Consumer Financial Protection Bureau officials will pay $22.3 million to lease temporary offices in addition to the record-breaking $145 million being spent to renovate the agency's headquarters, according to documents obtained by the Washington Examiner.
Controversy has dogged the CFPB for more than a year for nearly tripling the initial $55 million cost estimate for renovations to the building that will serve as the bureau's permanent headquarters. The building is across the street from the White House, at 1700 G St. NW in Washington.
Bureau officials surprised members of Congress by confirming the new figure at a Jan. 28 House Financial Services Committee hearing.
Rep. Patrick McHenry, R-N.C., chairman of the panel's subcommittee on oversight and investigations, said he has toured the building and thought it was fine.
“It's certainly usable commercial space,” McHenry told the Examiner.
CFPB Director Richard Cordray told Congress in January that the agreement for the CFPB to temporarily lease space in the building was signed before he began running the agency in January 2012. "That was an agreement signed before I became director," Cordray said earlier this year, in response to a question from McHenry.
Federal records show the CFPB first signed a temporary lease for use of the space on G Street in July 2011. Cordray was nominated by President Obama for the director's post on Jan. 4, 2012, and by the next day, the bureau was distributing press releases quoting Cordray and identifying him as its director, according to its website. The president renominated Cordray to the post later that month.
On Feb. 17, 2012, more than a month after Cordray took the director's post, the bureau inked a 20-year lease on the G Street space.
McHenry said the discrepancy in Cordray's testimony is “deeply concerning.”
CFPB Chief Financial Officer Stephen Agostini told Congress last July that the renovation was necessary because the agency "cannot run telephone lines, run electrical lines, run computer lines [on two floors of the building], because when the building was built, it was not anticipated they would use those things." Cordrary also separately told Congress that "two-thirds" of the building needed an "upgrade [to] the basic structure."
Despite those problems, the building's previous occupant, the U.S. Office of Thrift Supervision, used nearly 6,000 square feet in the building basement for its data center and additional space for an IT file room, according to plans on file with the comptroller's office.
The thrift office was part of the Treasury Department and supervised all chartered banks and savings and loans institutions in the United States. OTS was dissolved in October 2011.
At the time Agostini made his assertion, Rep. Sean Duffy, R-Wis., told the Examiner that his "jaw dropped to think he wants us to believe there's no phone lines in the building."
Lawmakers also have described the CFPB renovation as over-the-top and extravagant.
Rep. Jeb Hensarling, R-Texas, for example, castigated Cordray during the Jan. 28 committee hearing for the price escalation, comparing the renovation costs to Trump Towers, the Bellagio hotel and Burj Khalifa, a luxury skyscraper in Dubai.
In 2012, CFPB retained Skidmore, Owings and Merrill, one of the world’s most prestigious architectural firms, for the renovation design.
The Chicago-based company also was the architect and engineering firm for Burj Kahlifa, as well as Cayan Tower, another luxury skyscraper in Dubai.
Contracting documents show that to date CFPB has paid $9.2 million to the architectural firm.
The temporary CFPB space at One Constitution Square in the nation's capital will cost the bureau $22.3 million, according to a General Services Administration occupancy agreement obtained by the Examiner.
The agreement requires CFPB to pay GSA more than $1.6 million for August and September 2013, more than $9.8 million from October 2013 through September 2014, nearly another $10 million through September 2015 and more than $800,000 for October 2015.
The bureau must make those payments even though it won't begin moving into the temporary space until this spring.
Bluhm’s Chicago-based private equity firm, Walton Street Capital, is one of two privately held companies that developed and owns the Constitution Square property in downtown D.C.
The second company is StonebridgeCarras, a real estate and development firm in Bethesda, Md., just outside of Washington.
For 10 years, Stonebridge owner George Carras was executive vice president at Chicago-based JMB Realty, which Bluhm owned. JMB was once one of the largest property developers in the United States.
As a bundler, Bluhm raised between $250,000 and $500,000 for Obama in 2008 and more than $500,000 in 2012, according to the Center for Responsive Politics.
In 2013, Chicago Magazine ranked Bluhm as one of “100 Most Powerful Chicagoans.” Forbes estimates his net worth at $2.5 billion.
The GSA also leased Two Constitution Square from Bluhm for a 15-year term that will house Justice Department offices.
The administration's lease of both buildings put it at 99 percent occupancy, according to Washington Business Journal.
A third building at Constitution Square is completed. Douglas Firstenberg, a principal at StonebridgeCarras, told the Examiner that the new tenants will be private-sector parties.