Mainland partnership gets first phase of Navy housing

By Dan Nakaso
Advertiser Staff Writer

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Work divided into five phases Phase I: 960 homes in the Halsey Terrace, Radford Terrace, Moanalua Terrace, Hokulani and McGrew Point housing areas will be demolished and replaced with 908 single-family homes. Another 1,040 homes will be renovated. Phase II: 1,032 homes Phase III: 2,020 homes Phases IV and V: Entire O'ahu Marine Corps inventory of approximately 2,300 homes. Companies interested in possible subcontracting work can contact Mike Miller, executive vice president of C.F. Jordan, at 422-4269. Fax: 422-8258.

The selection of Hawaii Military Communities LLC followed the Army's selection of Actus Lend Lease last month for a similar 7,700-home project valued at more than $1 billion.

The projects are the latest and biggest efforts by the Department of Defense to overhaul its antiquated housing and help retain servicemen and women.

Locally, the combined Army, Navy and upcoming Air Force awards represent an expected boost to Hawai'i's economy and an explosion in construction jobs and subcontracting work that will drain Hawai'i's current construction workforce of 26,700.

"This is a significant contract," said U.S. Sen. Daniel Inouye, the ranking member of the Senate Appropriations defense subcommittee. "It will provide the men and women of our armed forces and their families with better housing. It also will mean work for the construction industry, and it will help to boost Hawai'i's economy."

Hawaii Military Communities is made up of Forest City Enterprises Inc., which is based in Cleveland, Ohio, and C.F. Jordan LP of El Paso, Texas. They teamed with 18 Hawai'i-based companies to develop their bid for the Navy contract.

Forest City Enterprises serves as the managing partner in the venture, said Forest City COO Thomas Henneberry. C.F. Jordan will be responsible for construction and management. While Forest City has not worked on any projects in Hawai'i, C.F. Jordan built the Navy Commissary/Exchange Mall at Pearl Harbor, which opened last year.

Yesterday's announcement means Hawaii Military Communities will now enter into as much as six months of negotiations with the Navy for the first phase involving 1,948 units in the Halsey Terrace, Radford Terrace, Moanalua Terrace, Hokulani and McGrew Point housing areas. The cost is estimated at $358 million for construction, renovation and demolition, Henneberry said, and for amenities such as community centers, landscaping and street improvements.

Work could begin in late 2004 and is expected to take four years, Henneberry said.

But Hawaii Military Communities also enters now into exclusive negotiations for the remaining three phases to build and renovate another 3,052 Navy homes and the Marine Corps' entire inventory of 2,300 homes on O'ahu, said Brad Davis, the Navy's public/private venture program manager.

Davis declined to specify what factors helped Hawaiian Military Communities win the bid.

"It was based on the best value to the government," he said. "They provided the best value."

The projects are possible because of the Pentagon's new thinking since 1996 to divert officer and enlisted housing allowances into developers' hands so they can get projects launched sooner.

The Department of Defense estimates that under the old system, it would take 30 to 40 years — at a cost of $30 billion — to upgrade the 168,000 military homes around the country deemed "inadequate."

Developers used to get a lump-sum payment after their work was finished, then left the operations up to the military.

Now, in perhaps the most significant change, the developers commit to maintaining and managing the homes for 50 years despite the possibility that enlistments might fall and bases could close.

The work on O'ahu involves building and renovating 16,756 homes at Hickam Air Force Base, around the Navy's Pearl Harbor and at the Army's Schofield Barracks, Wheeler Army Airfield, Helemano Military Reservation, Fort Shafter, Tripler Army Medical Center and Aliamanu Military Reservation.

The Air Force is expected to announce the winner of its contract Friday.

Splitting the Army and Navy projects between two different companies means construction workers will be spread thinly between the various projects and the red-hot civilian home industry, said Karen Nakamura, executive vice president of the Building Industry Association-Hawai'i.

"The demand's going to be even greater," she said. "It won't be coordinated, where you can move one crew at a time from one section to the other. If the schedule doesn't work out, you could have everybody looking for excavator at the same time, everybody looking for graders, everybody looking for masons. I don't know how our workforce can sustain that type of demand from so many projects at the same time."

But splitting the contracts also means good news for subcontractors who double the opportunity to get contracts, Nakamura said. "It certainly gives us more opportunities for the subs. But I'm worried that the various entities may start to hire workers (directly) and start to deplete the workforce from the subcontractors," she said.

Reach Dan Nakaso at dnakaso@honoluluadvertiser.com or 525-8085.