Military's housing is big deal

$3 billion project to get under way in spring of next year

Privatization pilot project

Fort Meade

March 08, 2001|By Rona Kobell | Rona Kobell,SUN STAFF

The Army's $3 billion contract to privatize housing at Fort Meade is big business for Anne Arundel County.

Bigger than the $250 million to build Arundel Mills, the county's first mega-mall.

Bigger than the $1.3 billion to expand Baltimore-Washington International Airport.

So big it's triggering a barrage of superlatives.

"It's definitely the largest development I've heard of," County Executive Janet S. Owens said yesterday.

"It's one of the largest investments in decades," said Bill Badger, president and chief executive officer of Anne Arundel Economic Development Corp.

It's so large that MC Partners LLC, the company named Tuesday to develop the project, is a joint venture among four big companies, some of them subsidiaries of larger behemoths. Construction alone will cost more than $400 million over the next 10 years and include demolition of more than 2,500 housing units.

Its impact will not be just local, but nationwide.

Fort Meade is one of four pilot sites for the Army's Residential Communities Initiative, a privatization program Congress approved in 1996 to eradicate substandard military housing and eliminate housing shortages. Most of Fort Meade's homes were built in the 1950s and 1960s and lack basic amenities, such as master bathrooms and family rooms.

For nearly two years, the Army has been preparing Fort Meade and its 15,000 military families for the construction, scheduled to begin in the spring of next year.

"It's going to be a tremendous project," said Ted Lipham, director for the Residential Communities Initiative.

MC Partners - which stands for Meade Community - consists of Picerne Real Estate Group of Warwick, R.I., and IT Group, based in Pittsburgh. CIT Group, based in New York City, and Newman and Associates, a Denver subsidiary of GMAC Commercial Holding Corp., will provide financing for the project.

The project is Picerne's largest in 75 years of family operation - a fact not lost on its staff.

"I live in Portsmouth, Rhode Island. It's a town of 18,000. I'm basically building my town all over again," said Chris Bicho, Picerne senior vice president.

Bicho's company will move about 30 employees to Maryland and hire about 70 more over the next 10 years.

More significant will be the increase in IT Group's military construction subsidiary, Beneco Enterprises Inc., which has a small office in Waldorf.

Ali Bitar, the company's general manager for quality control, said all 250 employees at Beneco will work on the project, and he expects more will be hired.

"It's astronomical," he said of the impact. "We were working with millions. Now we're working with billions."

Even Owens acknowledged the development's size, while exciting, is "a little daunting."

Her staff has worked with the base during the past eight months on infrastructure issues, including utility improvements, and landfill and school capacities.

But Bicho said he's not flustered by the $3 billion price tag - or the work. The Army estimated the project's cost by taking the average monthly housing allowance at Fort Meade - $1,164 - multiplying it by the number of units included - 3,170 - and adjusting for inflation over 50 years.

"The way the military values contracts, the real estate industry would never look at it like that," Bicho said.

He's focusing on the $400 million construction investment over the next 10 years. MC Partners will recoup its investment through rental income.

The Army will also pay the company a fee - usually about 4 percent of the entire project's rental income - to manage the properties over the project's 50-year lease.

MC Partners will be responsible for maintaining the infrastructure, working with the county and marketing and managing the property.

Bicho is also undaunted by the years needed for completion.

Construction is taking so long because, he says, people are living in the homes. "If you had an empty base, you could do it in half the time."

In the next month, MC Partners will begin developing a construction and design plan.

As that occurs, the housing office at Fort Meade will conduct an environmental assessment of the site. The Army is planning a signing ceremony for the end of the month.

County and Army officials said they were pleased a developer had been named, especially because the Army's selection process hit a few delays.

But not everyone was pleased with the news.

Milton J. Pajak Jr., business development manager of Harkins Builders Inc., one of the 17 bidders on the project, said he was "disappointed" a local firm wasn't selected. But though his Marriottsville company lost the bid, Pajak was pleased the project was going forward.

"Our armed services personnel need this desperately," he said. "They're out there defending us, each and every day."

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