News & Politics

GSA Says Trump Organization Is in Compliance With Hotel Lease

Photo by Jeff Elkins

The Trump Organization is in compliance with its lease with the federal government to operate the Old Post Office as a hotel, the General Services Administration wrote in a letter today to the New York real-estate and hospitality company. The letter appears to settle weeks of uncertainty over a clause in the lease that stipulates that no elected official of the federal government can receive “any benefit” from the lease.

The GSA’s letter is addressed to Eric Trump, who along with his brother Donald Jr. took over day-to-day operations of the Trump Organization in January. President Trump continues to be majority owner of the family firm, with his stake—including 77 percent of the hotel—being held in a trust that is giving him regular updates on profits and losses. But because the President currently has no official position in the Trump Organization, the GSA employee overseeing the property found the company is not in violation of its lease.

“President Trump is not an officer, director, manager, employee, or other official in any of the entities listed above,” Kevin J. Terry writes in reference to a long list of limited-liability companies and revocable trusts that Trump and his three oldest children, including Ivanka, use to divvy up their shares of the hotel. The letter also states that the trust holding Trump’s assets was adjusted to not receive any payments from the business entity operating the hotel.

“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,” Terry writes.

The GSA’s conclusion is sure to irk the House Oversight Committee’s Democrats, who have sought to make an issue out of Trump’s continued ownership of his family company, including the hotel. The hotel, on which the Trump Organization spent $200 million, continues to be the subject of multiple liens from contractors who say they were stiffed and lawsuits with the chefs José Andrés and Geoffrey Zakarian, who canceled plans to open restaurants there in 2015 over then-candidate Trump’s incendiary statements about immigrants. The hotel is also being sued by the owners of Cork Wine Bar, who claim it is a source of unfair competition.

In a press release, House Oversight Democrats Elijah Cummings and Peter DeFazio say the GSA’s decision to allow the Trump Organization to continue to hold the Old Post Office lease makes the clause about elected officials not being parties to such agreements pointless.

“GSA changed the position it held before President Trump took office. This new interpretation renders this lease provision completely meaningless—any elected official can now defy the restriction by following this blueprint,” Cummings and DeFazio say. “The letter provides a completely inadequate explanation for its decision and instead footnotes news articles”—Terry’s letter cites a December 3 Politico story—”and recites the complex structure of trusts and limited liability corporations through which President Trump and his family own the hotel. This decision allows profits to be reinvested back into the hotel so Donald Trump can reap the financial benefits when he leaves the White House. This is exactly what the lease provision was supposed to prevent.”

The consumer-advocacy group Public Citizen, which is trying to act as a watchdog to the Trump Administration, is much sharper in its assessment of Terry’s letter. “The GSA’s legal analysis would get a first-year law student kicked out of law school,” the group says. “Handing the ownership stake over to a trust owned by the president and delaying pay out of profits does nothing to change those central facts and does not cure the violation of the plain terms of the lease. This Alice-in-Wonderland legal reasoning is an affront to the rule of law. And it matters in very practical terms, as well. The operation of the Trump International Hotel just down the street from the White House represents an institutionalization of cronyism on a scale never seen in American history.”

Trump has not nominated a new GSA administrator, though for now, the agency appears to be fine with the government he heads serving as landlord to two of his sons.

Staff Writer

Benjamin Freed joined Washingtonian in August 2013 and covers politics, business, and media. He was previously the editor of DCist and has also written for Washington City Paper, the New York Times, the New Republic, Slate, and BuzzFeed. He lives in Adams Morgan.