HOUSING FOR SERVICE PERSONNEL and their families has been a source of frustration for the military for years. Since the end of the Cold War and the ongoing efforts to close military bases, housing stock has deteriorated dramatically. The Department of Defense estimates that about 50 percent of its 257,000 housing units is substandard. By the military's calculations, it would take 30 years and $16 billion to meet its current need for adequate housing using traditional methods of contracting and construction.

Additionally, the military is experiencing the same kinds of housing shortages as civilians. Seventy percent of service personnel live off base; with rising housing costs, their basic allowance for housing only covers about 80 percent of the average cost of rent.

At the same time, military leaders have testified to Congress that adequate housing is one of the top issues that service personnel consider when deciding whether to re-enlist.

In 1996, Congress gave the military the tools to speed up construction of new family housing and to repair units that can be salvaged as part of the Military Housing Privatization Initiative. Under this plan, private developers design neighborhoods and build houses that they own, and they get a 50-year contract to maintain the units.

To date, the military has awarded contracts for 60,451 housing units. Another 74,108 are in or pending solicitation of requests for qualifications, and 34,174 units are in the planning stage. Using private contractors will save the military an estimated 10 percent on construction and maintenance costs and cut nearly a decade off the timetable for eliminating its substandard housing.

The units are designed in complete communities. The goal is to mirror surrounding neighborhoods, says John Torti, president of architectural and planning firm Torti Gallas and Partners based in Silver Spring, Md., which has worked on several projects. The master plan design is intended to help the families make friends quickly and easily.

“It's really good stuff,” he says. “We're making neighborhoods that are comparable to the best new urban neighborhoods, and I feel very good about that. After you have a foothold of success, you don't want to screw it up because there's so much opportunity out there.”

In 2003, the Village at Naval Training Center, just outside downtown San Diego, won an EPA National Smart Growth Achievement Award. The 50-acre site has 500 townhouses, a site for an elementary school, and an 11,000-square-foot community center with a swimming pool and a fitness room.

“Seeing people move into these homes, you can see how ecstatic they are,” says Tony Megliola, public-private venture team leader at Naval Facilities Engineering Command, Southwest division. “We moved them from the worst stuff nationwide. It's an unbelievable morale boost. If you have a sailor or Marine on deployment, and he's trying to focus on a mission and he knows his family back home is suitably housed and there's no costs out-of-pocket, it's one aspect of his life he doesn't have to worry about.”

For builders, the initiative represents, “literally, billions of dollars worth of work and tens of thousands of housing units,” says Robert P. Harris, director of military housing at the NAHB Research Center. “There are a few large players getting a lot of the work, but there are opportunities for smaller builders—smaller projects with less units or to be part of a larger team. The sheer volume presents opportunities.”

Scott Forrest, director of special venture acquisition for Naval Facilities Engineering Command, agrees. The Navy alone has more than $3 billion worth of housing needs still to be addressed.

“We recognize that we are not experts in housing,” he says. “We want to capitalize on those that are. ... Anytime we get an opportunity, we tell folks this isn't government contracting, it's government investment in private companies. There is still a lot of work to do.”