Last month, CFPB Director Richard Cordray came under sharp questioning at a House Financial Services Committee hearing by Chairman Jeb Hensarling (R-TX). The Chairman was critical of the CFPB’s proposed $145 million renovation of its Washington, D.C., headquarters. The cost of that renovation, according to Hensarling, has increased nearly 50 percent since it was first mentioned in the CFPB’s budget report issued in December. Video of the interchange can be found here.
Issued in December, the CFPB’s budget report (found here) states that the bureau is “making a significant one-time investment to renovate its headquarters building” which “has not undergone significant renovation since it was constructed in 1976.” The budget calls for “replacement of aging mechanical and electrical systems, installation of energy-efficient lighting and repair of the parking garage decks, sidewalks and public spaces.” Cordray indicated that the more than 1,000 employees of the CFPB will work in temporary office space during the renovation.
Hensarling questioned the wisdom of the CFPB renovating a building that it leases. He said the renovation cost exceeds the value of the building. “You’re putting in almost as much as the entire value of the building,” he told Cordray. That price means, he continued, that “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.” To put the perceived extravagance into context, Hensarling said it would have been far less expensive for the CFPB to lease space in the Trump World Tower in Manhattan, or in the Burj Khalifa, the tallest skyscraper in the world, located in Dubai. In fact, Hensarling revealed that one of the design firms involved in the building of the Burj Khalifa has been paid $7.5 million for work on the new CFPB headquarters.
Cordray indicated that the expenditures were unavoidable, saying, “We have leased a tough building,” He said that the size of his organization limited their options. He denied that the CFPB was seeking to “build some palace” and noted that “the renovations that are performed there will make the building serviceable for years to come, probably far outlasting the time of our lease.” It is also true that Dodd-Frank requires the CFPB to be located in Washington, D.C.
Nevertheless, Hensarling suggested that the CFPB was unaccountable in its internal financial dealings. No matter how excessively the CFPB might spend on its headquarters, Congress does not control its budget. Rather, the CFPB is funded through the Federal Reserve, outside the Congressional budgeting process.