Have you ever wondered how military housing companies use your Basic Allowance for Housing (BAH) dollars? The infographic below shows a broad overview of housing costs associated with BAH and how Corvias Military Living operates.
But let’s take a closer look.
When you live on-base with Corvias your rent includes maintenance services, average use of electricity and/or natural gas, water, sewer, lawn care, pest control, access to community amenities, trash/recycling services, plus other resident services and events. These services and amenities are not always included in the off-post community. We use the BAH funds to cover expenses such as maintenance costs, payroll, fire and police emergency service fees to the installation, utilities, capital improvements, service contractors and the financing fees for the project.
Any remaining BAH dollars are then placed in a reserve account for future projects and upgrades to on-base housing for each project/installation. The Army or Air Force must approve the use of reserve account funds which are to be used for future renovations, capital improvements (roofing, road repairs, or mechanical equipment replacements) or new construction. This step is very different from traditional real estate developers, whose extra income is company profit. It is also different from the way government housing was funded prior to privatization. Prior to these public/private partnerships in military housing, there were no savings accounts for future improvements.
How does Corvias make a profit?
Corvias earns a profit through management and performance-based fees, as determined by both business partners (Army/Air Force and Corvias Military Living) before the beginning of the project. This fee for service is common practice in the property management industry. In order to earn the full fee, Corvias must achieve benchmark goals. These goals include items such as budget, customer satisfaction, occupancy percentage and on-time services. In other words, Corvias does not make money outside of those fees. For example, if money is saved through renegotiating a service contract such as lawn care or pest control, those savings go back into the program through the reinvestment account.
How do BAH rates impact military housing programs?
The uncertainty of force structure, future Base Realignments and Closures and BAH reductions does make it difficult to plan and invest enough for future improvements while maintaining all current services (i.e. expenses). When BAH goes down, we have fewer funds available to maintain and sustain the current level of homes and services. We are looking at options to reduce expenses without a major impact to current quality of life to our residents. What ideas do you have for us to reduce our expenses?
To read more about the 2016 National Defense Authorization Act and how it may impact you, read Reduced Basic Allowance for Housing (BAH) – What’s Happening in 2016.