WASHINGTON, Dec. 17, 2013 - The 2014 basic allowance for housing rates for service members released today represent an average increase of 5 percent, or up to $75 to $80 per month, the Defense Department's BAH program manager said.

The new rates will take effect Jan. 1 at a cost of about $20 billion for the Defense Department program, which will affect nearly 1 million service members, Cheryl Anne Woehr said. The allowance differs by pay grade, location and whether or not service members have dependents.

"How each service member is impacted is local," Woehr said, explaining that BAH rates are based on the costs of housing for civilians with comparable incomes in 306 areas in the country with significant military populations.

"The program focuses strictly on the rental market and certain types of housing, such as rental prices for townhouses, apartments and single-family homes," Woehr said.

BAH rate adjustments, she said, are based on three factors: data gathered from property managers for existing vacancies in each area, the costs of utilities based on data from the American Community Survey, and renter's insurance costs, based on data collected from insurance carriers in each state.

BAH rates are routinely reviewed and are adjusted each year to account for fluctuations in rent, utilities and renter's insurance in a given location, said Navy Lt. Cmdr. Nate Christensen, a Pentagon spokesman.

"BAH is designed to assist service members assigned to permanent duty stations within the United States with acquiring housing comparable to civilians in the same income range at that location," he added.

The largest BAH area increase for 2014 will be in Mobile, Ala., at an average of 14.9 percent, which translates into about $1,500 for BAH per month for service members with dependents, compared to $1,305 per month for 2013. Increases in Honolulu County, Hawaii, and Minneapolis-St. Paul, Minn., follow at 14.7 percent and 14.5 percent, respectively.

The areas with the largest BAH decreases are Sacramento, Calif., where a 7.7 percent BAH reduction translates into $1,998 monthly for service members with dependents, compared to $2,132 in 2013 Yuma, Ariz., sees a 6.1 percent decrease in 2014, and BAH rates will drop by 5.9 percent at Altus Air Force Base, Okla.

The BAH rate decreases will apply only to service members who are newly reporting to those locations. Service members already assigned to an area where BAH decreases in 2014 are "grandfathered" by the program's individual rate protection, and their rate will not go down. In areas where BAH is increasing, service members who already live there will receive the new rate.

"We do want to make sure we're fair to the service members regardless of where in the country they're stationed," Woehr said.

A BAH primer on the Defense Travel Management Office website lays out the data collection process and has a table that links housing types to pay grades, she added.