GSA Says Trump D.C. Hotel Lease Is Valid, Despite Ban On Elected Officials

Mar 23, 2017
Originally published on April 7, 2017 12:01 pm

President Trump got good news on Thursday from the federal agency that oversees the three-year-old lease on his five-star hotel in Washington, D.C.

The General Services Administration said in a letter that the Trump Organization is in "full compliance" with the lease on the luxury hotel that's located just blocks from the White House.

Many ethics and contract experts have called upon GSA to end the lease, noting that the contract language specifically says no "elected official of the Government of the United States ... shall be admitted to any share or part of this Lease, or to any benefit that may arise therefrom[.]"

But GSA contracting officer Kevin Terry wrote that reaching "simplistic 'black and white' conclusions regarding the meaning" of the contract's ban on elected officials was not appropriate. He determined the lease is valid because Trump moved his interests in the building to a revocable trust, which is being managed by Trump's oldest sons and other associates. Trump is the sole beneficiary of that trust.

Terry led contract negotiations with Trump in 2013. In his letter Thursday, Terry said the property had been a money loser for the federal government before Trump landed the lease. The Trump Organization has been paying $250,000 a month in rent since it signed the lease, according to Terry.

Stephen Schooner, an expert on government procurement law at George Washington University, said the GSA decision was "unbelievable."

Terry's conclusion is "unpersuasive, as a matter of law" and harmful to the "integrity — and thus credibility — of GSA, the presidency and procurement process," Schooner said.

Reps. Elijah Cummings and Peter DeFazio, top Democrats on the House Government Oversight and the House Transportation and Infrastructure committees, respectively, condemned the GSA conclusion.

They argue that GSA never intended for politicians to profit from the government-owned building, which is why it included the language banning elected officials. "This new interpretation renders this lease provision completely meaningless—any elected official can now defy the restriction by following this blueprint" of creating a trust, they said in a statement.

Trump signed a 60-year lease in 2013 for the building that once served as headquarters of the U.S. Post Office. The Trump Organization spent upwards of $200 million on renovations and reopened it as a hotel about a month before the Nov. 8 presidential election.

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RACHEL MARTIN, HOST:

President Trump may have suffered a setback this week with health care reform. But he did score a victory when it comes to his five-star hotel here in Washington, D.C. There had been a controversy over a particular clause in the lease on the hotel that is just blocks away from the White House. NPR's Jackie Northam has been following the story, and she joins us now in the studio to talk about this development. Hi, Jackie.

JACKIE NORTHAM, BYLINE: Good morning, Rachel.

MARTIN: So what was the issue, first off?

NORTHAM: Well, it has to do with the landlord, which is none other than the federal government. Trump's hotel is in the historic Old Post Office building on Pennsylvania Avenue. And when Trump signed the lease for that hotel, it said that no elected official of the government of the United States can be a party to or benefit from that lease. And there are many ethics experts who say that the moment Trump took office, he was in violation of that clause.

Now, the General Services Administration, the GSA, is the agency that oversees federal property. And it's been looking into this for a couple of months and then yesterday determined that in fact the Trump Organization was in full compliance with that lease.

MARTIN: So how can that be? Explain what the reasoning is.

NORTHAM: Well, the reasoning that we saw is that the contracting officer, a fellow named Kevin Terry, wrote a letter to Donald Trump Jr., the president's son who is running his businesses at the moment. And Terry said that people were reaching, quote, "simplistic black and white conclusions regarding the meaning of the contracts ban on elected officials." And he said the lease is valid because Trump moved his interest into a revocable trust which is being managed by Trump's sons and some other close associates.

MARTIN: But he still owns the hotel.

NORTHAM: He - no, he leases the hotel from the federal government.

MARTIN: He still leases the hotel...

NORTHAM: Right.

MARTIN: ...But he still drives the profits from the hotel.

NORTHAM: Well, it's all gone into a revocable trust. So once he's out of office, he'll get it back.

MARTIN: He'll get it back.

NORTHAM: Right.

MARTIN: So how has this news been going over with all the government ethics folks who've been raising a lot of concerns about conflicts of interests?

NORTHAM: They were pretty vocal yesterday about this. I spoke with one fellow, Steven Schooner, who's a government procurement law specialist, a professor at George Washington University here in D.C. And he said it was "unbelievable." And that's a direct quote. He said that the decision harmed the integrity and the credibility of both the GSA and the presidency.

And the problem many ethics experts have is that now that he's in office, Trump is both the tenant and the landlord, and that the GSA never intended for politicians to profit from a government-owned building. And that's why the language was written in about banning elected officials from being on the lease.

MARTIN: So we should point out that the Trump Hotel is currently being used for events by embassies, other foreign groups. The president himself regularly visits, likes to talk about how great and luxurious his hotel is.

NORTHAM: (Laughter) Yes. He eats dinner quite often there as well, yes. And that's - you know, the problem with many experts, again, in ethics, is that, you know, you can have these special interest groups. You can have these lobbyists and even foreign governments coming in and using the hotel as a way to try and curry favor with the president. You know, and then there's this Emoluments Clause, which...

MARTIN: In the Constitution.

NORTHAM: In the Constitution, exactly, and which prohibits the president from receiving any payments from foreign governments. So some question of, say, whether an embassy renting a ballroom in the Trump Hotel would be exactly that. The president says he'll turn over any profits from foreign governments to the Treasury. But critics say, really, the only way to prevent any sort of conflict of interest or even perceived conflict of interest would be for the president to divest himself. And the president, of course, has refused to do that.

MARTIN: NPR's Jackie Northam. Thanks so much, Jackie.

NORTHAM: Thank you. Transcript provided by NPR, Copyright NPR.