith, Tim, 204

Soldier’s memorial, 278

Soriano, Edward, 110, 151, 217

Source Selection Advisory Council (SSAC), 61–63, 79, 187

Source Selection Authority (SSA), 61, 62, 64, 79, 187, 194

Source Selection Evaluation Board (SSEB), 61–64, 79, 96, 

103, 107, 108, 184, 187, 194

Source Selection Evaluation Plan (SSEP), 63, 78

Spence, Floyd, 37

Spigelmyer, Don, xiv, xv, xvii, xix, 18, 32, 38, 55, 60, 76, 96, 

104, 118, 147, 170, 172, 183, 188, 190, 193, 215, 219, 231, 243, 

255, 258, 266, 294–296

Departure from RCI, xix, 253

SPiRiT. See Sustainable Project Rating Tool (SPiRiT).

Stafford, Aimee, xx, 159, 160, 170, 295

Stafford, Jerry, 48, 131

Standard Operating Procedures (SOP), 171, 189, 225

Starbucks, 217, 218, 219

State Historic Preservation Offices (SHPO), 148, 149, 162, 

221, 222, 224, 225, 233

Stefanides, Dean, xv, xix, 28, 29, 30, 38, 72, 245, 246

Stefanski, Francis, xv

Stewart, Michael J., 106

Streamlining of the RCI process, 187, 188

SUH. See Senior Unaccompanied Housing (SUH).

Sullivan, Dick, 51

Sustainable Project Rating Tool (SPiRiT), 190

Swap providers, 271

Swearingen, Lana, 55

Swieconek, Bob, 55

Switzer, Jim, xx, 138, 139

T

Taibl, Paul, 80

Tauscher, Ellen, 202

Taxation, 110, 114, 201–203, 212, 258, 299

Fort Hood, 99

Thompson, Lee, 105

Thurmond, Strom, 35

Tiger Team, 32

Utility Tiger Team, 116

Town Center, 221, 222

Columbia, 76

Fort Belvoir, 183, 199, 212, 216, 217, 218, 219, 220, 233

Fort Irwin, 77, 219, 279

TRADOC. See Training and Doctrine Command 

(TRADOC).

Traffic issues, 214, 215, 299

Training and Doctrine Command (TRADOC), 203, 256

Training of RCI staff, 188

Trammell Crow Company, 85, 100, 101, 133, 142

Tramp, Anton, xiv, 147, 150

Tripler Army Medical Center, Hawaii, 249, 284

U

U.S. Air Force Academy, Colo., 47

U.S. Army Community and Family Support Center, 23

U.S. Army Forces Command (FORSCOM), 48, 51–56, 84–86, 

98, 101, 110, 112, 116, 134, 137, 185, 186, 256

U.S. Military Academy, 260, 274

U.S. Military Housing Benefit Corporation (USMHBC), 63, 

64

Unaccompanied Personnel Housing Privatization Task 

Force, 279

Unaccompanied Personnel Housing (UPH), 194, 219, 232, 

241, 242, 246, 257, 260, 266, 279, 280, 281–284

Urban Land Institute, 30, 80, 81, 265

USMHBC. See U.S. Military Housing Benefit Corporation 

(USMHBC).

Utilities controversy, 19, 115, 116

V

Van Antwerp, Robert, 107, 110

VanSlyke, Joyce, 257, 297

VanWiltenburg, Phillip, 105, 106

Variable Housing Allowance (VHA), 12, 14, 50, 55

Vietnam War, 12

Village Commons, Herryford Village, Fort Belvoir, 217, 222

W

Walter Reed Army Medical Center, D.C., 131, 191–193, 

206–208, 209, 210–212, 231–233, 255, 274, 275

Warner, John, 74

Warriors in Transition, 228

Warriors Walk, Fort Stewart, Ga., 277, 278

Washington, Caryn, 157, 158, 159

Waterfall list of potential residents, 167, 168, 197

West Point, N.Y., 250, 274, 275

Wheeler Army Air Field, Hawaii, 247, 249

Wherry Housing program, 9–11, 16, 20, 32, 34, 74, 92, 98, 103, 

148, 149, 258, 293, 294, 298

Wherry, Kenneth, 9

Whitaker, Joseph W., 128

White Sands Missile Range, N. Mex., 231, 275

White, Sarah, 198

White, Tom, 159

Williams, Chris, 278

Williams, Kirk, 60, 140

Williams, Marvin, 138

Wilson, Doug, xx

Wilson, Robert, 252

Wimer, Rick, xx

Winn Residential Military Housing Services, 142

Winters, Jodi, xx

Wolfowitz, Paul, 244

Woodlawn Little League, 214

World War I, 8, 103, 222

World War II, 8, 150, 252

Wright, Larry, 204

Y

Yim, Randall, 102, 114

Yuma Proving Ground, Ariz., 259, 265, 284

Z

Zarelli, Joseph, 150