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You might have seen a few episodes of HGTV’s Flip or Flop where Tarek and Christina El Moussa thought they snagged a good deal on a house only to have it turn into a money pit. We’re seeing something similar happen with the renovation of the Consumer Financial Protection Bureau’s (CFPB) headquarters. A Federal Reserve Inspector General report finds that it has become the reno from hell. The Washington Examiner’s Richard Pollock reports [emphasis mine]:
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 House Financial Services Committee notes that this is some expensive remodeling:
It also equals more than $590 per square foot being renovated at the CFPB’s rented headquarters. That means the CFPB is spending much more per square foot than it cost to build the Trump World Tower ($334/square foot), the Bellagio Hotel and Casino ($330/square foot) and the Burj Khalifa in Dubai ($450/square foot).
Even though CFPB renovation plans include “a raised water table flowing over waterfall of naturally split granite in a four story interior glass staircase,” once completed it will only house two-thirds of CFPB’s Washington, DC-based employees.
This story gets stranger because the CFPB doesn’t own the building but instead is renting it. In February, Rep. Jason Chaffetz (R-UT) told NPR, “When you see these departments and agencies leasing a building and then investing millions and millions of dollars to retrofit them for their specific need, it just sort of drives you nuts.”
Renovation work hasn’t even begun on the building, called a “dump” by CFPB Director Richard Cordray. The report notes that contracts for construction and managing the construction have not yet been awarded. Only an architectural/engineering firm has been hired so far.
While renovations are underway, the CFPB will rent temporary office space in another building at a cost of $22.3 million.
This isn't the only time CFPB's spending has been questioned. In May we learned that the CFPB plans to spend nearly $400,000 on an all-staff conference in Washington, DC later this month.
Costs get out of control when there’s little accountability. Under the Dodd-Frank law, Congress does not appropriate money to the CFPB. Since it’s funded by the Federal Reserve, Congress can’t use its power of the purse to hold the agency accountable for its spending.
House Financial Services Committee Chairman Jeb Hensarling (R-TX) who has held hearings on the CFPB, said, “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.”
Rep. Patrick McHenry (R-NC), chairman of the House Financial Services Subcommittee on Oversight and Investigations who requested the Inspector General investigation, added, “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.”