Housing construction experiences delays

  • Published
  • By Rhonda Siciliano
  • 66th Air Base Wing Public Affairs
HANSCOM AFB, Mass. --  Construction progress on Hanscom's privatized housing project has slowed considerably. With just 17 new houses completed and now occupied by Hanscom residents the project continues to fall behind the scheduled construction of 784 new homes that American Eagle Communities, the project owner, were to have completed by November 2009. 

American Eagle Communities is a partnership between Carabetta Enterprises, of Meriden, Conn., and Shaw Infrastructure Inc. of Baton Rouge, La., a subsidiary of The Shaw Group. 

"The project is experiencing distress due to substantial cost overruns and lower than projected occupancy," said Mike Hawkins, Air Force Center for Engineering and the Environment. 

"The cost overruns are primarily due to inaccurate cost estimates by the project owner," he said. The Air Force Center for Engineering and the Environment or AFCEE is the portfolio manager for Hanscom and all other Air Force privatized housing and, together with the Hanscom privatization asset management team, is responsible for monitoring project performance. 

"The difficulties at Hanscom are unique to this particular developer," Mr. Hawkins said. Hanscom is not the only base experiencing delays with its privatization project. Work has ceased at Little Rock Air Force Base, Ark. and Moody AFB, Ga. Patrick AFB, Fla., has experienced delays like Hanscom. All of the projects are owned and managed by American Eagle Communities. 

"Through AFCEE the Air Force is taking every step to ensure the success of the projects," Mr. Hawkins said. "We work on a daily basis with the bondholders, the project owners, and other stakeholders to resolve the issues at hand as expeditiously as possible." 

The privatization projects are not traditional military construction contracts, but rather 50-year real estate transactions between the developers and the Air Force whereby the developers agree to offer privately owned homes for rent to military families in exchange for an initial government capital investment conveying existing housing and land for rental payments by military occupants of housing. 

Each of the projects is a stand-alone project with different bondholders and financial structures. Mr. Hawkins said that the impact and actions necessary to move the projects forward will be determined by the specific legal documents involved in those transactions. 

AFCEE, he said, detected performance problems early and encouraged the bondholders, the financial lenders of the project, to become more involved in the projects. As a result, the bondholders engaged the developer, American Eagle Communities, in performance discussions. 

"The trustees/bondholders have taken actions to preserve project value," Mr. Hawkins said. "They have stopped or limited construction draws due to construction escrow imbalance and required the project owner to provide recovery plans for each project." 

AFCEE remains fully engaged with the bondholders with a focus towards establishing a way forward at Hanscom, as well as the other three Air Force projects that American Eagle Communities manages. 

"We are working hard to minimize the impact to our Hanscom residents," said Col. Tom Schluckebier, 66th Air Base Wing commander. "We're obviously disappointed with the performance and the delay in delivery of new homes is the most significant impact residents may encounter. For residents who may have hoped to stay in their current quarters for the length of their tour here at Hanscom, the potential for additional construction delays could work in their favor. For others, who were looking forward to moving to a new home in the near future, the probability of that happening has likely diminished." 

Colonel Schluckebier said that residents will be kept informed of developments related to Hanscom's housing privatization project. "As for the immediate future," Colonel Schluckebier said, "Our hope is that construction will be completed on those new houses that are in various stages of being built and the other construction areas can be secured to ensure the safety of our residents and the property."