Lawmakers Propose Reforms Following ‘Flagrant Mismanagement’ of Trump Hotel Lease

Following the “flagrant mismanagement” by the government’s landlord of the lease for the Trump International Hotel in Washington, D.C., House Democrats suggested a series of reforms to prevent similar issues going forward. 

The Democratic staff on the House Transportation and Infrastructure Committee released a report on Thursday summarizing its investigations into the General Services Administration's handling of the lease for the Trump hotel located in the Old Post Office building. Since President Trump did not fully divest from his businesses upon becoming president, this has been the subject of controversy among lawmakers, government watchdogs and outside groups. Previous reports have shown financial losses, low occupancy rates at the hotel, profits from foreign governments and other ethics issues. The new report notes those problems as well, but also suggests legislative solutions. 

“This report brings to light GSA’s flagrant mismanagement of the Old Post Office lease and its attempt to duck its responsibility to support and defend the U.S. Constitution’s emoluments clauses,” said Rep. Peter DeFazio, D-Ore., committee chairman. “GSA kept the American people in the dark about the poor financial health of the hotel, and most importantly who was spending money at the hotel and how it might be influencing the Trump administration.” 

The GSA inspector general recommended in a January 2019 report, which the new congressional one reflects, that GSA conduct a legal review of the lease. While GSA formally agreed with the recommendation, it has yet to “properly address the issue” almost three years later, said the Democratic committee staff in the new report. 

This “indicates that legislative action may be needed to ensure GSA is appropriately managing its outleases and to enhance oversight of these critical ethical and constitutional issues so that they are avoided in the future,” the report continued. Legislative recommendations presented by the majority staff are the following: 

• Requiring GSA’s outleases to include audit rights for GSA and its inspector general;
• Banning the GSA administrator or designee from entering into outleases that don’t have “interested parties” clauses, which “at a minimum includes a prohibition on any federally elected official or Cabinet member to share, participate in, or benefit from an outlease;”
• Requiring notice to Congress about outleases or sales of them that have 50% or more usable square feet; and,
• Requiring GSA to request a review by the Committee on Foreign Investment in the United States for proposed outleases if the facility is near a military installation or other sensitive government location. 

No specific bills addressing these suggestions have been introduced yet. However, the report also noted that at least two bills the House passed––the For the People Act and Protecting Our Democracy Act––would address some of the issues the staff said it has exposed in investigating the lease. 

GSA did not respond for comment on the report, but GSA Administrator Robin Carnahan spoke about how the agency is approaching the lease under her tenure during a hearing for the transportation committee's Economic Development, Public Buildings and Emergency Management panel on November 2.

“I know that this is an important topic. I know that there is a lot of history about this that long predates my arrival four months ago at GSA and I very much respect Congress' oversight role in all of this,” she said. “I have instructed the team to ensure that the tenant is fully compliant with all of its lease obligations and that we at GSA are being as transparent as we possibly can be with the committee and its oversight requests and always focused on doing everything we can to protect the public’s interests in every way. So, I cannot turn back the clock on things that have happened in the past, but I can commit that going forward I am very interested in making sure we have the right procedures in place for these kinds of outleases and that Congress’ role in that is one that is appropriate.”

In October, Democrats on the House Oversight and Reform Committee, which has also been investigating the lease, released documents that raised what they called “new and troubling questions” about the financial situation. Despite the news report in November that an outside group is acquiring the lease, the Democrats’ probes continued.