Leader Blues

Saturday, January 12, 2008

TOP STORY >> Housing project stalled

Leader senior staff writer

A team working to complete the sale of the failed housing-privatization contract at Little Rock Air Force Base and three other bases must still resolve “several outstanding issues,” according to Staff Sgt. Katherine Garcia.

She said rumors that talks had broken down and stopped were not true.

LRAFB officials had hoped for selection of a new developer from among two bidding on purchase of the contract as early as last Monday, Garcia said, but the failed owner of the projects wants all issues completely resolved.

“It’s safe to say it’s probably not going to be this month,” she added.

Meantime, the Air Force is scheduling town hall meetings at each base to talk about “where we are at and the way ahead,” according to Garcia.

Several banks pulled the plug on construction at LRAFB by American Eagle Communities, which had completed only 25 of the 486 new housing units promised and made scant progress on remodeling an additional 732 units.

When the job was shut down, the company was two-years behind on a project only three years old, according to Brig. Gen. Rowayne Schatz. Forest City Enterprises, of Cleveland, Ohio, one of the two potential developers, recently bought a 3,000-unit Navy privatization contract from American Eagle Communities LLC at Puget Sound.

“We don’t comment on transactions until they are final,” said Forest City spokesman Jeff Linton. “We can’t provide status updates on negotiations that may or may not be taking place.”

Two other developers—Pinnacle and Hughes—have joined to bid on the projects. The team working out details includes representatives of American Eagle Communities, four Air Force bases, the Air Force construction contract wing and the banks, Garcia said.
One scenario would group all four privatization contracts, while the other scenario would split out the Moody Air Force Base contract in Georgia. The other two bases left in the lurch are Patrick Air Force Base in Florida and Hanscom Air Force Base in Massachusetts.

Carabetta Enterprises, which is the managing partner in American Eagle, says the Air Force misrepresented the occupancy rates at the time the contracts were originally awarded, leaving them without sufficient cash flow.

Senators Mark Pryor and Saxby Chambliss of Georgia have asked for an investigation into how a formerly bankrupt company like Carabetta with a long track record of stiffing subcontractors and litigation could have been chosen in the first place.

The two lawmakers also have passed legislation—currently in limbo in the vetoed Defense Authorization Bill—requiring stricter vetting of companies doing business with the military and greater oversight.

Some local contractors have begun getting money owed them a year or more.