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Senators hear of horrors blamed on military housing

Published: Apr. 26, 2022 at 4:13 PM EDT
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WASHINGTON, D.C. (WRDW/WAGT) - In a more than two-hour hearing Tuesday, U.S senators heard from military families about problems they’ve had with Fort Gordon housing contractor Balfour Beatty Communities.

Members of the Senate Permanent Subcommittee on Investigations also listened to testimony from company executives, who answered to claims that Balfour Beatty continues practices it had sworn off.

Tuesday’s hearing came hours after the subcommittee released the results of an eight-month investigation that found tenant issues with Balfour Beatty continued well after the company pledged in 2019 to change its ways.

Problems ranging from leaks and mold infestations to general disrepair – and a lack of responsiveness to these issues – were first reported 10 years ago by News 12′s I-Team.

The hearing was led by Democratic Sen. Jon Ossoff, making his debut as chairman of the subcommittee. He launched the investigation after hearing from Fort Gordon families.

He asked Balfour executives Tuesday why he should believe any assurances from a company that pleaded guilty to a six-year scheme to defraud the government.

Subcommittee ranking member Ron Johnson, R-Wis., echoed that sentiment with the quip: “Fool me once, shame on you; fool me twice, shame on me.”

The 2021 guilty plea was an admission to manipulating online work orders in a scheme to boost financial incentives. The scheme involved making repair issues appear less severe and more quickly resolved than they were.

Senators hear from families

Among service members testifying Tuesday about their problems with Balfour Beatty was Capt. Samuel Choe, who’s now stationed in South Korea but who lived in a Balfour-managed home at Fort Gordon from Augusta of 2019 to February of 2021.

He testified about his daughter’s life-threatening skin condition.

“Her skin, once youthful and supple, is now reptilian in nature to where there are numerous times when she will wake up in the night, hands covered in blood from her scratching while sleeping,” he testified Tuesday.

“She resembles a burn victim at her worst,” he said.

WATCH THE HEARING:

He blames the condition on a mold infestation at the Fort Gordon home – a problem he says Balfour Beatty refused to acknowledge and that even still brought skepticism from a company executive at Tuesday’s hearing.

Choe flew for 7,000 miles to testify, facing the subcommittee after receiving this admonition from the girl: “Avenge me, Daddy.”

Soon after moving into the home, the Choe family discovered mold in various places in a bathroom. In the meantime, the girl’s skin condition progressively worsened, and her doctor said it was from mold and mildew exposure.

In a June 25, 2020, letter, her allergy specialist diagnosed the girl with “allergic eczema” or “severe atopic dermatitis.” The specialist recommended the home be thoroughly and professionally cleaned and that if “this strategy was not successful” in terms of alleviating the daughter’s severe skin condition, the family should move to a new home with “no moisture issues [and] no dust or molds.”

It was an uphill battle, Choe told the subcommittee Tuesday, with Balfour Beatty refusing to let him break his lease or move him to a new house. Then when he was finally able to get out of the lease “after much effort” through the chain of command, the company pursued him for collection, he said.

The skin problem continues for his daughter, who needs injections that cost thousands of dollars per month.

With a once-vibrant and social personality, she’s become withdrawn, Choe said.

Progress and setbacks

Also testifying before the subcommittee was Rachel Christian, a housing advocate for military families.

She said problems like the Choes’ are all too common in a system that’s privatized the vast majority of family housing on military installations.

She said a handful of companies handle the contracts across the country, and none are really any better than Balfour, which is one of the big players,

In fact, she told the subcommittee, some of the much smaller contractors that don’t get a lot of attention are far worse, she said.

She said when tenants go to on-post housing offices, they’re told that the staff’s scope is limited and it has no power to force the contractor to make repairs.

A few years ago when changes were promised, including a tenants’ bill of rights, she was excited.

Instead, it was a nightmare, she said. Leases had been 10 pages but went to 110 pages, she said, in an effort to create a “universal lease.” The dispute resolution process for an Air Force tenant is now 48 steps, something she sees as unacceptable.

Adding to the problems: Complaints and tenant requests for repairs can bring retaliation from post commanders, who see the numbers as statistics that reflect poorly on them.

The company’s response

The second half of the hearing included testimony from Balfour Beatty executives Richard C. Taylor and Paula Cook.

Taylor described a complex business model for the contractors, something the subcommittee staff described in its report as contributing to the problem.

Subcommittee investigators say the privatization of base housing in 1996 created not typical defense procurement contracts but instead about 80 “privatized military housing projects,” each with distinct legal agreements in which the housing company and the military each holds a membership interest.

The military service branches then leased land to each project entity for a 50-year term and conveyed existing homes for the duration of the lease. Many of these homes, like most of the 1,000 managed by Balfour Beatty at Fort Gordon, were built in the 1950s and 1960s.

Other key features of the contracts are incentive fees if the housing companies can meet certain performance goals established by the military. That’s what’s been blamed for the fraud scheme at Balfour Beatty.

Finally, there’s a steady flow of tenants and rent. Defense appropriations provide service members with housing allowances, which service members then turn over to housing operators like Balfour to cover rent and other fees for on-base housing.

Despite all that, Taylor told the subcommittee the business model hasn’t necessarily been as profitable as originally envisioned.

Asked if it was a money-losing proposition, he said he wouldn’t characterize it that way. Still it wasn’t as profitable as often predicted, he said.

He rejected the idea that the complaints against Balfour are the result of a systemic failure. In fact, he suggested that considering the great volume of communications Balfour receives, the negative comments are a small portion.

But he admitted the company isn’t perfect.

“Things go wrong,” he said. “We don’t always get it right the first time.”

What’s important, he said, is to look at what went wrong and try to fix it.

He admitted there have been some issues with “ductwork sweating” because of the conditions in homes and issues with insulation because of the era in which the homes were built.

But asked by Scott what he’d have changed to avoid the problem of “rogue employees,” Taylor said there could have been better internal controls.

Scott asked: So it was a “lack of oversight,” not the structure of the entity, that caused the past issues?

“I think that’s fair,” Taylor replied.

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