Essay on Privatization in Military Housing Communities

Introduction
The Military Housing Privatization Initiative ("MHPI") gives the U.S. government broad authority to provide credit enhancement. The MHPI actually consists of a series of legislative authorities designed to test the use of various incentives to encourage private sector investment in military housing over a five year period. Tools provided in the MHPI include the ability to guarantee loans and leases convey or lease land and improvements, make differential lease payments, invest in private partnerships or corporations, and make direct loans in order to provide for the acquisition or construction by the private sector of family housing units on or near military installations. When the MHPI became law, the Department of Defense asserted that it could solve the military housing crisis in ten years without any significant increase in funds currently allocated to military housing in the Department's budget. On closer review, however, the MHPI contains several constraints on the new authorities that have led to little progress in the military housing area, and with a nation-wide solution nowhere in sight.

The MHPI authorizes the military to make differential lease payments to private sector lessors pursuant to a written agreement in addition to the rental payments for the housing made by the military members in amounts the Secretary of the subject department determines appropriate. Nevertheless, budget scoring dilutes the effectiveness of this tool.

Congress and the military have determined that they want to integrate members of the military to the greatest extent practicable into the communities in which they are located. Therefore, the Act expressly provides that the room patterns and floor areas of military family housing units acquired or constructed under the Act are generally comparable to the room patterns and floor areas of similar housing units in the locality concerned. This enables the private developer to build housing...................

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