$110M Loan Funds Phase II of Private Military Housing Project

ANCHORAGE, AK-A joint venture of locally based JL Properties and Hunt Building Co. of El Paso, TX has secured the nine-figure loan they need for the second phase of a military housing privatization effort at Elmendorf Air Force Base.JL Properties and Hunt Building respectively formed Elmendorf Housing LLC and Anchorage Housing LLC and put them together as Aurora Military Housing LLC for the project, which includes the development and renovation of some 1,200 housing units, mostly four-plexes. The $110-million loan, which will be provided by the Alaska Housing Finance Corp., has a 35-year term and carries an interest rate of 7.25%, a source at AHFC tells GlobeSt.com. The total development cost of the project is estimated at $232 million.The Elmendorf project is part of a national initiative by the military to improve housing for military personnel through incentives to private developers. The Department of Defense has awarded 30 such private housing contracts at bases across the country, allowed under the Private Sector Housing Initiative approved by Congress in 1996.Phase I at Elmendorf, also handled by Aurora Military Housing, consisted of new construction, renovation, and demolition of 828 units that currently have a vacancy of 1% and a waiting list. Phase II of the Elmendorf project involves an approximately four-year real estate transaction wherein the Air Force will convey 986 existing housing units on 254 acres and provide a 50-year lease for 254 acres of improved and on which the units are located. Of the existing units, 552 will be demolished and replaced, 310 units will be renovated and 124 will remain as is. An additional 208 new units will be constructed to bring the total housing up to 1,194 units.AHFC is a self-supporting public corporation with offices in 16 communities statewide. AHFC’s first endeavor into financing military housing occurred in 1990 when AHFC provided a $54 million, 30-year term loan to build 366 units of military housing on Eielson AFB, the first private military housing arrangement of its kind. In 2001, AHFC provided a $48 million, 30-year term loan to Aurora Military Housing, LLC, for Phase I of housing at Elmendorf AFB. AHFC contributes more than $100 million annually to Alaska’s State budget revenues through cash transfers, capital projects and debt-service payments. J.L. Properties, which includes Jonathon B, Rubini and Leonard Hyde, was formed in 1992. It is one of the largest private real estate developers in Alaska, operating a portfolio of more than 2,400 housing units and approximately one million sf of other commercial property. Hunt Building Corp., founded in 1974, is a full service development, construction, and property-management company with a long history of military housing development. Of the 50,000 housing units the company has built , more than 34,000 units have been completed for the Armed Services through MILCON and other privatized housing projects in 24 states, including Alaska, Hawaii, the District of Columbia, and Guantanamo Bay, Cuba. A measure that passed the Alaska Legislature in the closing days of this year’s session would allow a special tax exemption for the improvements to be made to the existing housing on the base. Gov. Frank Murkowski has not yet signed it into law, and a former legislator that considers it special interest legislation is threatening a lawsuit if he does. Aurora Military Housing did not receive the tax beak for its work on the first phase of the project and says that without the tax break it cannot move forward on the larger second phase.