A government watchdog criticized the Consumer Financial Protection Bureau's controversial headquarters renovation, whose price tag has risen to an estimated $216 million, saying there was not a "sound business case" for the project because the agency never analyzed other options.
The inspector general's report, released Wednesday, said bureau officials have been "unable to locate any documentation of the decision to fully renovate the building."
The bureau also failed to follow its own guidelines for approval by an internal investment review board because a required analysis of alternatives to the renovation was not completed, the report said.
"We cannot conclude whether a complete analysis would have altered the decision to approve funding for the renovation," said the report by the Federal Reserve's inspector general, which is the official watchdog for the bureau.
"However, without this analysis, the value of the IRB process as a funding control is diminished and a sound business case is not available to support the funding of the renovation," the report said.
Some House Republicans, who strongly opposed the creation of the bureau in the 2010 Dodd-Frank financial reform law, have been highly critical of the headquarters renovation. They said the plan is too costly and shows there is not enough congressional oversight of the bureau.
Under the Dodd-Frank law, the bureau's funding comes directly from the Federal Reserve and does not have go through the congressional appropriations process. Congressional Republicans have been trying to change that arrangement as well as make other alterations to the bureau's structure that would weaken its power.
“When they passed the Dodd-Frank Act, Democrats in Congress and the White House made the CFPB unaccountable to taxpayers and to Congress," said House Financial Services Committee Chairman Jeb Hensarling (R-Texas), a leading bureau critic.
"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," he said. "It’s outrageous.”
The bureau is renovating the seven-story downtown Washington building that previously housed the Office of Thrift Supervision, which was closed as part of the 2010 overhaul of financial regulations.
Bureau officials said the 36-year-old building needed significant renovations, including updating its electrical and ventilation systems.
“The CFPB’s headquarters is a government asset that is past its prime and needs to be brought up to current standards," bureau spokeswoman Jen Howard said Wednesday. "Government buildings are frequently renovated."
But the estimated cost of the project has been rising, adding to the ire of Republicans.
The price tag increased from $95 million in early 2013 to $145.1 million late last year and now is $215.8 million, the inspector general's report said.
Howard said the bureau "has been open and transparent about our cost estimates."
And she questioned the report's cost estimate, saying it should still be $145.1 million. The $215.8-million figure includes related costs, such as moving expenses and renting interim space, the report said.
Howard said including other expenses, such as rental costs, in the renovation estimate "is incorrect and misleading.”
Hensarling and Rep. Patrick McHenry (R-N.C.), who requested the inspector general's report, said that based on the new inspector general's estimate, the renovation would cost about $590 per square foot. That is more than it cost to construct the Trump World Tower in New York City, the Bellagio Hotel and Casino in Las Vegas, and the world's tallest building, the Burj Khalifa, in Dubai, they said.
"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," McHenry said.
The per-square-foot estimate was made by the Financial Services Committee staff, which excluded the building's parking garage and retail space because they are not being renovated, said committee spokesman Jeff Emerson.
The federal General Services Administration, which is managing the renovation, estimated it would cost much less per square foot -- about $250, which is in line with other recent similar projects. The agency used construction costs of $126 million and the building's total square footage.
The inspector general's report did not include a cost per square foot.
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