The agency should be asking more questions about the lease and its financial terms, lawmakers say.
The General Services Administration came under fire from Democrats during a congressional subcommittee hearing on Wednesday for lax oversight of the lease and financial audits for the Trump International Hotel in Washington.
“When people stay at Trump’s D.C. hotel [President Trump] directly benefits, yet despite all the legal and ethical issues that arise from this unprecedented arrangement, the agency that oversees the lease—the General Services Administration—has not done anything about it,” said House Transportation and Infrastructure Subcommittee on Economic Development Chairwoman Rep. Dina Titus, D-Nev. She said this was despite the GSA inspector general saying the president’s business interests in the lease “raised issues under the Constitution's Emoluments Clause that might cause a breach of lease.”
The 2008 Old Post Office Redevelopment Act required GSA to find a private partner to redevelop this financially struggling historic building that would eventually become the Trump International Hotel. Following Trump’s inauguration and failure to fully divest from his business interests, Democrats and ethics watchdogs raised concerns about potential conflicts of interest since the Emoluments Clause of the U.S. Constitution prohibits the president from receiving payments beyond his salary from either federal, state or foreign governments.
The lease, which Trump signed in August 2013 with GSA as the landlord, 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.” Titus noted that GSA did not do a legal review of this provision with consideration of the Emoluments Clause to avoid any ambiguity, as the inspector general recommended.
GSA Public Buildings Commissioner Daniel Matthews said it would be “inappropriate” for the GSA to weigh in on potential Emoluments Clause violations due to ongoing court cases, and Republicans on the subcommittee agreed. He deferred to the GSA contracting officer's discretion. However, GSA Inspector General Carol Ochoa testified that is was improper for GSA to not address this constitutional issue.
As for the financial aspects of the lease agreement, the government gets a monthly rent payment, although the Democrats and Matthews disagreed on the specifics of the terms. Democrats interpreted the lease that the Trump organization pays the base rent of $3 million per month and, if the revenues exceed the base rent, then the government is due a percentage of the gross over that amount. However, Matthews said the rent is based on gross revenues and there is a minimum payment of about $3 million per month.
“We don’t know what the revenues are or aren’t,” said Rep. Peter DeFazio, D-Ore. “You are telling us that all we’re getting is the base rent and nothing else is due, but you won’t substantiate that. You’re accepting [the Trump Organization’s] audited statements, you won’t show us those. And then we have the legal opinions, of course, which we can’t see either.”
Matthews said the GSA does program management and contract reviews on a regular basis, but could not say for certain if it does audits on its lease agreements. Although the subcommittee received more than 3,000 documents from the GSA, it is still looking for some involving legal opinions and financial statements. “From the answers that you have given so far, in addition to the lease that we’re currently reviewing, I have major concerns about the oversight that you have over any of the leases that the GSA has entered into,” said Rep. Sharice Davids, D-Kan.
Additionally, Democrats got Matthews to admit that he could not say affirmatively if the hotel has received profits from foreign entities because he hasn’t requested such information. “The rationale the Trump administration used to get past the Emoluments issue was that they would deliver to the Treasury any profit that was received,” said Rep. John Garamendi, D-Calif. “Yet we have absolutely no way to determine if there was any participation at the hotel by a foreign government or state government,” besides some press reports.
In contrast to the Democrats, Republicans argued the Trump Organization is in compliance with the lease with GSA, touted the success of the hotel and pivoted away from the Emoluments issue. Subcommittee ranking member Rep. Mark Meadows, R-N.C. said the deal between GSA and the Trump organization is “a good deal for the American taxpayer.” He also said it would “break historical precedent” if the GSA weighed in on the Emoluments Clause.
“When we are making demands of agencies, taking federal employees away from their core mission to comply with these requests, we have some responsibility to ensure the requests are reasonable,” Meadows said.
The hearing on the hotel’s lease is one of the many aspects of the Trump world under scrutiny as a result of the president not fully divesting from his businesses. On Sept. 13 an appeals court reinstated a case brought by watchdog Citizens for Responsibility and Ethics in Washington that alleges Trump is profiting illegally from his properties in New York and Washington, D.C. The case is now going back to the district court in New York. There are two other Emolument Clause cases pending before appeals courts.
CORRECTION: This article has been corrected to attribute a quote to Rep. Mark Meadows, R-N.C.