A $4.4 billion housing initiative has helped tide over the construction industry in a tough economy
POSTED: 1:30 a.m. HST, Jul 31, 2011
Spreading out across the volcanic crater of Aliamanu Military Reservation is a sea of new homes with two-car garages, Corian-counter kitchens, central air conditioning, solar hot water heaters, vaulted ceilings, well-kept white-fenced yards and much happier families dwelling within them.
This used to be the run-down neighborhood where military families complained not too many years ago about shoddy wiring, electrical fires and mold problems.
Across Oahu a $4.4 billion housing privatization initiative started in 2004 has been transforming the military neighborhood landscape, and keeping the Hawaii construction industry out of the depths of the recession in the process.
The massive rebuilding effort by developers Lend Lease and Forest City Military Communities has so far resulted in the completion of 7,150 new Army, Navy, Air Force and Marine Corps homes on Oahu and renovation of 2,915 others. Thousands more are still planned to be built.
The effort may have saved Hawaii's construction industry along the way. As an example of the expenditure levels, Forest City was doing $35 million in construction a month in 2008, officials said.
Lend Lease said it was delivering about 100 homes a month in 2009, and about 50 to 60 now.
Economist Paul Brewbaker said the big economic impact played out as expected, but a delay in the project's start was fortuitous for the state.
"It was a little slower to get mobilized, but as it turned out, it did bridge a huge valley in private construction that unfolded and became acutely severe after the collapse of (investment bank) Lehman Bros. precipitated a credit crunch," Brewbaker said.
The military housing projects have passed their peak but are still going strong: Forest City completed the last of the Navy homebuilding effort in March, and has about 387 more new Marine Corps homes to build — work that will take it into 2014.
Lend Lease plans to build 1,997 more new Army and Air Force homes and renovate 1,545 others into the year 2020.
The military, realizing it couldn't build or renovate its housing stock to desired standards fast enough, turned to the private sector to build, operate and maintain housing through the Military Housing Privatization Initiative of 1996.
A service member's housing allowance is used to pay for rent and to cover the construction of new homes and maintain them under 50-year terms with the developers.
Lend Lease, headquartered in Australia, is constructing 6,449 Army and Air Force homes in Hawaii and renovating 2,953 existing homes as part of $2.85 billion worth of expected projects.
Forest City, based in Ohio, is building 3,085 new homes and renovating 1,507. The projects are projected to cost $1.6 billion.
Will Boudra, vice president of development for Forest City, said the builder was able to complete better-quality homes faster than the Navy could in the past.
"So I think in that instance, we can say that the privatization process has been a success because we've been able to build so many homes so quickly," Boudra said.
Army Sgt. Maj. Dwight Wafford, who lives with his wife, Carolyn, and their 18-, 16- and 13-year-old daughters in one of the new houses in Aliamanu Military Reservation, said the builder gathered input from military members in designing the homes.
Island Palm Communities is the partnership between Lend Lease and the Army and represents the Defense Department's largest military family housing privatization project.
"They just seemed to put a lot of thought into how they designed the homes," said Sgt. Maj. Wafford, 44, who works for the U.S. Army Pacific surgeon division.
The Army family was stationed in Hawaii 14 years ago, and their on-base house was "cinder blocks and no AC — it was quite a different experience," said Carolyn Wafford.
She added that their current three-bedroom house "is the best house we've ever lived in."
The new houses are single family or duplexes in the neighborhood.
She likes the island in the kitchen, two built-in computer stations and the fenced-in back yard. Her husband appreciates the dirt tub next to a side door where he can wash off his gear.
"As a military family, we were very hesitant to accept the changes in going to privatized housing," Carolyn Wafford said. She expected there to be extra burdens placed on military families.
"But when we got into this house, I think it's the square footage (that I like). I think it's an architectural amazement they can put this size house on this lot," she said.
Wafford also recalls the "housing Nazis" before housing privatization at other Army installations who weren't helpful in
providing information about when or which housing would be available for the family after it moved to a new location.
Island Palm is "very, very responsive," she said.
Some of the old quad-unit homes remain in Aliamanu, but construction crews continue to move forward with their demolition and replacement.
Ann Wharton, a spokeswoman for Lend Lease, said between the Army and Air Force projects, $110 million is expected to be spent on construction in fiscal 2012, $115 million in 2013 and $600 million between 2014 and 2020.
Between 350 and 500 subcontractor personnel are on site every day representing a variety of trades, she said.
Tony Narvaez, owner of Kapolei-based Superior Concrete Services, said his company would probably be a small family-operated business with five or six employees if he didn't get the work he got on the Army and Air Force projects.
"When the economy had its downturn, for us, doing work for Lend Lease, we actually saw steady growth within our company," said Narvaez, who was born in Hawaii.
He said he's averaged about 58 employees on a yearly basis — all Hawaii residents — and the Lend Lease contracts represent about 80 percent of his work.
"I do see it is starting to become more competitive because the private-sector work has really taken a big hit over the years, and a lot of private-sector contractors are coming to the federal side now," Narvaez said.
He said he has a positive outlook, though, with the continuing housing privatization work, other federal projects, the rail project and with some homebuilders looking to start up some big projects.
"There's a positive outlook in federal (work), and I see there's a turn that's going to be coming around in the private sector, too, with Castle & Cooke and D.R. Horton homes," he said. "There's some planned projects on their side, too."