AJO, Ariz. — Some people here call it Sesame Street. Others call it Legoland.

They’re referencing the boxy-shaped, brightly colored houses built by the government for U.S. Customs and Border Patrol agents who work in and around this small former copper-mining town near the Mexican border.

The houses, some bright blue, others the color of salmon, are lined neatly along two rows on a hill near Ajo’s historic plaza. They have been a source of contention both for locals and now for federal investigators, who say the government spent nearly $700,000 per house in a city where the average home costs less than $90,000.

The report by the Department of Homeland Security’s inspector general found that U.S. Customs and Border Protection overspent by about $4.6 million on new houses and mobile homes. The agency spent about $17 million for land, 21 two- and three-bedroom houses and 20 mobile homes. Construction was completed in December 2012.

Critics are calling it a classic case of government waste.

“My personal opinion is that they spent too much money on the homes. It’s ridiculous,” said Ernie Crowell, a retired, lifelong resident.

The agency began the project after anticipating a need for more housing for agents as the Border Patrol doubled in size from 2004 and 2008. But opponents questioned the need to build new homes at a time when existing homes in Ajo were vacant.