A Twitter chat is like a meeting on Twitter; it has a specific discussion topic and a scheduled start time. Using the hashtag #MilCents at the end of each tweet, MFAN will ask questions to a group of financial experts.
Last year’s National Defense Authorization Act (NDAA) included a Tenant Bill of Rights to address problems reported by military families living in housing on military installations. MFAN was at the forefront of this discussion because data we gathered in our survey of military families detailed where and what types of problems were occurring.
The Tenant Bill of Rights included 18 rights afforded to military tenants in privatized military housing. On Monday, June 1, Assistant Secretary of Defense for Sustainment, W. Jordan Gillis, and the Department of Defense’s Chief Housing Office issued a memo stating that 14 of the 18 rights had been secured and that work was still ongoing for the three remaining rights. Which begs the question, what is taking so long?
The answer? It’s complicated. Allow us to explain.
These are the remaining three rights:
The Department of Defense began privatizing military housing in the late-1990s. To do this, each branch of service began entering into agreements with private companies, forming new partnerships to repair and construct military housing. Much of the housing was in poor condition and more housing needed to be built, so the new partnerships had to take out loans from lenders to pay for the repairs, new construction, and/or ongoing maintenance.
It may be helpful to think of these lenders as large banks. If you’ve ever bought a home, the lenders are in a position similar to the mortgage company that holds your mortgage. Before the DoD/private company partnerships can take actions that are restricted by their loan documents or might impact their ability to repay the loans, they have to first get permission from the lenders.
Getting the lenders’ approval is more complicated than it sounds. When the partnerships entered into agreements with the lenders, the partnerships committed to meeting certain requirements. Now that they’re asking to change some of those requirements—even if the changes have been ordered by Congress—the lenders have a right to approve the changes, or potentially renegotiate, the existing agreements.
As a next step, the partnerships and DoD will need to prepare amendments to the existing agreements that can be submitted to the lenders for approval. This process will take time, and lenders are not likely to accept new loan terms that are less favorable or that that otherwise impact the finances of the partnership.
To further complicate matters, there are roughly a dozen or more lenders and dozens of partnerships involved who all must negotiate and separately agree to the final changes to any agreements, and the negotiations can’t begin until the Department of Defense has issued guidance on what the remaining rights will look like in practice. All of that work has been delayed by the impact of the COVID-19 pandemic on the workforce—both on the DoD’s employees and the employees of the private partnerships. The housing companies plan to “virtually” meet with DoD officials this month to continue working through more of the details.
Senior defense officials said this afternoon that the DoD is trying to define a dispute resolution process that will be fair to all parties. They have, however, nearly finalized a plan to allow tenants access to maintenance history.
The good news: just because this is hard doesn’t mean it isn’t worth the effort. Based on what we have heard, the housing companies and the Department of Defense really are working tirelessly to make the last three rights a reality.
MFAN has been committed to the issue of military housing since problems first came to our attention. We will continue to keep you updated on this issue as it progresses and changes.
Subscribe to our newsletter and recieve all of the latest MFAN news.
No comments so far.