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Little Rock AFB housing project falters

JACKSONVILLE, Ark. — Plans to renovate 1,200 homes for military families of the Little Rock Air Force Base have fallen through, and Air Force officials are looking for a new developer to take on a scaled back project.

American Eagle Communities entered a $106 million agreement three years ago with the U.S. Air Force to renovate homes for the base as part of the Defense Department’s push to privatize military housing. Under the agreement, American Eagle is to manage the housing, collect rent and handle maintenance and upkeep.

But in May, the company halted its work, leaving empty lots and half-built residences, after private investors stopped funding the project. Also, more than $12 million in private bonds issued in 2004 to help fund the project defaulted this month. Another $52.2 million in bonds were repaid to investors last month as American Eagle officially slipped into default on the contract.

Brig. Gen. Rowayne Schatz, the base commander, said the Air Force is working with American Eagle, Little Rock Family Housing, and the bonds holder to try to sell the project to a new developer. Included in the sale negotiations are American Eagle housing projects in default at Hanscom Air Force Base, Mass., Patrick Air Force Base, Fla., and Moody Air Force Base, Ga.

If the sale falls through, the remaining bonds would collapse into default and the Little Rock project would start over again, with a new proposal, a new contractor and all-new funding sources. Schatz said the Air Force and American Eagle would prefer to find a new developer and get the project back on its feet again.

“We want to have the best-quality housing for our airmen and families that we possibly can,” Schatz said. “Privatization is a good tool to do that.”

An Air Force study for the base last month projects the base will need a minimum of 659 homes in 2012. The exact number of houses that will remain at the base is not yet known.

Meanwhile, the Arkansas congressional delegation wants to know how the American Eagle project failed. Sen. Mark Pryor, D-Ark., and Sen. Saxby Chambliss, R-Ga., have jointly filed legislation that calls for an investigation into all military privatization projects that have fallen behind schedule or into default.

The legislation calls for descriptions of how the contracting company was solicited and chosen, how the financing was structured, and what remedies are available to recover from stalled projects.

Air Force officials expect to know in the next few weeks whether the project will be sold.

“We’re hoping in a month or so an agreement will be reached with a new developer in principal and that it will probably take a few months to get all the negotiations and paperwork done and review the project,” Schatz said. “And then my optimistic, realistic window is that early next summer, we’ll see construction start again and move forward.”