What’s Going On?

Are Feds Ready to Seize Trump’s Hotel? Maybe?

Four House Democrats claimed in a letter Wednesday that the federal government might force Trump to divest from his D.C. hotel. The agency that oversees his contract appears to disagree.

12.14.16 7:27 PM ET

Donald Trump may have to give up his stake in his D.C. hotel—if only the federal government could agree on what they want to do about it.

Two weeks after Democrats in the House implored the General Services Administration—the federal agency leasing the Old Post Office Building to Trump for his Washington D.C. hotel—to take action on an inherent problem in the 2013 lease agreement, they seemed to have gotten the answer they wanted.

After a December 8 briefing, Democrats wrote in a letter to Denise Turner Roth, administrator of the GSA, released Wednesday, that a deputy commissioner briefed House Oversight and Government Affairs Democrats including Reps. Elijah Cummings, Peter DeFazio, Gerald Connolly and Andre Carson. 

The GSA allegedly had come down hard on the president-elect—at least according to a nameless GSA “Deputy Public Building Service Commissioner” cited by Democrats in their letter.

 “The Deputy Commissioner informed our staff that GSA assesses that Mr. Trump will be in breach of the lease agreement the moment he takes office on January 20, 2017, unless he fully divests himself of all financial interests in the lease for the Washington D.C. hotel,” the letter said.

Except, according to the GSA, that’s not what happened. At all.

“GSA does not have a position that the lease provision requires the President-elect to divest of his financial interests,” a spokesperson for the agency wrote in an email. “We can make no definitive statement at this time about what would constitute a breach of the agreement, and to do so now would be premature. In fact, no determination regarding the Old Post Office can be completed until the full circumstances surrounding the President-elect’s business arrangements have been finalized and he has assumed office. GSA is committed to responsibly administering all of the leases to which it is a party.”

Asked to clarify, the GSA spokesman did what most people would do: blame Congress.

“You will have to direct questions about the letter to the Members and their staff,” the spokesman replied.

Cummings then provided a statement to The Daily Beast standing by their letter and the information they received from the GSA employee. 

“We understand GSA’s position that this breach has not yet occurred, will not occur until Donald Trump is sworn in as president, and is officially viewed as a ‘hypothetical’ issue until that time," the statement read. "We also share GSA’s hope that the agency will not have to address this issue if President-elect Trump divests his ownership in the lease before then. But the simple fact is that GSA informed our staffs that they interpret this lease provision as prohibiting any elected official from having any ownership interest in the lease, and we stand 100% behind our letter.”

A spokesman for Representative Jason Chaffetz, who chairs the House Oversight and Government Reform Committee, did not respond to a request for comment about the hotel and the letter.

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The issue at play is that the lease agreement signed between the Trump Organization and the GSA stipulates that “no elected official” can be part of the lease, which creates an immediate problem when Trump takes office as the highest ranking elected official in the country. The Wednesday letter marks the first official recognition from a representative of the GSA that something must be done immediately about the obvious overlap between Trump’s business interests and his upcoming administration.

Perhaps what is more troubling is that according to the new letter, the Trump Organization has had no communication with the GSA about the conflict.

“The Deputy Commissioner informed our staffs that GSA received no communications from Mr. Trump or his associates about this issue after he won the election in November, when it became clear that a potential breach of this lease agreement was imminent,” the letter reads. Additionally, the letter contends that the GSA has informed the Trump transition team about their specific concerns but heard nothing back.

The legal counsel for the Trump Organization has not responded to a request for comment from The Daily Beast. But, on a daily press call with the Trump transition team on Wednesday, spokesman Jason Miller simply said that the hotel issue would “come up in January,” at a press conference which is intended to detail how Trump will address his business interests. (It was delayed for a month after initially being scheduled on December 15).

But experts, like Steven Schooner, a professor of government procurement law at the George Washington University Law School, previously told The Daily Beast that it would be fairly easy to have another major hotel chain take over the lease.

“Best solution: GSA and Trump (quickly) agree to transfer (or as we say, novate) the entire agreement/contract/lease to another company,” he wrote in an email. “Marriott comes to mind. They’re headquartered in the DC metropolitan area, and they operate dozens of hotels in the area. This property could be re-branded as a JW Marriott, Ritz Carlton, a St. Regis, an Autograph Collection, or maybe even an Edition. Who cares? Easy.”

He added that “leaving the building vacant would be better than the current, sordid situation which makes the U.S. Government resemble a Banana Republic.”

In order to investigate the inherent conflict further, House Democrats are requesting additional documents from the GSA by December 20, including monthly expense and profit projections, legal memos regarding conflicts of interests and a list of any currently available unleased space in the hotel.

Until then, experts perceive the letter as a step in the right direction. At least, assuming the different branches of the GSA are in fact in agreement.

“Kudos to the Deputy Commissioner of GSA's Public Building Service for doing the right thing,” Schooner said in an email to The Daily Beast. “It's not easy to be at odds with the Trump organization, as many have seen, so let's not gloss over the fact that credit is due here.”

He found the Trump Organization’s lack of a gameplan for the hotel to be “extraordinary.”

“Whether unbridled arrogance or basic incompetence, it's quite simply unacceptable,” Schooner said. “Remember, this lease was signed in 2013, and Trump announced his candidacy more than a year before the election.  That can only mean that the Trump organization has never seriously considered appropriate risk mitigation strategies and solutions in the $180 million dollar, high profile, long term agreement with the U.S Government.  That's a devastating indictment.”