Federal government cancels costly, decade-long search for a new FBI headquarters

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Washington, July 11, 2017 | comments
Jonathan O'Connell

The federal government is canceling the search for a new FBI headquarters, according to officials familiar with the decision, putting a more than decade-long effort by the bureau to move out of the crumbling J. Edgar Hoover Building back at square one.

The decision follows years of failed attempts by federal officials to persuade Congress to fully back a plan for a campus in the Washington suburbs paid for by trading away the Hoover Building to a real estate developer and putting up nearly $2 billion in taxpayer funds to cover the remaining cost.

Officials from the General Services Administration, which manages federal real estate, said they plan to announce the cancellation in a phone call with bidders and in meetings on Capitol Hill on Tuesday morning. They spoke on the condition of anonymity because they were not authorized to disclose the decision before it was announced.

For years, FBI officials have raised alarms that the decrepit conditions at Hoover constitute serious security concerns. But the plan to replace the building grew mired in a pit of government dysfunction and escalating costs with no end in sight.

Officials and executives involved in the process also said a lack of permanent leadership at both agencies could have hindered the case for funding.

Both agencies are operating under transitional leadership, as President Trump’s appointee to the FBI, Christopher A. Wray, has not yet been confirmed, and Trump has not appointed a permanent GSA administrator.

Trump has had an unusual relationship with both the GSA and the FBI. The GSA is the landlord to his D.C. hotel. Trump has also been embroiled in a high-profile dispute with the FBI over its ongoing Russia investigation, having fired director James B. Comey — who lobbied hard for a new campus — in May.

The GSA’s unconventional strategy of trying to offset the development cost by trading the Hoover Building downtown to the winning bidder was aimed at saving the government money but became a laborious and expensive complication.

As the search dragged on, both the federal government and developers bidding on the project began to bear inordinate costs.

Real estate companies pursuing the deal spent years and millions of dollars attempting to make their case for the project. The GSA, meanwhile, is housing many of the bureau’s 9,500 headquarters employees using expensive short-term leases at about a dozen locations throughout the Washington region because the staff long ago outgrew the Hoover Building.

Under both the Obama and Trump administrations, the GSA and the FBI sought more funding for the project than they ultimately received.

President Barack Obama had sought $1.4 billion toward construction of the project, but in May, Congress left it underfunded by more than a half-billion dollars. Congressional leaders had pulled together $523 million toward the project and possibly $315 million more through transfers of existing funds previously meant for other uses.

That was on top of $390 million that had been previously appropriated for the project.

Then in June, House appropriators rescinded $200 million from the project, drawing exasperation from local officials who have been pushing for the government to decide among three final locations: Greenbelt, Md., Landover, Md., or Springfield, Va.

At the time the House took back the $200 million, Minority Whip Steny H. Hoyer (D-Md.) and Rep. Anthony G. Brown (D-Md.) called the decision “reprehensible.”

On Monday night, Hoyer weighed in again, calling the news that the GSA would end the search “an extremely alarming development.”

“The Trump administration and Republicans in Congress are putting the safety and security of our country at risk,” he said.

The view was echoed from Virginia. “Reports that the federal government is pulling the plug on a new FBI headquarters reveals insurmountable Trump conflicts with GSA, FBI, and Vornado,” Rep. Gerald E. Connolly (D-Va.) said Monday night, referring to Vornado Realty Trust. “This is devastating news. Conflicts have consequences.”

An FBI spokeswoman declined to comment. A GSA spokeswoman did not return calls seeking comment. It is possible that the FBI could utilize some of the already appropriated money toward another headquarters plan.

In the meantime, the FBI headquarters is crumbling. On a rare tour of the building in 2015, bureau officials pointed to cracked concrete, makeshift work stations in former storage areas and badly dated building systems.

The officials said the structure is so inefficient that it has begun to hinder the agency’s modern mission, one increasingly focused on combating international terrorist threats and cybercrime.

They are also increasingly concerned that the Hoover Building could be susceptible to attacks.

“Having a state-of-the-art facility that meets that mission is paramount,” Richard L. Haley II, FBI assistant director and chief financial officer, said in an interview in 2015. “Security concerns are important. And you just have to open up the public records to see where you know bad things can happen if you don’t have the right security precautions.”

Trump is familiar with the project from his career as a real estate developer and said he considered bidding for it himself. In 2013, he signed a lease for another GSA property nearby on Pennsylvania Avenue NW, the Old Post Office Pavilion, which he turned into the Trump International Hotel.

But his presidency raised questions about whether the agency would be able to make an impartial decision given the involvement of two billionaire New York City developers who were among the four final bidders and who have ties with the president.

Steven Roth, founder of Vornado Realty Trust, served as an economic adviser to Trump’s presidential campaign and co-owns a building with him and other properties with Trump’s son-in-law, Jared Kushner.

Larry Silverstein, who founded his development company Silverstein Properties in 1957, has developed, owned or managed 40 million square feet of commercial real estate. He has called Trump a “friend of mine.”

Silverstein was bidding in partnership with Lerner Enterprises, headed by Washington Nationals owner Theodore N. Lerner.

Now all the bidders will head home having nothing to show for their years designing, pricing and financing what might have been the largest government development since the CIA moved to Langley in Northern Virginia in 1961.

Acting GSA administrator Timothy Horne is scheduled to testify before a House subcommittee Wednesday at a hearing about “Maximizing Taxpayer Returns and Reducing Waste in Real Estate.”

https://www.washingtonpost.com/business/economy/2017/07/10/e25c1080-65af-11e7-9928-22d00a47778f_story.html?utm_term=.11393f22a0c2
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