Leader Blues

Wednesday, August 29, 2007

TOP STORY >>Base contractor on way out

By JOHN HOFHEIMER
Leader senior staff writer

“Given the current project’s financial conditions, it is unlikely that American Eagle will be able to resume work (on them),” an Air Force spokesman said Monday of housing privatization contracts at the Jacksonville air base and three other air bases.
That could confirm Brig. Gen. (Select) Rowayne Schatz’s comment last week that he believed a different developer would finish the job.

American Eagle Communities has not responded to questions emailed Friday.

Work stopped May 7 on the company’s $127 million contract to build, renovate, own, manage and rent housing to airmen and their families at Little Rock Air Force Base. American Eagle Communities, a joint limited-liability venture between the Carabetta family of Meridan, Conn., and Shaw Infrastructures of Baton Rouge, has left some contractors and suppliers on the LRAFB project owed hundreds of thousands of dollars.

The Carabettas, through American Eagle and other legal entities, have privatization contracts with four Air Force bases, and work has stopped on all four.

They have said publicly that they are selling two of the jobs and trying to sell the others.

Work stopped in March at Moody Air Force Base, where contractors may be owed millions of dollars, and at Hanscom and Patrick air bases as well.

“American Eagle’s obligations as stated in the project documents, are still valid,” according to Mike Hawkins, spokesman for the Air Force Center for Engineering and the Environment.

Schatz, the base commander, has said the project is already two years behind schedule and that about 200 homes should have been built by now instead of the 25 completed.

He reported recently that the base paid more than $9 million through its basic housing allowance in 2006.
Hawkins said this week that the project was still receiving rent revenues, but that it “goes into a lockbox account.”
He said the proceeds were used to pay for daily operational expenses such as repairs, maintenance and utilities, plus insurance payments and debt service.

“Additional revenue beyond these expenses generally goes into accounts for long-term capital repair and replacement, i.e., hot water heaters, roofs, carpeting…and reinvestment accounts.

“The project lenders (at Moody Family Housing) have initiated legal action/documentation to default the project owners or place the project into state receivership,” according to Hawkins.

“The Air Force has legal remedies as well which may also be pursued. We work on a daily basis with the bondholders, the project owner, and other stakeholders to resolve issues at hand as expeditiously as possible.”

Tom Brockway, American Eagle’s project manager for LRAFB Family Housing, is still overseeing operations, but he declined to answer questions last week, asking instead for an email that he would forward to his bosses.

Among those questions, so far unanswered, are whether or not American Eagle intends to complete the LRAFB contract, default on it or sell it and why the company is so far behind schedule both at the Jacksonville base and at similar bases and forts across the country.

We asked whether they intended to pay suppliers and subcontractors and if so, whether they would be paid in full and when.
We asked whether the company had filed for bankruptcy and whether it was in receivership, and finally, “What happened?”
Hawkins said the privatization problems are unique to the Carabetta projects.

“The Air Force hopes that the current impasse gets resolved expeditiously and that construction resumes as quickly as possible,” according to Hawkins. “The Air Force goal is to get quality housing for our airmen.”

Here’s a roundup of their military privatization jobs:

Little Rock Air Force Base, Jacksonville—Worked stopped in May on American Eagle’s project to build 468 new homes and remodel 732 homes. Twenty-five homes completed to date.

Moody Air Force Base, Georgia—Carabetta Enterprises Inc. contracted to build more than 600 homes.
Work stopped in May with two houses built.

Patrick Air Force Base, Pelican Coast Florida—American Eagle Communities contracted to build 552 homes for Air Force personnel and 400 for non-military.

Of those, 164 have been completed and work has stopped.

Hanscom Air Force Base, Mass.—Contract awarded in April 2007 to American Eagle for at least 784 new homes. Work proceeds intermittently.

Beale Air Force Base, near Sacramento—American Eagle won a contract in 2004 to build 585 new housing units and remodel 759, but was dropped from the contract over a legal question.

Ft. Leonard Wood—Work began in January 2004 to privatize and manage more than 2,200 military family housing units.
An Army spokesman says the job is on schedule. A local observer says the job is behind schedule.

Pacific Northwest Com-munities—American Eagle is selling its contract to build or renovate and manage more than 2,700 Navy homes throughout Puget Sound, including 604 new homes. The contract was signed in September 2005.