Jessie ----
by on December 27, 2018
About 1/3 of military families, roughly (some 700,000 people), live in rented accommodation on bases. Their living conditions have come into the spotlight since Reuters revealed lead poisoning risks in Army homes, mold and vermin infestations, and in Navy and Marine Corps housing, and sparse protections for tenants.
Those reports have prompted Congress and the Department of Defense to order at least three investigations.
But despite all of this scrutiny, the finances of privatized military housing have remained hidden. The Pentagon has never disclosed the precise terms offered to developers and property managers such as Picerne, deeming them confidential business transactions. But in a recent Reuters investigation, the report shows how the arrangements work for one leading private developer, obtaining thousands of pages of proprietary documents that lay out the fees and responsibilities that Picerne's business negotiated with the Army. These documents show that the landlord received iron-clad assurances of profit, often while putting up little initial cash of his own.
The corruption never ends, does it?
To make a profit, the scion of a wealthy Rhode Island real estate family has cultivated ties with military brass and politicians. Corvias has spent millions on lobbying, and Picerne has enlisted the help of his state's powerful Democratic senator, Jack Reed, an Army veteran and ranking member of the Senate Armed Services Committee.
These profits helped fund the lavish lifestyle of John Picerne, which includes a yacht, private jet travel, and mansions renovated by celebrity decorator Martyn Lawrence Bullard, known for his work with the Kardashian family and fashion designer Tommy Hilfiger.
The report showed the confidential framework agreements between Corvias and the U.S. Army for six of the 13 military bases where the company operates. These agreements – hundreds of pages each, known as Community Development and Management Plans – laid out Corvias' plans, responsibilities and projected earnings at bases.
And from 6 Army housing partnerships alone, Picerne's business stood to collect more than $254 million in fees for construction, development and management of the homes during the first decade of the deals, a Reuters analysis of the terms showed. Over the projects' 50-year duration, the fees were projected to top $1 billion. Nearly all of those fees are pure profit for Corvias, according to people familiar with the deals, because most of the projects' expenses are covered by rent income from soldiers.
Corvias also stands to earn hundreds of millions more in equity returns, the agreements show: It can share with the Army any cash left over from rental revenues after the projects' expenses have been covered. And Corvias gets additional fees from thousands of other homes it operates on six Air Force bases and one other Army post. The investigation was unable to review the operating agreements needed to analyze the profitability of those contracts.
And all this time, the company took all these risks with no consequences. Furthermore, the Feds put hundreds of millions of dollars and thousands of existing homes into the ventures. In all but one of the six Army projects Reuters reviewed, Corvias didn't have to invest a penny in equity until around a decade later, and the company kicked in less than a fifth of the money the military contributed. The Corvias contributions correspond to about 3 percent of the projects' planned development costs, which were largely funded by loans.
Yet Corvias is shielded from risk in another way: It isn't obligated to repay nearly $1.9 billion in bank loans its military housing projects have received. The loans – like the salaries of most Corvias workers on bases – are paid off from the housing rental stipends soldiers and airmen receive from the federal government.
Meanwhile the Army stated that it works daily with the privatized housing companies to ensure that residents' concerns regarding their housing are addressed.
Maryland's Fort George G. Meade, home to the secretive National Security Agency, is where Picerne laid the cornerstone of his military housing empire. Like most of the Army's family housing, the nearly 2,900 homes at Meade had fallen into disrepair under decades of government management. In official project documents from 2002, Corvias promised Meade families a better future.
But documents show that only 856 new homes were actually built. The Army signed off on the skinnied-down target after the developer said construction costs had surged, revised plans from 2006 .
During an October visit to Meade, investigators saw some areas of handsome new and historic homes, but also others filled with eyesores and safety hazards. Among the problems in the homes were a ceiling that collapsed onto a child's bed, roofs riddled with leaks, peeling lead paint, a wasp infestation, mold blooms, waterlogged drywall and a kitchen gas leak.
By the way, the average amount of monthly rental in Fort Meade is $2500.
There also has been documented health issues which include, shortness of breath, chest pain and mold allergies and blamed conditions on the home, built in 1959. When the indoor air quality was tested, it found mold counts up to 350-fold the levels found outside. A partly rotted wooden roof was the likely source of the fungus.
In a Meade neighborhood where Picerne's business pledged to build stylish new housing for officers, debris-strewn concrete foundation pads lie between two schools. An abandoned playground is overgrown with weeds.
The reason: The Army signed off on "re-scoping" the Meade project in 2006, scaling back the improvement plans after Corvias cited lower-than-expected occupancy rates, rising construction costs and costly renovation of historic homes. To save costs, the original plans had already deferred building a $1.2 million bridge over a busy thoroughfare – viewed as necessary for children's safety, planning documents say. Children use a crosswalk instead.
But at his lavish home, Picerne has employed British designer Martyn Lawrence Bullard, a star of the cable TV show Million Dollar Decorators.
In Picerne's six-bedroom neo-Georgian brick house in Providence, the designer installed black-and-white marble floors. Bullard told Australia's Belle Magazine the floor design was inspired by Rome's Pantheon. The home features chrome and jade accents, a Murano-glass chandelier and a faux-zebra rug.
Bullard also redecorated a $6 million Rhode Island beach home across Narragansett Bay from Newport, where Picerne docks his 49-foot Italian-made yacht, the Under My Skin. In the living room, the designer hung a gilded chandelier, sheathed the walls in black seagrass and added chairs clad in turquoise-hued leather. "I took my inspiration from the Victorians," he told another magazine. On Instagram, John Picerne lauded Bullard's "genius design."
Why isn't the government stepping in and stopping this?
But the disgusting waste doesn't stop in Rhode Island at Picerne's home. In Ireland, at another of his luxurious homes, the designer spent months procuring finishes such as petrol-blue damask silk wallpaper and a mix of Regency and William IV antique furniture for the drawing room of Picerne's Capard House. In September, Bullard posted a photo of the banquet hall. The long dining table was set with white linen, white roses, crystal goblets and formal place cards for 33 guests.
And when civilian real estate markets sputtered a decade ago amid the U.S. financial crisis, the rental revenue streams on military bases kept flowing steadily. Defense Department rent stipends to families are transferred automatically to base landlords.
Many of the dozen-plus other real estate firms with military housing contracts partner together on projects, sharing income. Picerne's firm takes on all aspects of development, construction and management, avoiding the need to split fees.
Picerne has also been able to take out cash he hasn't earned yet. In late 2013, according to Corvias financial statements prepared in 2015, Corvias obtained a $127 million loan from an affiliate of investment bank Guggenheim Partners. As collateral, Corvias pledged future fees from military housing.
Maybe we need a grand jury investigation of this corruption.
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