GSA: Trump Hotel Lease Is Fine Despite Our Own Contract

The agency responsible for managing federal agencies sees no issue in President Trump’s lease on a federal building—despite a clause prohibiting elected officials from making money on the deal.


The Government Services Administration released a letter on Thursday saying that the agency sees no issue with its decision to lease the historic Old Post Office Building to be used as President Donald Trump’s hotel in Washington D.C., despite a stipulation in the lease that has been interpreted to prohibit any elected official from benefiting from the deal.

In the letter, addressed to Eric Trump, one of the president’s sons who is now overseeing the hotel, GSA contracting officer Kevin Terry argues that because the president had resigned from a formal position with the company and was no longer receiving proceeds from the hotel while in office, the lease was good to go. He cites the fact that the Trump Organization agreed not to send earnings from the hotel to the president’s trust until he leaves office.

“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 wrote. (It should be noted that Terry himself helped negotiate the deal in the first place).

While Trump will not receive direct financial benefits from the hotel during his tenure in office, the fact that the lease is still under his company’s name has drawn the ire of ethics experts and Democrats on Capitol Hill. The announcement permits Trump’s company (which he still owns) to benefit from a deal overseen by the federal government, which he runs.

“Not only is the conclusion unexpected and unpersuasive, as a matter of law, but, as a matter of policy, it is harmful to the integrity—and thus credibility—of GSA, the Presidency, and federal procurement process,” George Washington University Professor of Government Procurement Law Steven L. Schooner told The Daily Beast.

Schooner had pointed out prior to Trump taking office that the lease agreement signed in 2013 with the GSA stipulates that “no elected official” can be part of the lease. Trump is currently the highest ranked elected official in the country.

“It is deeply troubling that the contracting officer’s letter makes no reference to the underlying conflicts of interest, which, of course, undercuts any suggestion that he (the contracting officer) engaged in independent analysis,” Schooner continued. “The CO’s decision favors the President, who, in effect, is his supervisor, just as it favors the GSA (in terms of maintaining the status quo); but it also pleases his (the CO’s) ultimate supervisor—the head of the agency—who serves at the President’s pleasure.”

“Moreover, there are significant transparency concerns, particularly to the extent that the letter and its conclusions are inconsistent with prior GSA communications reported by members of the U.S. Congress,” Schooner concluded.

Schooner is referring to the fact that in December of 2016, House Oversight and Government Affairs Democrats including Reps. Elijah Cummings, Peter DeFazio, Gerald Connolly, and Andre Carson released a letter stating that “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.”

At the time, they were excited by the prospect that the agency was taking their criticisms of the lease seriously. But the GSA told The Daily Beast on the same day that the House Democrats’ representation of the situation was not the same as their own.

“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.”

Fast forward more than three months later and the Democrats are at a loss as to why, in their minds, there was a sudden shift in opinion.

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“GSA changed the position it held before President Trump took office,” Cummings and DeFazio said in a joint statement to The Daily Beast on Thursday. “This new interpretation renders this lease provision completely meaningless—any elected official can now defy the restriction by following this blueprint. The letter provides a completely inadequate explanation for its decision and instead footnotes news articles 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.”

Terry did not immediately respond to a request for comment from The Daily Beast explaining what led to the agency’s letter on Thursday.

But Schooner had his own reasoning for it.

“Spine-ectomy,” he told The Daily Beast.