Actus wins $1.1B Air Force contract
By Andrew Gomes
Advertiser Staff Writer
A Mainland subsidiary of an Australian construction company yesterday won a second billion-dollar-plus assignment to privatize military housing on O'ahu with the help of local businesses.
The U.S. Air Force selected Napa, Calif.-based Actus Lend Lease LLC to renovate, replace and manage 1,356 housing units at Hickam Air Force Base.
INOUYE
The contract, valued at $1.1 billion over 50 years, is the third and final military housing privatization project to be awarded on O'ahu, following larger projects awarded in recent months by the Army to Actus and by the Navy to a Mainland-Hawai'i hui of companies.
All three projects are expected to add vigor to the state's growing economy and create an explosion of construction jobs and subcontracting work that will sap an already lean Hawai'i construction workforce.
The housing upgrades are expected to improve the morale and retention of military personnel and their dependents, who often find themselves assigned to antiquated living quarters.
"This is a great day for Air Force families stationed in Hawai'i," said U.S. Sen. Dan Inouye, the ranking member of the Senate Appropriations defense subcommittee, in a statement.
Initial Hickam development work estimated at $300 million is expected to start in April — before the Army or Navy projects — and be complete by February 2009.
Included in the construction will be renovation of 718 homes, reconstruction of 638 homes, undergrounding of utilities, addition of recreation areas and landscaping, and improved parking.
Actus will continue to maintain and manage the Hickam homes for 50 years, during which it will collect an estimated $1.1 billion in rental income from the Air Force.
The Air Force is retaining 1,284 housing units because they are near key operational facilities off-limits to the public.
Most of the Hickam homes are 50 to 60 years old, and 72 percent of them — roughly 1,900 of 2,600 — do not meet Air Force standards, said Col. Raymond Torres, 15th Airlift Wing commander.
Actus expects to subcontract $133 million, almost 90 percent of the construction work, said company spokesman Tom Swain. The balance of the $300 million project cost goes to insurance, financing, consulting and other nonconstruction expenses, he said.
Actus expects to begin seeking subcontractors in the next couple of months, after contract details are finalized with the Air Force.
Swain also said Actus anticipates spending $11 million a year with local companies for goods and services needed to maintain the Hickam housing.
Actus anticipates subcontracting a similar portion of work to local businesses for its Army contract for 7,700 homes on O'ahu, valued at $6.9 billion over 50 years. Work on the Army project could begin as early as mid-2004.
The Navy housing privatization project involves 7,300 Navy and Marine Corps homes on O'ahu. Hawaii Military Communities LLC — a partnership of Ohio-based Forest City Enterprises Inc., Texas-based C.F. Jordan LP and 18 Hawai'i companies — was awarded an initial phase of work covering 1,948 homes at an estimated construction cost of $358 million.
Work could begin late next year and is expected to last four years. The Navy has retained an option to negotiate with another company for three future phases that could cost more than $1 billion.
The Department of Defense has adopted the housing privatization strategy since 1996 to speed upgrades to military housing, estimating it would take 30 to 40 years and $30 billion for the government to upgrade 168,000 "inadequate" military homes around the country.
The program has private developers spending their money to upgrade and maintain the housing, then collecting rent over 50 years. The military leases the properties to the developers for 50 years, taking the risk that enlistments might fall and bases could close.
Actus has been awarded five military housing privatization projects, including 5,912 homes in Texas, 4,230 homes in Kentucky and 1,718 homes in South Carolina.
The company, formed in 1999 from a joint venture between Napa, Calif.-based Actus Corp. and Lend Lease Projects U.S., is a private subsidiary of Sydney-based Lend Lease, one of Australia's largest construction companies.
Reach Andrew Gomes at agomes@honoluluadvertiser.com or 525-8065.
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