The Federal Reserve's renovation plans for its Washington, D.C. headquarters have escalated to a $2.5 billion project, rising from an initial estimate of $1.9 billion. The significant cost increase has attracted criticism from political figures. The renovation aims to comply with modern safety codes, add office space, and maintain the historic integrity of the buildings. Challenges include outdated infrastructure, pandemic-related inflation, and soaring material costs. Labor shortages have exacerbated these issues, making the renovation more complicated than initially anticipated.
The Federal Reserve's long-planned renovation of its Washington, D.C. headquarters has turned into a $2.5 billion political flashpoint. Initially estimated at $1.9 billion in 2021, the cost of overhauling the Fed's historic Marriner S. Eccles Building and its adjacent Federal Reserve East Building has jumped by over 30%.
Renovating the Fed was never going to be an easy task. Fed Chair Jerome Powell admitted the renovations would likely stoke controversy. "No one in office wants to do a major renovation of a historic building during their term in office," he said in June.
According to the Fed's information page on the project, neither the Eccles Building nor the East Building has ever been fully renovated, despite having been built nearly a century ago, with some major mechanical, electrical, and plumbing systems dating back to their construction and containing lead and asbestos.
The original budget underestimated several now-familiar forces: pandemic-era inflation, soaring construction costs, and unexpected infrastructure challenges. Prices for structural steel and other materials spiked in 2021 and 2022 as supply chains tightened and demand for large-scale projects rebounded.
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