thedrifter
12-26-06, 07:21 PM
January 01, 2007
BAH boost
DoD announces small increase in allowance
By Gordon Lubold
Staff writer
The Pentagon will give service members an average 3.5 percent increase in housing allowances in 2007, about $44 per month for an average service member.
That’s less than recent increases, which have ranged from 6 percent to 7 percent and more, but there are two reasons for that, officials say.
First, the recent increases were above rental housing costs by several percentage points as Pentagon officials sought to improve the allowance by closing a gap that, at one time, had service members paying about 20 percent of their housing costs out of pocket. Second, the rental housing market, like the overall housing market, is softening across the country, officials said.
Pentagon officials released the 2007 BAH rates Dec. 18, listing payments for all paygrades for 370 locations nationwide.
The new housing allowance rates are based on a complex formula that shows rental rates generally decreasing, which is backed up by anecdotal evidence that landlords are looking for tenants. More apartments are being offered with one month’s free rent, upgrades and other incentives, defense officials say.
Because housing allowance rates closely follow those rental rates, BAH is also inching downward.
“Landlords, for the first time, were starting to have rental units that were standing vacant, and when rental units stand vacant, [landlords] begin to lower rents,” said Susan Brumbaugh, program director for the Pentagon’s Basic Allowance for Housing program.
But that does not mean service members somehow “lose out,” because their BAH should still be enough to cover average rental costs.
As recently as six years ago, service members were responsible for 20 percent of their housing costs.
Pentagon officials say the new system, which took five years to implement, should not require individuals to pay out of pocket as long as they rent housing appropriate to their paygrade — apartments for young, single troops, and townhouses and single-family homes for older people with families in higher ranks.
BAH rates are based on three factors: an analysis of actual rental rates in markets around the country, utility rates and renter insurance rates. That information is fed by housing managers at each base or station to a Pentagon contractor, Runzheimer International, which analyzes the data and spits out a rate for each area.
Each of the 370 housing markets includes 48 different housing rates, one for each of the nine enlisted ranks, 10 officer ranks and five warrant officer ranks, both with and without dependents.
Of the 17,760 rates the Defense Department calculated, 2,763, or about 16 percent, saw decreases spread across 135 housing markets, according to Pentagon data.
The system is designed to protect service members from losing money where there is a downturn in their rental market.
In areas that see a BAH decrease from one year to the next, no service member already in that area with an active lease or rental agreement will have his BAH rate reduced. Troops are locked into the BAH rate they received when they signed the document.
Only personnel coming freshly into that area would get the lower rates reflecting the recent change in the housing market.
However, if BAH rates go up in a given area, all service members get the increase, officials said.
Occasionally, the Pentagon and Runzheimer make a mistake in setting a market rate by basing their analysis on inadequate housing units. For example, an analysis might include rental rates from an area near a base in which no service member would want to live, which artificially depresses BAH rates.
That happened just once last year, at Fort Knox, Ky., where officials discovered unacceptable housing had been included in the analysis. Ultimately, revisions were made and some BAH rates were increased, on average, about $10 per month, Brumbaugh said.
“As soon as we were aware that some units had been included to establish the median were not adequate, we immediately took them out,” she said.
Ups and downs
The U.S. housing markets that saw the biggest percentage increases and decreases in average Basic Allowance for Housing payments from 2006 to 2007:
Increases
Housing market Pct. change
Kingsville, Texas 15.6
Cumberland, Md. 12.5
Hattiesburg, Miss. 11.9
Baltimore 11.6
West Palm Beach, Fla. 11.3
Limestone, Maine 10.5
Fort Wayne, Ind. 10.3
Fort Campbell, Ky. 10.1
Tuscaloosa, Ala. 10.1
Lake Charles, La. 10.0
Decreases
Housing market Pct. change
Monroe, La. -5.3
Fort Gordon, Ga. -5.1
Sioux Falls, S.D. -5.0
Florence, S.C. -4.4
Fort Benning, Ga. -4.2
Stockton, Calif. -4.2
Atlanta -4.0
Peoria, Ill. -3.8
Athens, Ga. -3.7
Seattle -3.6
Source: Defense Department
Ellie
BAH boost
DoD announces small increase in allowance
By Gordon Lubold
Staff writer
The Pentagon will give service members an average 3.5 percent increase in housing allowances in 2007, about $44 per month for an average service member.
That’s less than recent increases, which have ranged from 6 percent to 7 percent and more, but there are two reasons for that, officials say.
First, the recent increases were above rental housing costs by several percentage points as Pentagon officials sought to improve the allowance by closing a gap that, at one time, had service members paying about 20 percent of their housing costs out of pocket. Second, the rental housing market, like the overall housing market, is softening across the country, officials said.
Pentagon officials released the 2007 BAH rates Dec. 18, listing payments for all paygrades for 370 locations nationwide.
The new housing allowance rates are based on a complex formula that shows rental rates generally decreasing, which is backed up by anecdotal evidence that landlords are looking for tenants. More apartments are being offered with one month’s free rent, upgrades and other incentives, defense officials say.
Because housing allowance rates closely follow those rental rates, BAH is also inching downward.
“Landlords, for the first time, were starting to have rental units that were standing vacant, and when rental units stand vacant, [landlords] begin to lower rents,” said Susan Brumbaugh, program director for the Pentagon’s Basic Allowance for Housing program.
But that does not mean service members somehow “lose out,” because their BAH should still be enough to cover average rental costs.
As recently as six years ago, service members were responsible for 20 percent of their housing costs.
Pentagon officials say the new system, which took five years to implement, should not require individuals to pay out of pocket as long as they rent housing appropriate to their paygrade — apartments for young, single troops, and townhouses and single-family homes for older people with families in higher ranks.
BAH rates are based on three factors: an analysis of actual rental rates in markets around the country, utility rates and renter insurance rates. That information is fed by housing managers at each base or station to a Pentagon contractor, Runzheimer International, which analyzes the data and spits out a rate for each area.
Each of the 370 housing markets includes 48 different housing rates, one for each of the nine enlisted ranks, 10 officer ranks and five warrant officer ranks, both with and without dependents.
Of the 17,760 rates the Defense Department calculated, 2,763, or about 16 percent, saw decreases spread across 135 housing markets, according to Pentagon data.
The system is designed to protect service members from losing money where there is a downturn in their rental market.
In areas that see a BAH decrease from one year to the next, no service member already in that area with an active lease or rental agreement will have his BAH rate reduced. Troops are locked into the BAH rate they received when they signed the document.
Only personnel coming freshly into that area would get the lower rates reflecting the recent change in the housing market.
However, if BAH rates go up in a given area, all service members get the increase, officials said.
Occasionally, the Pentagon and Runzheimer make a mistake in setting a market rate by basing their analysis on inadequate housing units. For example, an analysis might include rental rates from an area near a base in which no service member would want to live, which artificially depresses BAH rates.
That happened just once last year, at Fort Knox, Ky., where officials discovered unacceptable housing had been included in the analysis. Ultimately, revisions were made and some BAH rates were increased, on average, about $10 per month, Brumbaugh said.
“As soon as we were aware that some units had been included to establish the median were not adequate, we immediately took them out,” she said.
Ups and downs
The U.S. housing markets that saw the biggest percentage increases and decreases in average Basic Allowance for Housing payments from 2006 to 2007:
Increases
Housing market Pct. change
Kingsville, Texas 15.6
Cumberland, Md. 12.5
Hattiesburg, Miss. 11.9
Baltimore 11.6
West Palm Beach, Fla. 11.3
Limestone, Maine 10.5
Fort Wayne, Ind. 10.3
Fort Campbell, Ky. 10.1
Tuscaloosa, Ala. 10.1
Lake Charles, La. 10.0
Decreases
Housing market Pct. change
Monroe, La. -5.3
Fort Gordon, Ga. -5.1
Sioux Falls, S.D. -5.0
Florence, S.C. -4.4
Fort Benning, Ga. -4.2
Stockton, Calif. -4.2
Atlanta -4.0
Peoria, Ill. -3.8
Athens, Ga. -3.7
Seattle -3.6
Source: Defense Department
Ellie