Sometimes there is no other solution than to have children sleep in the basement because of the room in a house. The key is to understand that the child's fear is real and should not be minimized. The child needs to be helped to face that fear but not told "there is nothing to be afraid of." To the child there is a lot to be afraid of. Then the parent and child need to work together to find ways to make it more "safe" in the basement.
I recently had a grandchild live with us and he needed to have his room in our unfinished basement. He also was afraid to be down there alone. We hung sheets to cover the unfinished concrete walls and put pictures on the sheets to make it seem more friendly. We had a night light and when he went to bed we had tapes softly playing so he did not feel so all alone. He was able to help us decorate his room so he felt it was his own space. The more input the child has in what his room looks like the better it is. The more the child has invested in his room, the safer he will feel there.
We all have a hard time facing fear. This needs to be handled with respect for the child. It will probably be a process of the child adjusting to the basement and not an event. It may take time for this space to feel like "home" to him.