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Military Housing Office sign at Vandenberg Space Force Base, California, September 3, 2024 (U.S. Space Force/Kadielle Shaw)

Today, 216 Cannon Air Force Base (CAFB) Airmen live in a brand-new, energy-efficient off-base community because of a commitment to eschew old thinking and develop unique housing solutions. CAFB was realigned as an Air Force Special Operations Command (AFSOC) base in 2007, and it brought consistent change to mission sets and people. Ever since, finding safe and affordable housing has been a steady concern for our Airmen and their families. CAFB benefits from a Military Housing Privatization Initiative and its fair share of military construction (MILCON) projects for dorms.

Despite all its advancement on the housing front, however, the installation still finds itself facing significant challenges. In fact, it is a crisis as demonstrated by:

• larger macroeconomic housing market headwinds

• interest rate environment

• cost of inflation

• analysis of historical manning and retention rates

• Airmen retainability

• Air Force changes to force structure

• reports like the Dorm Master Plan (DMP) or the recent Housing Requirements and Market Analysis (HRMA).

On the dormitory front, CAFB is projected to have an estimated shortage of 400 to 500 dorm rooms that should persist through 2030. This is due to historically 23 percent more junior Airmen assigned to CAFB than authorized and the Air Force’s enlisted grade restructure that grew authorized junior Airmen from 1,862 personnel to 2,332 personnel starting in fiscal year (FY) 2023.

Why is CAFB overmanned in these ranks? One reason is a retention rate of 7 to 10 percent below the Service average for first assignment Airmen and the lack of retainability of Airmen scheduled to come to CAFB on their second assignment. If we are not careful, retention problems of today will be recruiting problems of tomorrow. Airmen are voting with their feet about whether they want to continue their service at CAFB. This is even more apparent when analyzing the rank and skill levels of the Airmen assigned within our 1,300-person group. Many units are overmanned by at least twice their authorized levels with junior Airmen (E-1–E-4) but are undermanned in higher to midgrade ranks, resulting in a lack of experienced Airmen. Unit manning is sustained by Airmen fresh out of basic and technical training. An installation’s dormitory capacity will continue to be strained when requirements are based on total authorized personnel instead of total assigned. This analysis helps an installation understand why a dorm shortage exists, but it does not alleviate the problem. However, there is value in understanding the why.

 

In February 2023, Cannon AFB dorms were 104 percent occupied, and 292 dorm-eligible Airmen were incentivized to move out before the installation met the Air Force requirement to accommodate first-term Airmen for 3 years. This has been common practice for years due to capacity constraints. These Airmen now live on the local economy, with 75 percent of them in single-family rentals (SFRs) of at least three bedrooms and living with military roommates. Living in large SFRs may be the only affordable housing option for now, but this presents financial risks for these Airmen down the road since they are on different assignment cycles.

In March 2023, CAFB established a cross-functional team called House Hunters. The team comprises representatives across the installation, Air Force Community Partnerships (AFCP), the Air Force Civil Engineer Center (AFCEC), and Installation Mission Support Center Detachment 3 (IMSC Det 3). This team met weekly to pursue a multipronged approach to find a dormitory bridging solution until construction of new dorms starts in FY28. It was a team of teams that developed talent along the way, both on and off the installation. The team moved at an impressive pace with personnel at CAFB focused on the initiatives in the local community and IMSC Det 3 serving as a conduit from contractors and Team Cannon to IMSC and AFCEC. The team focused on two lines of efforts consisting of an off-base apartment lease and an intergovernmental support agreement (IGSA) with Eastern New Mexico University (ENMU).

In late July, Cannon AFB hosted a 3-day event attended by the AFCP team to meet with community leaders and stakeholders to explore where enhanced partnerships could advance quality of life and quality of mission initiatives. The visit focused on IGSAs, Office of Local Defense Community Cooperation programs, housing, real property, shared service contracts, joint training, grant programs, shared law enforcement duties and training, and joint medical training, and included a tour of the ENMU campus and dorms. The event forged new relationships and strengthened existing ones. Furthermore, the visit increased awareness of challenges throughout the community and explored possible solutions. Regarding family housing and unaccompanied housing, we held discussions in October on a possible IGSA with the city of Clovis, New Mexico, to meet a private market shortfall identified in our HRMA report.

Any one of these initiatives individually pursued by an installation could feel like an impossible task. In exploring multiple partnerships, CAFB secured an off-base apartment lease for 120 Airmen with options up to 216 rooms, hosted an AFCP site visit attended by 32 community leaders, and was granted authority to enter an IGSA with ENMU, all within 7 months.

Today, House Hunters continues to work on the same mission but with an expanded mandate to alleviate a private market housing shortfall of 1,805 units that was identified in our installation’s HRMA. Although the HRMA process is not perfect and our report is in draft form, it still provides valuable insights on the state of the housing market surrounding our installation. It offers a unique view on a housing market through the lens of military affordability and housing suitability.

What does the number 1,805 represent? Simply put, 1,805 represents the number of Airmen and their families who would not be successful in finding suitable quality and affordable housing in the private market. There is plenty to understand and analyze in an HRMA, but there are some key points that warrant mention.

The housing areas surrounding CAFB comprised Curry County, NM; Roosevelt County, NM; and Palmer County, TX. Our two main municipalities are Clovis, NM, and Portales, NM. The rental supply is projected to grow at 0.2 percent annually over the FY23–28 period. Military family homeowners have declined from 717 to 467, representing a 35 percent decline over the 2010–23 period. A private market shortfall of 1,022 units exists across all family housing profiles, and all fall below an $1,800 cost threshold. A private market shortfall of 783 exists across all unaccompanied housing profiles. Of note, 655 of the 783 units are one-bedroom units; all fall below a rental cost threshold of $1,100.

These shortfalls are a cause for concern when our installation has a dorm shortage of 400 to 500 units, and on- base housing is at 100 percent capacity. CAFB has an on-base housing wait list that averages nearly 300 families, mostly composed of junior noncommissioned officers who can wait up to 8 months to live in base housing. Leaders at all levels must take a holistic view of the installation housing issues since on-base and off-base housing issues are interrelated. When viewed holistically, it provides new insights to the entire housing situation.

For example, the on-base housing shortfalls add to the rental supply strain we see in our private market and make finding safe and affordable housing an even bigger challenge for many of our Airmen and their families. Their concerns are evident in data we received from a base- wide survey conducted to better inform the Department of Defense (DOD) Basic Allowance for Housing (BAH) determination process. The survey collected quantitative data (median rent, average utility cost) and qualitative data. One qualitative metric measured how easy it was to find safe and affordable housing within 95 percent of their BAH and used a five-point Likert scale ranging from “very easy” to “very difficult.” A total of 2,022 Airmen (67 percent sample rate of off-base residents) responded, with 1,600 of them stating that it was either “difficult” or “very difficult.”

Examining macroeconomic data and the housing market nationwide adds even more concerns. Nationwide, demand for single-family rentals exceeds supply due to:

• structural undersupply of single-family homes that stems from the 2008 financial crisis

• an aging millennial cohort seeking a single-family lifestyle

• eroding affordability of homeownership due to surging prices and higher mortgage rates

• relative affordability of SFRs compared to ownership.

We are becoming a nation of renters. The spread between homeownership costs and rents for single-family homes is the widest it has been in over 50 years. The increased cost of homeownership will continue to drive potential homebuyers into renting and push SFR demand beyond supply even further. The Nation’s structural shortage of homes, sitting under half the four-decade average, should continue to support high SFR occupancy rates and rent growth. The Joint Center for Housing Studies of Harvard University’s The State of the Nation’s Housing 2023 report states, “Home prices and rents remain elevated from pre-pandemic levels. Millions of households are now priced out of homeownership, grappling with housing cost burdens . . . increasing the need for policies to address the national housing shortfall at the root of the affordability crisis.”¹

Growing the Nation’s housing supply is proving difficult. Freddie Mac’s October 2023 report U.S. Economic, Housing, and Mortgage Market Outlook states, “Home builders are becoming less confident. . . . Higher interest rates and supply side constraints are putting pressure on suppliers’ ability to build new homes.”²

Given all this data and analysis, what does it mean for installations and communities? The next section answers this question. The four figures depict macro-economic housing data courtesy of the Visual Capitalist and Freddie Mac.

Accelerate Change to Win: Enterprise-Wide Solutions to Common Challenges

Accelerated, unconventional change is engrained in our AFSOC culture and realized through our U.S. Special Operations Command priorities of “people, win, and transform.” In short, these priorities mean our people are the reason we win, and as stewards of precious resources, we will transform via innovation and changes to our people and organizations to meet current and future challenges. Change is in our Air Force culture and was reinvigorated through General C.Q. Brown’s Accelerate Change or Lose paper of August 2020.³ It does not matter if the tag line is “accelerate change to win” or “accelerate change or lose”—both are calls for change. Across DOD, we need to change to meet an evolving security environment, but do we really need to change how we do housing? Yes. Now is the time to look for change in housing even when the Air Force is in a sea of change.

In Colonel John Boyd’s masterwork “Destruction and Creation,” the great airpower architect argues that organizational learning is as much a function of well-directed failure as well-directed success.⁴ His model implies that an organization that does not make room for destruction of old frameworks—one that does not allow for the possibility of imperfection—will stall quickly just like an engine firing on one cylinder. Entropy is messy, but without it there can be no motion.

Former Chairman of the Joint Chiefs of Staff General Brown approached this topic during his tenure as the Air Force Chief of Staff through his “Action Order B: Bureaucracy.” He states that “bureaucracy exists in all large organizations, and altering culture and practices that prevent timely and effective decisions is difficult.”⁵ He further notes that “decisionmaking remains cumbersome, slow, allows for ‘soft vetoes’ without accountability, and prioritizes compromise and consensus over decision quality. Mired in hierarchical processes and content with the status quo, the Air Staff must adapt to mission command and collaborative approaches to address the 21st-century threats and competitive strategic environment.”⁶ General Brown calls on the Air Staff to adapt, and he outlines his intent to make decisions faster. He states the need to change the culture to empower decisionmaking and risk-taking while holding leaders, supervisors, and action officers accountable to this new culture. Finally, he states success will be measured in terms of decision speed (time in coordination), quality of decision support (data and variety of options), and greater alignment across the Air Staff. In fact, out of his three Action Orders (Airmen, Bureaucracy, and Competition), he opines that Action Order B has proved the most elusive and challenging one to realize.

In the 2018 white paper “Air Force Unaccompanied Housing: An Emerging Challenge,” Fred Meurer and Steve Bonner consider Dyess Air Force Base (DAFB) as a case study to highlight the challenges installations face with dormitories and offered possible solutions. Meurer has been on the quest to provide safe and affordable housing for Servicemembers since 1981. This is longer than most. The paper is a watershed document with great ideas and prescient thinking. Meurer and Bonner state, “The [Air Force] is facing an emerging challenge with older dormitory buildings and lacks the funding necessary to replace aging facilities.” They appreciate the tough decisions that Service leaders face and recognized that they would need help from Congress. Furthermore, they state that they “didn’t believe the problem was extensive throughout the [Air Force] yet, but logic and anecdotal evidence suggest that finding a solution sooner rather than later would be prudent.” Unknown to both, the Air Force and DOD were also facing an emerging challenge—years before it developed into our current crisis.

At CAFB, the dormitory MILCON project has been the installation’s number one priority for 3 years, as well as AFSOC’s top priority. The construction cost estimates have gone from approximately $50 million to $90 million in 3 short years, and the dorms will not be move-in ready until 2030. Delayed investments will always cost more in the out years. When an installation is forced to deal with a dorm room deficit for 10 years, then it is not a failure by choice or a failure by chance, but instead a failure by concept.

There is no viable path to solve our installation’s housing shortages in a timely and effective manner within the constructs and concepts that currently exist within DOD—at least not without a cultural and innovative transformation that includes bold changes to law, policy, bureaucratic and budgetary processes, funding strategies, and decisionmaking. Until then, the most agile and effective solution to the housing crisis rests within the private market utilizing strengthened relationships with community partners and business stakeholders. This requires an introspective look across DOD on what it means to be a “good business partner.” Moreover, it requires a reexamination of necessary authorities and bureaucratic decisions with new perspectives and at the speed of the housing market. Not all of Meurer and Bonner’s solutions will be revisited here since they covered them so eloquently in their own paper, but let us review some.

There is no better time than now for a whole-of-government—at the Federal and local levels teamed with supportive community partners—approach to incentivize economic development to provide safe and affordable housing for our military and their families. This is especially important for remote and isolated installations surrounded by smaller communities. With a viable template at CAFB, why would we not incentivize economic development for housing our Servicemembers?

Military departments should focus on being the “first choice” business partners in the community and should employ a “build to lease” strategy through both public-private and public-public-private partnerships. Housing should be built to meet family housing, unaccompanied housing, and dormitory requirements. Both on- and off-base options must be pursued as well. These lease agreements must take a long-term view, like IGSAs take a 10-year view. Long-term agreements enable developers to build their financial models with increased accuracy and will help reduce business uncertainty that is essential given the market headwinds we now face. Lease terms and conditions that allow an installation to expeditiously terminate a lease provide flexibility for an installation with stipulations rarely executed. The risk of any lease not including these terms and conditions can be effectively managed at the installation level that still preserves resource stewardship and prevents insolvency of community stakeholders. Not fulfilling the housing needs of the installation is a greater risk than lacking flexible terms and conditions in a lease. Maximum effort and focus must revolve around the idea of becoming the best business partner.

On the financing front, developers need access to more favorable construction loans and better long-term financing through Federal lending programs offered through the Federal Housing Administration. This is a fair ask since these programs will provide housing for military members and their families. This will offset unfavorable financing terms a developer faces with terms and conditions that allow the military to expeditiously terminate an agreement since this is viewed as higher risk by lender underwriters. Additionally, the military Services should be allowed to make direct loans to persons in the private sector to provide funds to such persons for the acquisition or construction of housing units that are deemed suitable for military housing. This is like previous initiatives outlined in the Defense Authorization Act of 1996. All these ideas can reduce costs and increase affordability, turn a deal from unfavorable to favorable, and increase the number of developers willing to do business with DOD. Developers and investors alike are either avoiding or thinking twice about entering into any agreement with DOD that is filled with uncertainty and additional risk, and that achieves an internal rate of return of only 7 percent. Why would investors put capital at risk when they can get a risk-free return of nearly 5 percent in Treasury bills? This is known as opportunity cost, and DOD must be postured to tilt an investor’s investment decisions in its favor since DOD will compete with other market participants.

Serious consideration must be given to pursue more build-to-lease agreements versus MILCON projects. This agreement would require a timely opportunity or a created one and a willing community stakeholder and could meet the requirement sooner since MILCON is often late to need. The $90 million estimated cost to construct an Air Force standard 192-person dormitory at Cannon AFB is significant. In creative thinking, we can use the “what if?” tool to provoke our brains to think differently. To shift our perspective, we can use the “no limit” tool to remove limitations and assumptions to find novel solutions. Here is a practical example. What if we used the $90 million for a different solution based on a no-limit standard to provide housing for 192 dorm-eligible Airmen? At $468,000 per room and at $1.87 million per quad (four rooms with a common area), we get plenty of ideas to explore.

Based on Meurer and Bonner’s research, law, policy, budgetary processes, and constraints remain the biggest hurdles preventing private sector capital or non-Federal public capital from being used to supplement the congressional appropriations process. We need legislative changes to reverse the unintended consequences that DOD experiences from the Office of Management and Budget (OMB) and the Congressional Budget Office scoring rules that are based on the Balanced Budget and Emergency Deficit Control Act of 1985 and the Budget Control Act of 2011. A restoration of the OMB scoring relaxations that were eliminated in 2014 would provide relief, albeit temporarily. Laws should be amended to allow DOD to apply more business-like financial modeling to its capital expenditures, especially for housing. The rule that requires a Federal agency to offset the entire life-cycle costs of projects against its budgets in the year they are constructed, as opposed to amortizing these costs over 20 years or more as they would in the private sector, makes little sense. Choosing to use the BAH option to provide the cash flows in the build-to-lease agreements proposed herein could be beneficial in navigating the congressional appropriation challenges. However, no guarantees for occupancy or cash flows can be made under current law (U.S. Code 403—Basic Allowance for Housing). Perhaps a robust legislative affairs team could petition Congress for these legislative changes.

DOD could also benefit from a working capital fund to be used for timely investment opportunities, adapt to the changing market cycle, and offset macro-economic headwinds. This will take more of an investor mindset approach than the budget execution approach that currently dominates not only DOD but also the U.S. Government. Meurer and Bonner share that the state of Texas has a Defense Economic Adjustment Assistance Grant fund and a bond-based loan fund that could be tapped for capital. The City of Abilene, Taylor County, Development Corporation of Abilene, and other local government entities could also provide capital or in-kind development support. The authors share that the marriage of public and private investments is not a new concept since we see these through major infrastructure projects, stadiums, convention centers, and affordable housing. Also, they suggest that this could overcome risk aversion of private capital but need further exploration.

Why does solving the housing crisis matter so much? Why the drive to find innovative solutions at an accelerated pace? Why work to strengthen relationships with our community partners and value their support? For answers, we need to turn to culture one more time. Cannon AFB culture is centered on our Air Force and AFSOC core values and grounded in our SOF truths. Solving the housing crisis will require creativity, respect, and excellence—all of which reside in our core values. There are multiple things that affect the quality of life of our Airmen, but housing remains a top concern, perhaps because housing costs remain the largest part of family budgets. In AFSOC, the Human Capital Council assesses our Airmen across a range of mission support and personal resiliency factors. We meet quarterly to discuss the findings. Airmen’s concerns with housing, especially with the cost of living, surfaces in financial readiness, which for our Airmen is mission readiness. Our installations are power projection platforms, and we need Airmen to remain focused on the mission. Worrying about housing detracts from the mission.

Once the housing crisis is creatively addressed, we might see an increase in retention rates of first assignment Airmen and improved manning experience levels. The world is evolving quickly and dangerously. And in war, what is past is rarely prologue. The next war may be closer to home than we would like or imagine. Installations must continue to improve mission assurances and build resiliency in our communities. Without partnerships, we limit the potential for success. We must rely on these invaluable relationships between both our community partners and higher headquarters teammates to succeed in our collective efforts. Taking care of military members, their families, and the people within our communities must remain at the heart of every action we take, since our human capital is our competitive advantage. JFQ

Notes

¹ The State of the Nation’s Housing 2023 (Cambridge, MA: Joint Center for Housing Studies of Harvard University, 2023), https:// www.jchs.harvard.edu/sites/default/files/ reports/files/Harvard_JCHS_The_State_of_ the_Nations_Housing_2023.pdf.

² U.S. Economic, Housing, and Mortgage Market Outlook (McLean, VA: Freddie Mac, October 2023), https://www.freddiemac. com/research/pdf/Freddie_Mac_Outlook_ October_2023.pdf.

³ Charles Q. Brown, Jr., Accelerate Change or Lose, CSAF Action Orders (Washington, DC: Headquarters Department of the Air Force, August 2020), https://www.af.mil/Portals/1/ documents/2020SAF/ACOL_booklet_ FINAL_13_Nov_1006_WEB.pdf.

⁴ John R. Boyd, “Destruction and Creation,” September 3, 1976, https://www.coljohnboyd. com/static/documents/1976-09-03__Boyd_ John_R__Destruction_and_Creation.pdf.

⁵ Charles Q. Brown, Jr., To Accelerate Change Across the Air Force, CSAF Action Orders (Washington, DC: Headquarters Department of the Air Force, February 7, 2022), 2, https:// www.af.mil/Portals/1/documents/2022SAF/ FINAL_Modified_Action_Orders.pdf.

⁶ Brown, To Accelerate Change Across the Air Force, 7