Rudimentary cost dynamics of privatized military housing

As NOPE has learned through reading the original Laurelwood housing lease agreement and the dozens of supplements to the contract since 1990, the 300 mostly vacant Laurelwood homes on NWS Earle have thus far cost the Department of Navy (read: U.S. taxpayers) $70-$75 million, or about $250k apiece...so far.

Although no one would argue with the need to provide quality homes for our service members, the issue of whether privatization - in other words, hiring a private company to construct and manage brand-new military housing - saves Uncle Sam any money is valid and should be challenged by our legislators in Washington.

Take this from the Central Penn Business Journal, which reports the Navy will pay Lincoln Military Housing $7.2 million to demolish 55 old (1960s-era) homes and build 31 single-family homes for sailors and officers at the Naval Support Activity Mechanisburg base in Cumberland County, near Harrisburg, PA. Sounds nice, right?

NOPE is not in the real estate game, but let's hypothetically put the cost to bulldoze the old homes at $1.2 million. Back-of-the-envelope math would then put the cost to build the 31 new, 2,000-square-foot homes, at $200k apiece ($6.2 million), excluding the fees that Uncle Sam will presumably pay for many years to Lincoln to manage the homes.

In a small sample of existing homes in the Mechanicsburg, PA market (home to the base) on Realtor.com, meanwhile, we found nearly 70 already on the market (many looking brand new or less than five years old) for under $250k. Based on NOPE's past discovery from GAO research showing the trend among servicemembers to live in homes outside the military base, we can only question why the Department of Defense continues to view MHPIs, or privatized military housing ventures, as a panacea to military housing needs, particularly in developed areas such as Mechanicsburg, PA, where there is a supply of ready housing.

Citing the Laurelwood homes built under Section 801 (only 7 such communities were constructed under this code; the government found it a disastrous methodology), it is clear that MHPIs are a better alternative, but would the military not be better served (in cases like Mechanicsburg), to simply buy homes within the community and hire a property manager who would oversee the houses and service members' needs?

Just food for thought as we sit around (now inside the 30-day deadline of expiration of the military-use phase of the Laurelwood contract) waiting for the Department of Navy to come to a decision (and hopefully its senses) on proposed civilian housing at NWS Earle...