Fannie Mae is charging taxpayers millions for upgrades to its new headquarters. One upgrade, in particular, is a pricey chandelier costing $250,000.
The Federal Housing Finance Agency’s (FHFA) inspector general recently noted $32 million in questionable costs from an audit of Fannie Mae’s new headquarters in downtown Washington, D.C.
Fannie Mae will be the flagship of Midtown Center, scheduled to open in June 2018. The inspector general reported that costs for the new headquarters have “risen dramatically,” to $171 million — this is up from $115 million when the consolidated headquarters was announced in 2015.
Expensive upgrades are being blamed for cost overruns, per the inspector general. These upgrades include the following:
- A third glass walkway to connect Fannie Mae buildings ($2 million).
- Interior finishes and detailing ($7.7 million)
- A non-critical cafeteria ($4.1 million)
- Wood “veneer finishes” ($2.5 million)
- Light-filled town centers ($2.1 million)
- Decorative wood slatted ceilings ($1.2 million)
- Decorative wood “lunch huts”
- Additional pergolas, or garden-style pavilions, in elevator lobbies
- Key sculptures ($150,000)
- Gypsum ceiling detailing ($540,000)
- A broadcast studio ($700,000)
- Format tile for core wall elevations ($750,000)
- Decorative screens for conference rooms ($985,000)
- A chandelier ($250,000)
According to the inspector general, FHFA officials engaged in poor oversight of the project since they “did not review whether any of the major upgrades were cost-effective or whether lower cost alternatives were available.”
“For example, we identified an upgrade in the 80 [percent] General Contractor construction design documents identified as a $250,000 chandelier,” the IG said. “The expert’s representative explained that the expert first thought it was a light fixture but learned later that it was an ‘architectural feature’ for the trading room, intended to ‘evoke’ the activity in that room and assumed that this feature was part of some ‘government art program.'”
According to the acting deputy director of the FHFA, he told the inspector general he was “unaware” of the pricey chandelier, and said he would “question the expenditure of $250,000 for a piece of art.”
“We found no evidence, however, that FHFA has ever challenged this expenditure,” the inspector general said.
Fannie Mae has canceled a few of these projects out of “concern that they could create an unwarranted perception of our efforts to execute our workplace strategy in the best interest of the taxpayer.”
Rep. Bill Huizenga (R., Mich.) highlighted the lavish spending during a Financial Services Committee hearing Tuesday, calling out FHFA director Mel Watt for Fannie Mae’s $56 million cost overrun. “Good news. I discovered what a wooden lunch hut is,” he said. “Keep the wooden lunch hut, cancel the damn spiral staircase.”
“You are making K Street law firms and lobby shops jealous,” said Huizenga, who co-owns a gravel company and previously worked in real estate and development in the private sector. “They want to move to 15th and L. They want to move off K Street if this your headquarters.”
“FHFA’s expert noted that the level of detailing was ‘pretty intense’ and in the realm of ‘high end design,'” the inspector general said. “It concluded, however, that these features and finishes were ‘consistent with those found in major financial institutions or law firms and may be instrumental in attracting future employees to Fannie Mae’ and were ‘reasonable enhancements.'”
The IG also noted that the cost of the upgrades could be “significantly higher,” since the audit revealed $9.6 million in additional questionable upgrades in the contractor’s budget for the headquarters, including, “cabinets in a copy room, pantries, wood doors, bars, and quartz and glass countertops in a wellness room, town center café, a ‘CC lounge,’ free-standing decorative wood ‘lunch huts,’ custom wood menus for the Sky Lobby café, and elevator lobby pergolas.”
FHFA director Watt pushed back against the new report, claiming the new Fannie Mae headquarters will benefit taxpayers. “I consider the build-out features reasonable, cost-effective and consistent with my responsibilities under the law and I, therefore, did not object to them,” he wrote in response to the audit. “Some of these relate to the effective and efficient operation of Fannie Mae’s market room, which provides critical capital markets financial services to help support and sustain the U.S. housing market.”
The inspector general began providing oversight of the project in 2016, after receiving an anonymous complaint about “excessive spending by Fannie Mae.”
"BUILD THE WALL" bumper stickers now on sale. (BUY NOW)
If you would like to receive Breaking News text alerts on a smartphone or tablet, download the DML APP which is completely FREE and easy to use. Go to the Google Play Store or the IOS App Store and search for DML APP. Be sure to keep the app’s notifications setting on. Another way to receive alerts is to text to 40404 the following message: follow @realdennislynch (be sure to put a space between the word follow and the @ symbol).
To see more stories like this, sign up below for Dennis Michael Lynch’s email newsletter.
Sign up to get breaking news alerts from Dennis Michael Lynch.