USFK signs 'build-to-lease' deal for dorm at base in Seoul
U.S. Forces Korea and local business owners signed a first-ever “build-to-lease” agreement on the peninsula Wednesday during a brief ceremony at Yongsan Garrison.
Under the agreement, the private South Korean contractors will build a 144-unit dormitory for unaccompanied officers at K-16, a small base in Seoul, said Col. Daniel M. Wilson, USFK assistant chief of staff, engineer. Upon completion, USFK will occupy the facility on a 15-year lease.
“This is a very cost-effective way of getting us a building … getting our people housed and on base much faster than taking a more traditional approach.” Officials estimate leasing costs about 35 percent less than building the dormitory themselves.
Wilson said the company has 20 months to complete the building but a groundbreaking date hasn’t been set.
He called the project a “milestone,” and said officials plan to contract for another 1,500 to 1,800 Camp Humphreys housing units as it transforms into a major military hub in upcoming years.
The build-to-lease concept was new to South Korean companies, Wilson said, and the “industry is not used to this sort of procurement.”
“It’s taken us several years to get all the right tools in place to actually accommodate a ‘build-to- lease’ project,” he said.
The Army Corps of Engineers was instrumental in making the project successful, Wilson said.
“We hired some consultants through the Corps of Engineers who specialize in putting together these kind of projects,” he said.
Joseph Faccone, president of Knighthorse Corporation, teamed with Darrin Kennedy, of Colliers-Seeley International, to advise the military on the best course of action for the program.
Faccone said the K-16 contract “represents the pilot project that proves the business model and will allow us to use this methodology” in future projects.
Key is that build-to-lease helps stretch “budgetary dollars,” Faccone said.
He estimated the military will save about $1.7 million a year by using the program at K-16, based on the amount it pays now to house the officers off base.
Faccone also stressed that build-to-lease means no big upfront payments, an overall reduction in cost and the convenience of having the officers on base.
“We don’t pay a penny, not one cent, until we accept” the facility, he said.
Faccone also said this model is one that will play an important role in the future.
It has visibility at the highest levels of the Army, he said, and “really represents a very important way in which the Army is trying to marshal its resources.”