TINKER AIR FORCE BASE, Oklahoma (Reuters) – Here, near the heart of America’s “Tornado Alley,” an Air Force contractor built 398 new homes less than a decade ago, bankrolled as part of the U.S. government’s vow of safe shelter for the men and women who serve.

Today the collection of cookie-cutter duplexes is showing declines more typical of aged and neglected housing. Last spring, just six years after landlord Balfour Beatty Communities finished construction, the company was forced to start replacing every foot of water line in each house to fix systemic plumbing failures. In September, the company and Air Force inspected the tiny rooms where heating, ventilation and air-conditioning equipment is housed. Half had mold or water damage. Residents complain of leaks, mold, rodents and cockroaches.

While living in her new house on base, Stephanie Oakley’s five-year-old son underwent 42 weeks of chemotherapy, 33 days of pelvis radiation and 10 days of full-lung radiation this year. Doctors removed his adenoids, the hospital says, and then his tonsils.

The cancer treatment severely weakened his immune system. Any infections from mold, the family’s doctor warned, could be lethal. So when Oakley found mold in the vents of her home in August, she instantly called Balfour Beatty (BALF.L).

Yet the cleanup worsened the problem, she said. A contractor cleaned the vents but failed to cover the Oakleys’ possessions. She returned home to find fungus throughout the house. Green webs of mold stretched across the Batman emblems of her son’s sheets.

“I never felt hopeless about him getting cancer. I had faith,” she said. “But this right here is harder to deal with.”

Her story is part of a largely hidden reality about life on America’s military bases. The U.S. Department of Defense has privatized most of the living quarters on bases around the country, partnering with private companies to manage the vast system. What the Pentagon touts as privatization’s signature achievement – the building of new housing for military families – is marred by faulty construction and poor upkeep, Reuters found.

The Pentagon has never publicly released a definitive assessment of its two-decade old new construction program covering some 150 bases. But three years ago, the Pentagon’s Inspector General spot-checked housing units at five U.S. military bases, finding 282 deficiencies at 89 homes, including dwellings built or renovated under the privatization program. The problems, including “pervasive” fire hazards, faulty electrical wiring and unmitigated mold growth, were caused by “improper installation, insufficient inspection and inadequate maintenance,” the IG found.

A Reuters review – built from court records, interviews and Defense Department Inspector General documents obtained through the Freedom of Information Act – found serious construction problems with new or renovated housing on at least 17 bases. The flaws include water damage, improper electrical wiring, missing smoke alarms, and construction errors requiring residents to leave new homes. At six bases, the developer, unable to complete construction, was dismissed from the project.

The building program, some tenants say, has failed to meet the goal the Pentagon set two decades ago of building adequate homes for “the most dedicated” members of the armed services.

“The service members risk their lives,” said Andrea DeLack, whose husband, a retired Marine first sergeant, served in the wars in Iraq and Afghanistan. They were housed in a new, mold-ridden home on an Air Force base in Mississippi run by another landlord. “And in return, the organization as a whole doesn’t even give back with safe housing for us and our kids.”

Over the past two decades, the Defense Department has transferred ownership of more than 200,000 homes to private landlords. It also contributed $3.4 billion to help finance the renovation of 52,000 old homes and the construction of 80,000 new ones nationwide. The decaying homes in Oklahoma and Mississippi are among that new housing stock.

The military says the overall quality of housing has improved under the privatization program, but the Pentagon’s massive financial outlay has come with limited federal oversight and little accountability for the companies that run the gargantuan system. The contracts under which landlords operate, their revenues, inspection records and resident complaints are kept secret or heavily redacted by the Defense Department and the companies. The Pentagon says the details are proprietary.

In a statement to Reuters, the Air Force said it inspects a sampling of homes annually or when concerns arise, and that it requires private operators to employ third parties to ensure homes meet local building codes. The Air Force did not provide the results of its inspections, but noted, “results of these visits vary.”

“The Air Force places the health and safety of its members as a top priority,” wrote spokeswoman Laura McAndrews.

Balfour Beatty declined to discuss conditions at specific homes at the Oklahoma Air Force base. In a statement, the London-based company said most residents are pleased with its work. “We are steadfastly committed to making things right in these homes,” it said.

BIG BUSINESS, BASE TROUBLES

Balfour Beatty manages 43,000 housing units at Air Force, Army and Navy bases across the country, making it one of the biggest players in the industry. The company won the Tinker contract in 2008. Overall, the base has 660 homes.

At Tinker and two other bases, the Air Force contributed $137 million in loans to help finance new and renovated housing. The Defense Department does not reveal how much its partner landlords earn in rent. But Reuters estimates the rental revenue is $10.5 million annually at Tinker and $800 million at all the bases where Balfour Beatty is a housing partner. The figures were calculated using Pentagon data on military housing stipends. Neither the military nor Balfour Beatty challenged these estimates.

Here in the suburbs south of Oklahoma City, Balfour Beatty built nearly 400 homes between 2008 and 2012. It noticed the leaks as early as 2009, according to a court filing by Balfour Beatty. Last spring, Balfour Beatty started replacing every foot of water line in each house to address extensive water damage.

While plumbers replaced the piping, Air Force housing personnel and Balfour Beatty employees spent a week in September at each new home inspecting the mechanical closets, which hold heating, ventilation and AC equipment. Half had water damage, including spraying leaks, water pools three inches deep, raw sewage, rotten wood and severe mold, records show.

At a town hall meeting two weeks later, Balfour Beatty executives downplayed the problems, saying mold and water damage in HVAC areas don’t affect residents. “The good news is the mechanical rooms are isolated from the living areas,” said Steve Curtis, vice president of risk management at Balfour Beatty.

Tim Toburen, an environmental specialist in mold and water damage, disagrees. Examining photos taken by Reuters and residents, Toburen noted the walls separating the mechanical closets from living spaces appear to be made of drywall – a material susceptible to mold growth and providing no barrier to water. The air circulation systems themselves, when not properly sealed, suck up mold spores and distribute them around the house, he said. Inspection records obtained by Reuters show dozens of HVAC systems incorrectly sealed in new homes.

“Clearly there are big problems here,” Toburen said.

Asked about those problems, spokeswoman McAndrews said the Air Force “is concerned about the water damage.” The Air Force and landlord will promptly reinspect affected homes and make fixes, she said. Balfour Beatty will now inspect the rooms during routine maintenance checks.

Repairs were finished in October, homes were re-inspected and families are satisfied with the work, said Balfour Beatty spokeswoman Maureen Omrod.

The landlord is a unit of Balfour Beatty plc, a publicly traded corporation, which reveals little about the finances of its military housing subsidiaries. The Defense Department deems the project finances confidential and will not disclose figures.

Balfour Beatty assures investors, however, that housing soldiers, sailors and airmen is lucrative. At the company’s August results call with analysts, CEO Leo Quinn described military housing as a “fantastic business.”

The complaints about new homes extend beyond Oklahoma and Balfour Beatty. Another big player is Hunt Companies, which owns 50,000 homes on 49 bases and bills itself as the “largest military housing owner in the country.”

At Mississippi’s Keesler Air Force base, 13 military families are suing Hunt over endemic mold infestations they say sprouted from faulty construction and poor maintenance in their homes, which were among 1,000 built from 2007 to 2010 for $287 million.

Among the plaintiffs is the DeLack family. Earl DeLack, a retired first sergeant in the Marines, said his home at Keesler – the base has a Marine detachment – was riddled with mold, sickening his wife, baby and two other young children with allergies, rashes and headaches. DeLack said he alerted the base commanders, inspector general and others, to no avail, finally moving off base in 2016. He retired in July, following deployments to Iraq and Afghanistan.

“It was a bad way to leave the Marine Corps,” said his wife, Andrea.

Another plaintiff, Ann Yarbrough, an Air Force technical sergeant, showed a reporter black spots spreading across her ceiling in early December. Mold has been a recurring problem since the family moved into the house in 2011, putting her three young children at risk, she said. Later in December, the family was moved out of the house for mold remediation and will be spending Christmas in temporary quarters on base.

“That’s the crazy thing,” Yarbrough said. “When I was deployed to Afghanistan, I was worried about my family back here, because they were getting sick.”

In court filings, Texas-based Hunt denied allegations of poor maintenance, mold outbreaks or any harm to tenants. However, an internal memo from a Hunt affiliate to Air Force officials in 2008 shows the company knew its new homes were prone to mold. The company and Air Force confirmed to Reuters this month that 1,000 have needed “moisture remediation” in the past two years – including those of DeLack and Yarbrough.

Air Force spokeswoman McAndrews said some homes have required “extensive repairs,” so the service and Hunt agreed to complete the work in phases. The Air Force is monitoring progress “to ensure project milestones were met,” she said.

Hunt said it’s committed to addressing the problem. “Hunt Military Communities takes pride in providing the best possible housing for our Service Members and their families,” the company said in a written statement.

FAMILY TROUBLES

In Oklahoma, landlord Balfour Beatty faces resident complaints of maintenance nightmares and punitive fees. At Tinker, more than a dozen residents said they believe the company is slow to fix problems, admit obvious water damage or investigate mold.

In Janna Driver’s home on Night Hawk Court, water regularly seeped from the mechanical closet into the adjacent playroom for her four-year-old twin girls, she said.

In August 2018, the family called in its ninth request for help in a year. Driver’s husband followed the Balfour Beatty maintenance technician into the mechanical closet and snapped pictures of walls covered with mold from floor to ceiling, along with a puddle of water where the air conditioning unit’s condensation pipes emptied onto the floor. Her account is supported by maintenance records and photos and videos she took of the premises.

When Driver asked Balfour Beatty maintenance staff about the mold, she said they told her the company had been trying to treat it with bleach for six months.

During that time, medical records show, the family pediatrician diagnosed both twins with chronic upper respiratory infections – a symptom of mold exposure. Driver said she, her eldest son and oldest daughter experienced headaches and nosebleeds.

In August, Balfour Beatty moved the Drivers into temporary base housing, where water leaked into a light fixture. The family moved to a hotel – paid for by Balfour Beatty – in September. After two months, they left for a home off base. “I haven’t had one headache since,” Driver said.

Balfour Beatty continued to collect the family’s monthly housing stipend, however. It charged the Drivers a month’s rent for terminating the lease early. And it billed them $1,171 for unspecified damages.

The company declined to discuss the specifics of the Drivers’ case with Reuters. It said it has been transparent with the Air Force and residents about the plumbing problems, which it said affected a “select segment” of homes.

Company executives told residents the water damage was caused by defective plastic water lines installed by a subcontractor. Since last spring, Balfour Beatty has spent $6 million to repair water damage and install water lines, replacing the lines in at least 150 new homes, with plans to finish the remaining 250 by May.

In October, Balfour Beatty sued NIBCO, the Indiana company that made the water lines, in federal court in Oklahoma, alleging systematic failure of the equipment that caused “extensive leaks” throughout the Tinker homes. Balfour Beatty was still discovering new leaks at Tinker “on a weekly basis,” the suit said.

Earlier this year, NIBCO agreed to pay $43 million to settle a separate class action suit over allegations its water lines failed in homes across the country. Edward Sullivan, NIBCO’s general counsel, said the company believes other installation problems were to blame at Tinker and plans to fight the Balfour Beatty lawsuit.

In any case, the original pipes aren’t the only problem with the new homes. Inspection records show leaking HVAC systems and roofs, backed-up sewage lines and standing water in homes where the lines were replaced. Balfour Beatty insisted sewage backups were not a problem, but records show three homes had backups in HVAC rooms, one described as “bad raw sewage.”

In August and September, senior airman Abigaila Courtney said, sewage water backed up from her shower drain into the nursery in her remodeled home – which does not have plastic water lines. An environmental testing firm found high levels of mold spores in her child’s bedroom. Her four-month-old baby boy went to the emergency room with breathing difficulty, according to a letter from her son’s doctor. The doctor told Balfour Beatty to remove mold from their home.

Balfour Beatty declined to comment on Courtney’s complaints.

Courtney discovered that Balfour Beatty’s maintenance log, which she shared with Reuters, sometimes did not match the work done at her home. The log said her air filter was replaced in September, but a week after the purported upgrade, the filter was so furry it looked like a bearskin rug, according to a photograph she took at the time.

In the past, the work order system did not always match “actual performance,” the Air Force’s McAndrews said. After an audit, she said, changes were made to improve the work order process.

Courtney said the base’s inspector general told her it couldn’t help. So her family moved in with her sister-in-law off base. Nevertheless, Balfour Beatty said it would continue to collect her rent. “We have nothing to back us up and no one to help us,” she said.

BIG BILL AND SECRECY

In October, Balfour Beatty gathered Tinker residents in a town hall meeting to try to ease their concerns. A Reuters reporter was in the audience.

To educate the tenants about mold, company vice president Curtis kicked off his talk by defining the word “ubiquitous.” Mold, he continued, is everywhere. He displayed a picture of mushrooms growing in the yard of his home and discussed the many uses for mold, such as making penicillin, beer and cheese.

“We eat mold,” he said. “Does anyone like gorgonzola cheese?”

Stephanie Oakley, whose husband is an Air Force staff sergeant, said she called Balfour Beatty 30 times since moving in three years ago to complain about leaky plumbing, heating and cooling problems and water damage that left her living room carpet so wet it soaked through her socks. She said the carpet smelled like pee.

Oakley later learned the dank conditions posed an acute health threat for her son, who was diagnosed with rhabdomyosarcoma, a soft tissue cancer, in October 2017.

She began to worry in August when she discovered mold in all six of her vents and a patch growing on her carpet. An environmental testing firm found high levels of mold spores in her son’s bedroom.

Her son’s oncologist wrote Balfour Beatty Communities that “death rates are unfortunately high” when pediatric cancer patients contract infections from mold and fungus. He urged the company to remove the fungi and mold.

Balfour Beatty agreed to replace the flooring, clean the vents and pay for the family’s hotel room for a month, Oakley said. But the cleanup backfired.

Oakley said a Balfour Beatty contractor did clean the vents while the family was away, but failed to cover the furniture and possessions. Oakley came home in September to find a patina of mold spreading across the house and on her shoes, her husband’s dress shirts and their son’s bedding.

Still, the landlord would not acknowledge the existence of mold, nor would it share the results of its own mold tests with the Oakleys, she said.

On September 26, Oakley learned her son was officially cancer free. The next step was follow-up chemotherapy to cut the chances of a recurrence.

That same day, the boy’s doctors discovered a possible infection in his lung, delaying his follow-up chemo for weeks. The spot in his lung turned out to be severe asthma congestion. Though the cause cannot be certain, mold spores can aggravate asthma, according to the Centers for Disease Control and Prevention.

In the weeks after the company’s town meeting in October, the Oakleys moved into a new home off base. It is mold free.

After they left, Balfour Beatty accused the family of breaking the lease early and continued to collect $1,314 in monthly rent from the husband’s paycheck. The company also billed the Oakleys $2,400 to replace the mold-coated carpet, blaming the family for its condition.

The bill came with an offer. Oakley said if the family agreed not to sue and not to publicly discuss their experiences at Tinker housing, Balfour Beatty would waive the fee and refund one month of rent.

“It’s making us feel like we don’t have an option, like we have to sign it so we can make our mortgage payment,” Oakley said in late November, still mulling the company’s offer.

In the days after Reuters asked Balfour Beatty about the Oakleys, the Drivers and the Courtneys, the landlord stopped garnishing their monthly housing stipends.