Trump Washington Hotel Not Violating Lease, Government Says

  • President maintains ownership interest in hotel business
  • Lease terms appeared to ban elected officials from deal

Visitors stand outside of Trump International Hotel in Washington, D.C., U.S., on Thursday, Jan. 19, 2017.

Photographer: David Paul Morris/Bloomberg

President Donald Trump’s Washington hotel isn’t violating the terms of a lease with the U.S. government that appeared to ban elected officials from participating, according to the federal agency that serves as the hotel’s landlord.

The General Services Administration, which oversees the lease for Trump International Hotel Washington, D.C., said in a letter Thursday that Trump’s company was “in full compliance” with the pact, which was signed in 2013. The hotel, which opened in September, is housed in the Old Post Office, a U.S. government-owned building on Pennsylvania Avenue just blocks from the White House.

In announcing the decision, the GSA released documents saying that Trump would receive no payments from the hotel during his term in office. Critics said the president would benefit if the establishment succeeds nonetheless.

“This ruling is a disappointment,” said Noah Bookbinder, executive director of Citizens for Responsibility and Ethics in Washington, which has sued Trump over allegations that his businesses violate a U.S. Constitutional ban on officials’ receiving benefits from foreign governments. “Donald Trump still owns the hotel, still will benefit from payments and still has a vested interest in its success.”

Trump’s Businesses

The hotel has become one of the most visible potential conflicts of interest facing Trump, who has stepped down from active management of his $3 billion business empire, but maintained ownership interests. Congressional Democrats have called for Trump to divest from his businesses -- and said the hotel could become a magnet for foreign governments or others who’d patronize it to curry his favor.

The White House declined to comment. A spokeswoman for the Trump hotel thanked GSA for its “diligent review.”

At issue for the federal agency was a provision in the lease that reads: “No member or delegate to Congress, or elected official of the Government of the United States or the Government of the District of Columbia, shall be admitted to any share or part of this Lease, or to any benefit that may arise therefrom.”

Some government-procurement lawyers had argued that the provision barred Trump’s participation. His lawyers have maintained that he was not admitted to the lease as an elected official because it was signed years before his election. A decision was left up to GSA -- part of the federal government that Trump took over on Jan. 20, putting him on both sides of the lease, his critics say.

‘Bizarre’ Determination

“It’s not hard to conclude that GSA is disinclined to displease the president of the United States,” said Laurence Tribe, a professor of constitutional law at Harvard University who’s part of CREW’s legal team. He called the agency’s determination “bizarre and hard to account for in terms of what the lease says.”  

In a letter dated March 23 to Donald Trump Jr., the president’s oldest son, GSA contracting officer Kevin M. Terry wrote that the decision was “based on my review of the lease, discussions with tenant, and documents submitted by tenant.” The letter outlined changes that Trump’s representatives have made to how money will flow through Trump Old Post Office LLC, which leases the building. Trump retains an ownership stake in the company through a trust.

Documents cited in the letter include a notice from the hotel on March 20 that it would not make any payments to “any entity in which President Trump has a direct, indirect or beneficial interest,” according to the letter. “In other words, during his term in office, the president will not receive any distributions from the Trust that would have been generated from the hotel.”

‘Business Purposes’

Amounts that would have been distributed can instead only be used “for business purposes and activities,” including the operation of the hotel, according to the letter.

Tribe said that the arrangement is “essentially parking the profits” in the hotel business “until Trump leaves the presidency.” He and other lawyers are advising CREW, which alleges that Trump’s businesses receive income from foreign governments, violating the U.S. constitution’s ban on officials’ receiving such “emoluments.” The president is still in line for “deferred enjoyment of the emoluments he is unlawfully accepting from various governmental entities and banks controlled by them.”

Trump’s representatives have said his hotels will pay any profits derived from foreign-government spending to the U.S. Treasury. A spokeswoman for the Trump Organization, which manages the various businesses, said the payments will be made annually at year’s end.

Changed Position

Two congressional Democrats who have called for additional scrutiny of the hotel lease said that with its determination, GSA had “changed the position it held before President Trump took office.” Representatives Elijah Cummings of Maryland and Peter DeFazio of Oregon have said their staff members were briefed on the agency’s position in December, after they requested information on Nov. 30.

The congressmen said GSA’s determination renders the lease’s ban on elected officials “completely meaningless” and will allow “profits to be reinvested back into the hotel so Donald Trump can reap the financial benefits when he leaves the White House.”

Cummings is the top Democrat on the House Oversight and Government Reform Committee, which exercises general oversight of government agencies. DeFazio is the top Democrat on the House Transportation and Infrastructure Committee, which has jurisdiction over GSA.

Earlier this month, DeFazio had asked GSA’s inspector general, Carol Ochoa, to look into the handling of the lease. Ochoa said in a letter dated March 17 her office would “consider whether to review” the matter once the agency made its determination.

— With assistance by Bill Allison

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