Government Wastes $1 Million Renting Building With Leaky Roof

Thomas Phippen | Reporter

For more than a year, the IRS occupied a building in Tulsa, Okla., that had mold problems and a leaky roof, and paid nearly $1 million just to get out of the lease.

The Public Building Service (PBS) which found and rented the building for the IRS knew of the leaking roof at the building, but rented it anyway, at a low rate, without including the repairs in the lease agreement and forcing the government to eventually vacate, according to a report form the Inspector General Monday.

The government cut a $974,000 check the government cut to terminate the lease, the Inspector General said.

The search for an office began in 2013, and the government visited seven potential properties in the Tulsa area. Of those, four were ruled out for various reasons, and the team was left with three options. They asked for proposals and received offers from just two. Then one offeror pulled its proposal, and the government was left with one option — a building located at an industrial park called Eton Square.

The survey team had noticed the leaking roof, but the representative of the building’s owners assured the government that the roof would be repaired, and the government went forward with the lease. PBS didn’t include the building’s shortcomings in writing, and the IRS moved in June 2016.

After IRS employees working out of the IRS office complained that the building was a health risk due to “mold contamination, roof and window leaks,” and that there was a “lack of access for people with disabilities,” Oklahoma Republican Sen. James Lankford asked the Inspector General to look into it in a May 2017 letter. (RELATED: Senator Releases ‘Federal Fumbles’ Waste Report)

The property managers “performed roof and window repairs, but leaks continued to occur,” the Inspector General said in a September 2017 report. The property owners also proposed plans to fix the roof and the mold damage, but the government found those plans inadequate due to the timeline of the project, the lack of safety assurances.

According to the Inspector General, the PBS failed to follow proper procedure in selecting the building and finalizing the contract. The government is supposed to note the condition of a building in the selection process, but the team selecting the Eton Square property didn’t do that. The team leader for the survey was under the impression that he should not note the leaks or the water damage in the initial notes on the property, but the Inspector General pointed out that a survey team is supposed to mark the condition and age of the building. In this case, the survey team did not.

The advance team also didn’t “incorporate terms and conditions into the lease to ensure that the lessor resolve the problem prior to occupancy,” the Inspector General said. “As a result, despite recurring water leaks and mold problems in the building, PBS lacked the ability to compel the lessor to replace the roof and was ultimately forced to terminate the lease at a cost of $974,000 to taxpayers.” The IRS finally moved out in January.

The contracting officials “were aware before executing the lease that the building’s roof leaked, [but] they did not incorporate terms and conditions into the lease to ensure that the lessor followed through on its assertion that it would replace the roof prior to occupancy.”

The property owner at the time the IRS leased the Eton Square building, US Acquisition Property Xiii of Colorado, did not return The Daily Caller News Foundation’s request for comment. Lankford’s office also did not respond.

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