Press Releases

Why is a Washington Agency Spending $145 Million on Renovations for a Building It Rents – and is Worth Only $154 Million?
More Per Square Foot Than Cost of Trump Tower? Of Bellagio Casino?

Washington, January 28, 2014 -

House Financial Services Committee Chairman Jeb Hensarling (R-TX) today questioned CFPB Director Richard Cordray on the Bureau’s plans to spend $145 million for renovations to its Washington headquarters.  A full transcript of the question and answer session can be found below.

Chairman Hensarling: Mr. Cordray, I have no doubt that you have figured out that the majority of this committee feels that your agency is unaccountable by design, but we we are increasingly concerned it may be unaccountable by practice as well. As you can tell, from the monitors the majority also are very focused on the unconscionable, unsustainable, and frankly immoral debt that is being left to our children- so how you expend the peoples’ funds is a very salient issue. You were last before the Senate Banking Committee on November 12th. You were asked by Senator Coburn who asked you, “Can you tell me why we need a $95 million building?” I believe he was referring to your renovation budget. You answered “by the way, we do not own, and I would rather not spend a penny on it.” You went on to say “the HVAC and electrical apparently has to be brought up to snuff,” and finally “it is not like we are building some palace for the Bureau over the long-term.”

Director Cordray: That is correct.

Hensarling: And now I discover on December 16th of last year the Bureau released its financial report. Is it not true on page 39 of the report that the headquarters renovation costs have now jumped to $145.1 million?

Cordray: I don’t believe that is correct in terms of construction costs. There are additional costs we are using….

Hensarling: This is not part of the renovation costs on page 39 of the report?

Cordray: I’m just saying. We are using GSA now to oversee this renovation because it has, as we understood, has received scrutiny and we want to make sure things are being done right. 

Hensarling: Well let me ask you about the GSA then, because as I understand it the GSA owns or leases 354 million square feet in 9,600 buildings across 2,000 communities and that your $145 million renovation budget now is equivalent to over half -- over half -- of their entire annual budget nationwide.  Were you aware of that?

Cordray: I don’t know much about GSA’s operations.  That’s not the agency I run. I know a lot about the CFPB’s operations. What I would say is they are the experts at dealing with these types of projects so we got them involved.

Hensarling: OK, is the $145 million merely to update the HVAC and electrical?

Cordray: No, and there have been different numbers here, and the most recent number that I’ve seen is $114 million. What I am told is is that about two-thirds of it is required in order to upgrade the basic structure of the building. We bought a tough building apparently, and when I say bought -- we have leased a tough building.  

Hensarling: So it’s not your building?

Cordray: That is correct.

Hensarling: And you’re putting in, you’re renovating a building you do not own, putting in almost as much as the entire value of the building. I’ve tried to get some comparable real estate costs. As you say “we’re not building some palace for the Bureau over the long-term.”  Apparently your renovation cost is now $483 per square foot which is triple – triple – the typical Washington, D.C. luxury commercial class- A luxury renovation rate of $150 per square feet.  Three times as much as the DC metro area.  The Trump World Tower; you are spending more per square foot than the Trump World Tower which came in a $334 per square feet. You are spending more than the Bellagio Hotel and Casino, which at the time it was complete, was the most expensive hotel ever built – $330 per square feet. And if I’m pronouncing this right, you are more expensive than the Burj Khalifa, the tallest skyscraper in the world, located in Dubai, which came in at $450 per square feet, which is known as a “world-class destination”, “new urban masterpiece”, “superlative in every respect” designed by “the world’s most esteemed designers” one of which the architectural firm Skidmore, Owings, and Merrill, which the Bureau paid $7.5 million in order for architectural and engineering services at your headquarters. So here’s the deal:  What on God’s green earth is going on here? Explain to me, Mr. Director, why I shouldn’t be outraged and why the American people shouldn’t be outraged? 

Cordray: Thank you for asking a question Mr. Chairman and let me restate.  First of all, we do not own this building; it is an asset of the Federal Government; it is owned by the Comptroller of the Currency. We have leased the building. The renovations that are performed there will make the building serviceable for years to come, probably far outlasting the time of our lease. The notion that we would try to build some palace that we don’t even own or control doesn’t make much sense to me.  I am told that…..

Hensarling: I don’t think it makes much sense to the taxpayers, but you’re spending the money.

Cordray: If I might finish? I am told that we have to do certain things so that the building can be brought up to code and work properly.  We’re going to have to vacate the building while this is going on. None of this is convenient for myself and our employees. None of this is something that we prefer to do. You know, we work with GSA to try to understand what space was available in Washington, D.C. and there is very limited space for an agency with over 1,000 employees….

Hensarling: My guess is cheaper space could have been found in Reston and the American taxpayers would have appreciated it.

Cordray: We looked around at surrounding areas as well.

Hensarling: I’m beyond my time.

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