FAQs About the Fed’s HQ Upgrade

The following guest post is contributed by Andrew T. Levin, a professor of economics at Dartmouth College and contributor to Mercatus Center publications regarding the need to strengthen the Federal Reserve’s transparency and public accountability. The views expressed here are solely those of the author and are not intended to represent the views of the Mercatus Center or any other person or institution.

Note: This blog post was revised on 07/19/2025 to reflect the NCPC’s Sept. 2021 approval of 318 spaces for the new underground parking garage—about half as large as the 577-space garage in the Fed’s initial plans.

Statutory Authority

Is the Fed authorized to spend unlimited amounts on its buildings? No. Section 10 of the Federal Reserve Act authorizes the Fed to provide “necessary” and “adequate” offices for its officials and staff. Identical terms appear in numerous statutes governing other agencies such as SEC and FDIC. Unlike other agencies, however, the Fed is uniquely authorized to make such determinations “in its judgment” without relying on congressional appropriations, but such judgments must be consistent with the statutory requirements. Indeed, GAO’s Red Book has an entire chapter about the “Necessary Expense” doctrine, i.e., an agency’s expenditures must be essential for carrying out its statutory mission, while the term “adequate” is consistent with GAO’s prohibition of expenditures on luxury items or frivolous amenities. Evidently, the Fed may not use its discretion to construct a golf course, an amusement park, or a palatial structure.

Can the Fed exempt itself from all relevant building statutes? No. Section 10 of the Federal Reserve Act authorizes the Fed to construct, upgrade, and furnish offices for its staff “notwithstanding any other provision of law.” That phrase is commonly used in hundreds of U.S. statutes. The Supreme Court has ruled that when one statute appears to conflict with another, “the intention of the legislature to repeal must be clear and manifest”; general language such as the “notwithstanding” phrase does not repeal an existing statute unless the conflict is irreconcilable. This principle is now embedded in the canons of statutory interpretation. Consequently, the Fed must submit all of its building plans to the National Capital Planning Commission (NCPC), and any modifications to those plans must be submitted for further review. Moreover, the Fed’s HQ buildings are directly adjacent to the National Mall, and hence all changes to the exterior and landscaping of those buildings must be submitted to the U.S. Commission of Fine Arts (CFA) for review.

Total Cost of the HQ Upgrade

What is the total cost of the Fed’s HQ upgrade? The Fed’s latest budget allocates a total of $3.6 billion for its long-term space plan. As shown in Table A2.8, this amount includes $2.5 billion for the upgrade of the Eccles and 1951 Constitution Avenue buildings, $540 million for the nearly-completed upgrade of the Martin building, and $30 million for post-upgrade reconfiguration. The budget item of $510 million for upgrading the Fed’s building at 1709 New York Avenue (NYA) has been deferred and is not included in the current multiyear capital budget of $3.1 billion.

How large is that cost relative to other federal buildings and corporate headquarters? When the Eccles-1951 project is completed, the Fed’s HQ will be one of the most expensive structures in the world. For example, the buildings owned by the U.S. Congress—including the Capitol, six congressional office buildings, the Library of Congress, and the U.S. Botanical Garden—have a combined valuation of $2.6 billion. The Bank of America building (a 55-story skyscraper in Manhattan) was completed in 2009 at a cost of about $1 billion—the equivalent of $1.6 billion at current construction prices. JPMorganChase has spent about $3 billion on its new 60-story HQ.

What about the standard metric of cost per square foot? When the HQ upgrade is complete, the Eccles and 1951 Constitution Avenue buildings will have a total area of 1.1 million ft², and hence upgrading these two buildings will cost about $2,300/ft². In contrast, a premium 10-story office building in Washington DC now has a construction cost of about $600/ft², while the construction cost for the JPMorganChase skyscraper is about $1,200/ft²—only half as much as the cost of the Fed’s HQ upgrade.

Will the Fed’s HQ upgrade produce savings over the longer run? No. Premium offices in the vicinity of the Fed’s HQ can be contracted at less than $60/ft², and a high-end contract would allocate about 200 ft² per employee. Thus, for the 960 Fed staff who will be working at 1951 Constitution Avenue, a comparable 30-year lease would cost about $260 million (assuming a 4% interest rate and a 2% inflation rate). In effect, a long-term lease would have cost only one-sixth as much as acquiring and upgrading this building.

Pre-Upgrade Building Conditions

Did the Eccles building have any comprehensive renovation prior to the HQ upgrade? Yes. In 1999-2003 the Eccles Building Infrastructure Enhancement Project (EBIEP) included removal of all asbestos insulation and lead paint; replacement of the roof and all major building equipment; upgrades to electrical, lighting, plumbing, and security systems; refurbishment of elevators; restorations of interior, terrace, and courtyard areas; and upgrades to security at building entrances; see here and here. The total cost of the EBIEP was $24 million, consistent with a frugal design and careful management, and did not entail any major alterations to the historic design of the Eccles building.

Was the Eccles building “unsafe” prior to the HQ upgrade? No. This building was fully occupied by staff prior to the onset of the COVID-19 pandemic. Public events and ceremonies were held at the building, and public tours were advertised on the Fed’s webpage and special tours were arranged by Smithsonian Associates. When the Fed submitted its project plans to the National Capital Planning Commission (NCPC) and Commission of Fine Arts (CFA), it gave no indication of any current or impending safety issues at the Eccles building.

Did the Eccles building require scheduled maintenance prior to the HQ upgrade? Yes. Satellite photos confirm that the new roof installed in 1999-2003 was a white-coated single-membrane “cool roof” (the standard energy-saving approach for federal office buildings with low-sloped roofs), with a typical lifespan of 15-25 years. Thus, it is not surprising that by 2018 the building was subject to localized leaks that warranted a full replacement of the roof. Given the Eccles roof area of about 100,000 ft², a new roof would be expected to cost about $1.2 million, including labor and materials. Similarly, the rooftop unit and electronic controls for the heating, ventilation, and air conditioning (HVAC) system should be modernized every 15-20 years. An office building of this size (~275,000 ft² prior to the HQ upgrade) requires ~1000 tons of cooling capacity, and hence the cost of HVAC modernization is about $2.5 million.

Did the 1951 Constitution Avenue building need a comprehensive renovation? Yes. When GSA transferred the building to the Fed in 2018, its press release stated that the building would need to be renovated. For a building of that size (~128,000 ft² prior to the HQ upgrade), the asbestos abatement would cost about $2 million, and lead paint removal could cost up to $5 million. Modernizing its HVAC system might require replacement of all ventilation ducts (about $10 per ft² of building area) as well as a new rooftop unit, and hence a complete HVAC modernization might cost up to $5 million. More broadly, a comprehensive renovation—similar to that of the EBIEP and the 2014-18 renovation of the USDA’s historic Whitten Building—would encompass all major building systems at a cost of about $50 million at current construction prices.

Primary Cost Drivers

Has inflation been the primary factor for the total cost of the HQ upgrade? No. In November 2018, the Fed approved a multicycle capital budget that included $75 million for renovation of the Eccles and 1951 Constitution Avenue buildings—roughly similar to the inflation-adjusted cost of the EBIEP and to the GSA’s renovation of the USDA’s Whitten building. In February 2020, the Fed’s budget expanded that allocation by a factor of nearly 20x to a total amount of $1.4 billion for “revitalization” of these two buildings. The cost index for commercial office building construction rose 44% from December 2019 to December 2024, and hence inflation alone would account for about $620 million, i.e., about one-fourth of the current budget allocation of $2.5 billion.

Why is the upgrade of the Eccles building costing more than $1 billion? The basic answer is simple: The Fed decided to fully enclose the two courtyards and install skylights, thereby converting these two spaces into glass-covered atriums. In its project plans submitted to NCPC and CFA, the Fed stated that “the west atrium will function as a space of respite for Board employees” while acknowledging that major structural alterations of a historic building “presents a number of unique challenges.”

Why is the 1951 Constitution Avenue upgrade so expensive? Three key design features have determined the overall cost of this upgrade: (1) Demolition of the central wing of the historic building, construction of a new north wing, and installation of a skylight over the central courtyard. (2) Excavation and construction of an extensive new concourse level that will provide underground facilities and connections to the Eccles and Martin buildings. (3) Excavation and construction of a vast underground parking garage beneath the front lawn of the building. The project plans submitted to NCPC and CFA state: “The pedestrian tunnel connection will facilitate communication, permitting staff and escorted visitors to move freely between buildings without having to go through security screening at each building. The tunnels intersect in a newly created atrium space within the Eccles East Courtyard which becomes the hub, or fulcrum, for the three buildings. A new dignified entry for staff and VIP visitors allows entry into the space at grade level.”

Luxury Amenities

Should the new underground parking garage be viewed as a luxury amenity? Yes. This 318-space garage may turn out to be one of the most expensive parking facilities in the world, due to the combination of the high water table and deeply-submerged bedrock (at depths of 8-10 feet and 40-60 feet, respectively), the soil conditions of water-saturated silt and clay, and the sensitive location beneath the front lawn of a historic building adjacent to the national mall and the nearby tidal basin. The Fed has not disclosed any building contracts, but commercial rates for excavation and construction of waterproof underground structures point to a likely cost of about $125-250 million. By contrast, the Fed could have contracted with nearby commercial garages whose current rates are about $250/month, and hence a 30-year lease for 300 spaces would have cost about $20 million—far less than the cost of the Fed’s new underground parking facility.

Should the Eccles building’s new rooftop dining be viewed as a luxury amenity? Yes. The top level of the Martin Building has private dining rooms that have been used since it was completed in 1974; at that time, the dining rooms on the fourth floor of the Eccles Building were converted into office space, and Fed officials in the Eccles building simply walked across the street for lunch. The Fed’s project plans indicate that the Eccles dining suite will now be restored and that “the Governors’ private elevator will be extended to discharge at the dining suite level.” Of course, the cost of this amenity is at least an order of magnitude smaller than the cost of the new underground parking garage.

Should rooftop garden terraces be viewed as a luxury amenity? Yes. The term “green roof” is generally used to describe roof systems with soil depth of 2-5” that is sufficient for grass species; such systems can be very cost-effective. By contrast, the term “vegetated roof terrace” refers to deeper soil depth (thereby accommodating a wider variety of plant species) and occupiable space for building users. Thus, a vegetated roof terrace imposes a much heavier load on the building’s pillars and beams, roughly 10x that of a conventional roof or a green roof. Thus, incorporating a vegetative roof terrace into the design of a new building may be very reasonable, whereas adding this feature to a historic building requires major structural changes; indeed, engineering experts warn that such structural upgrades can be “cost-prohibitive.”

Will the Fed’s HQ upgrade include rooftop garden terraces? Unclear. The Fed’s project plans indicated that the Eccles and 1951 Constitution Avenue buildings would each have a new pair of “vegetated roof terraces” with soil depths up to 8” (to facilitate the planting of diverse native species) as well as paved areas furnished with moveable tables, chairs, and 30” planters. The plans stated that “Both roof terraces will be accessible and will seek to create usable outdoor space for building users.” However, as of 15 July 2025, the Fed’s FAQs on this project indicate that “some features of the buildings, including rooftop spaces and new water features on the building grounds, were scaled back or eliminated.”

Transparency and Public Accountability

Does Congress approve the Fed’s budget for its buildings and operations? No. The Fed has unique authority to set its own budget. All other federal departments and agencies have budgets that are determined by congressional appropriations.

Is the Fed’s spending shown in the federal budget? No. Since its enactment in 1921, the Budget and Accounting Act has required every “department, commission, board, bureau, office, agency or other establishment of the Government” to submit its budget for inclusion in the federal budget and to provide all of its budget-related records to OMB (31 U.S.C. § 1108). However, the Federal Reserve Board has quietly exempted itself from this statutory requirement. Thus, the federal budget simply reports the remittances that the Fed transmits to the U.S. Treasury; the Fed suspended such remittances in 2022 when it began incurring net operating losses.

Does the Fed publish the minutes of its budget approval meetings? No. The Federal Reserve Board approves each annual budget using an electronic notation vote. Any member of the Fed Board may request that the budget be discussed at a Board meeting, which would be open to the public under Government-in-the-Sunshine regulations. However, the Fed’s budget has never appeared on the agenda of any of its meetings.

Does the Fed disclose the details of its building contracts? No. The Fed’s budget memos and annual reports provide information about its total expenditures, but the Fed does not disclose any information about specific contracts for its building projects. By contrast, construction and renovation projects for all other federal departments and agencies are overseen by GSA, and those contracts are posted in a searchable database.

Has the Fed alerted NCPC and CFA regarding changes to its upgrade plans? No. The Fed’s webpage states that the water features in the plans approved by NCPC and CFA in 2021 have subsequently been “eliminated.” However, the Fed “does not regard any of those changes as warranting further review” and hence has not submitted any modifications to NCPC or CFA.

Does GAO review the Fed’s building projects? No. Under current statutes the Fed has sole authority to acquire property and to build, upgrade, and furnish offices for its officials and staff. By contrast, GAO conducts comprehensive reviews of the budgets and spending of all other federal departments, offices, and agencies.

Does the Fed have a fully independent inspector general? No. The Fed’s inspector general (IG) is an employee of the Federal Reserve Board who works “under the authority, direction, and control” of the Fed Chair on all policy-related matters. By contrast, at every other major federal agency (with an operating budget exceeding $5 billion), the IG is a fully independent federal official, nominated by the President and confirmed by the Senate, who reports directly to Congress.

Has the Fed’s IG examined the design or cost of the HQ upgrade project? No. Over the period from March 2014 to February 2022 the Fed’s IG issued a series of reports about the Fed’s contract management process, but the IG has never investigated the design or cost of the HQ upgrade project. On 14 July 2025, Fed Chair Powell directed the Fed’s IG to conduct an investigation of the Eccles/1951 project.