Renovation costs for the Consumer Financial Protection Bureau's Washington headquarters continue to spiral upwards, now pegged at $215.8 million, according to the inspector general of the Federal Reserve Board of Governors.
The scathing report authored by IG Mark Bialek said there is no “sound basis” to support the controversial renovation. Unlike Congress, the Fed's IG can review CFPB programs and spending.
"The approval of funding for the renovation was not in accordance with the CFPB’s current policies for major investments,” and as a result, “a sound business case is not available to support the funding of the renovation,” he said.
The IG also complained that CFPB officials were “unable to locate any documentation” for the renovation.
The latest cost estimates for the building, located across from the White House, are now $65 million more than the bureau's estimate only six months ago.
That's more than double last year’s estimate of $95 million. The original budget number was $55 million in 2010.
The new cost estimates put it at $590 per square foot. Congressional critics have previously complained in hearings that the new CFPB building would a be “palace,” more opulent than Trump World Tower (whose construction costs were $334 per square foot), Las Vegas' Bellagio Hotel and Casino ($330 per square foot) and Dubai’s Burj Khalifa ($450 per square foot).
Bialek’s conclusions were sent to Rep. Patrick T. McHenry, R-N.C., in a Monday letter, a copy of which was obtained by the Washington Examiner. McHenry, the chairman of the House Financial Services Subcommittee on Oversight and Investigations, requested the IG investigation Jan. 29.
The IG slammed CFPB for ignoring its own agency procedures before the bureau’s Investment Review Board, which is to assure that all major federal investments have gone through proper analysis, including estimates of costs and benefits of alternative plans.
Bureau officials told the inspector general that the Investment Review Board approved the final plan without any comparative numbers “because funding approval was viewed as a formality, given that the decision to proceed with the renovation had already been made.”
While the General Services Administration says it closed the bidding process for the renovation, the agency has not approved an architect-engineering firm to undertake the construction.
Members of Congress assumed the IG, with broad investigative powers, could obtain documents about the renovation.
But Bialek said CFPB “was unable to locate any documentation of the decision to fully renovate the building.”
Bialek's report is likely to elicit new howls from congressional critics. In a statement, McHenry compared the bureau's failure to produce documentation to the Internal Revenue Service scandal, in which emails on hard drives were lost for seven IRS officials implicated in targeting conservative groups.
“Now we learn the bureau, presumably taking a page out of the IRS' playbook, has lost the documentation showing who actually gave final approval for this massive waste,” McHenry said.
The Examiner has a Freedom of Information Act lawsuit pending before U.S. District Court for the District of Columbia because of CFPB's refusal to disclose renovation records.
The IG reviewed three different cost estimates. One was a $55 million figure published in CFPB’s 2011 budget justification.
During congressional testimony earlier this year, CFPB Director Richard Cordray claimed the $55 million figure was "a Washington Examiner fiction."
This figure, compiled by the Office of Thrift Supervision in 2010, the previous occupant, envisioned a Class B+ office space.
The OTS building was originally rated a Class C building, or a low-quality building.
In April 2013, CFPB issued a new $95 million figure, which was included in the CFPB Strategic Plan, Budget and Performance Plan and Report. This figure did not consider the “class” of the building.
A $150.8 million estimate was published in 2013 in a CFPB report. This budget upgraded the building to a Class A building, the top category for luxury commercial office buildings.
This plan rejected less-expensive phased construction and added a 7th floor to the building. The bureau later reduced the cost to $139.1 million and excluded the new seventh floor.
The IG’s new number for the cost of the renovations of $215.8 million. Included in that figure is $145.1 million in obligated funds for construction, $70.7 million for architect-engineering fees, rent for temporary housing, moving costs and other expenses.
House Financial Services Committee Chairman Jeb Hensarling, R-Texas, said the IG’s findings were “outrageous.”
“When they passed the Dodd-Frank Act, Democrats in Congress and the White House made the CFPB unaccountable to taxpayers and to Congress,” Hensarling said in a written comment.
“We’re seeing the results of this dangerous unaccountability today in a Washington bureaucracy that is running amok, spending as much as it wants on whatever it wants. It’s outrageous,” he said.
McHenry said the findings are “deeply troubling” and “lead to even more questions about the unaccountable design of the CFPB. The continuously growing price tag is a tremendous waste of funds and, amazingly, there is still no assurance the $216 million price tag won't grow higher.”
In 2011, the building was appraised for just $153.7 million, according to an audit report released by the Treasury Department’s inspector general in December.