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Chair DeFazio Presses GSA for Answers on How it Plans to Vet Potential Buyers of the Trump Hotel Lease, With Specific Concerns About National Security Issues and Constitutional Conflicts

Feb 7, 2020
Press Release
DeFazio: “…GSA’s previous failure to consider constitutional issues raised by the election of Donald J. Trump, coupled with the building’s location next to the Department of Justice, across the street from the FBI and a few blocks from the White House and the U.S. Capitol, make it critically important that GSA be prepared to exercise its rights, under the lease, to review the qualifications of any potential purchaser”

Washington, DC — Chair of the House Committee on Transportation and Infrastructure Peter DeFazio (D-OR) sent a letter to the General Services Administration (GSA), with follow-up questions after Administrator Emily Murphy testified before the Committee on January 28th, 2020.

In the letter, Chair DeFazio wrote: “While it is virtually unprecedented that the President of the United States is both the landlord and tenant of any federal building, the case of the Old Post Office building creates unique complexities. In this instance, GSA must work through these issues and be prepared to respond to receiving notice from the Trump Organization about its intent to sell its interests in the outlease.  You pointed out multiple times during your testimony that the outlease was signed prior to your arrival at GSA. But the potential sale of the outlease is happening on your watch, so we encourage you to be prepared.”

Chair DeFazio is requesting formal responses to their questions by February 21, 2020.

A comprehensive timeline of the Committee’s investigation into this lease can be found here.

A full copy of the letter can be found below.

February 7, 2020

The Honorable Emily W. Murphy
Administrator
General Services Administration (GSA)
1800 F Street, NW
Washington, DC 20405

Dear Administrator Murphy:

Thank you for testifying before the Subcommittee on Economic Development, Public Buildings, and Emergency Management on January 28, 2020. As noted at the hearing, the potential sale of the Trump International Hotel, which leases the Old Post Office Building from the General Services Administration (GSA), highlights a host of ethical, legal, and national security concerns. GSA’s previous failure to consider constitutional issues raised by the election of Donald J. Trump, coupled with the building’s location next to the Department of Justice, across the street from the FBI and a few blocks from the White House and the U.S. Capitol, make it critically important that GSA be prepared to exercise its rights, under the lease, to review the qualifications of any potential purchaser. The fact that GSA may have as few as 45-days, under the lease, to conduct such review, means time is of the essence; and GSA should prepare for this review now instead of waiting until it first receives notice from the Trump Organization that it has found a purchaser. 

Toward that end, we request that GSA consider the following questions, and provide us with its answers by February 21, 2020:

  1. The lease between GSA and the Trump Old Post Office, LLC, gives the tenant (Trump Old Post Office, LLC) “the right to retain a successor management company selected by it to serve as Operator provided that the proposed Operator is a Qualified Operator” and that GSA “shall have the opportunity to confirm whether or not it concurs that such proposed Operator is a Qualified Operator.” How will you go about determining if any proposed operator is qualified?  Will you be able to make this determination within the 45-day time period provided under terms of the outlease? What happens if you require additional time to complete your assessment of the proposed operator’s qualifications? 
  1. We are deeply concerned about the potential sale of the outlease to a foreign entity which would raise potential conflicts with the Foreign Emoluments Clause of the Constitution. To what extent will you examine sources of funding to be used in the sale?  If there is foreign funding in the proposal, will GSA request a Committee on Foreign Investment in the United States (CFIUS) review?  If the purchaser is a corporation or LLC, how will GSA ensure that a corporate shell or other legal construct is not being used as front for a foreign government?
  1. What steps will you take to determine if the proposed sale price is fair and reasonable? What will you do, if you determine the sale price to be unreasonably high, to ensure that such price is not an attempt by an unscrupulous actor to influence the President or U.S. policy? 
  1. The potential sale of the outlease to a foreign entity also presents security concerns given the Old Post Office building’s location near high-security buildings such as the Federal Bureau of Investigation’s (FBI’s) headquarters. The Foreign Investments Risk Review Modernization Act of 2018 broadened CFIUS’s review to include certain real estate transactions in close proximity to a U.S. government facility with national security sensitivities. Will GSA or the tenant engage the Department of Justice (DOJ, FBI or the U.S. Secret Service) in determining whether the proposed operator represents a security risk?  How will GSA ensure that national security is not compromised in the event the outlease is sold to a new operator?
  1. The Foreign Emoluments Clause requires “Consent of the Congress” for any federal officeholder to “accept of any present, Emolument, Office, or Title, of any kind whatever, from any King, Prince, or foreign State.” Will GSA submit to Congress any bid from an entity with ties to a foreign government that intends to purchase the lease of the Old Post Office Building before such sale of the lease is consummated?  Has GSA advised the Trump Organization against the solicitation of such bids? If not, please explain why not. Will GSA advise the Trump Organization against solicitation of such bids? If not, please explain why not.
  1. When the Trump Organization entered into the Old Post Office lease, Donald Trump was not an elected official. But now he is the President of the United States and has retained his financial interest in the Trump International Hotel. If the Trump Organization benefits from the sale of the lease, does GSA believe that will trigger the Emoluments Clauses of the U.S. Constitution? 
  1. Will GSA inform the Committee when GSA receives notice from the Trump Organization that it has identified a qualified purchaser?

While it is virtually unprecedented that the President of the United States is both the landlord and tenant of any federal building, the case of the Old Post Office building creates unique complexities. In this instance, GSA must work through these issues and be prepared to respond to receiving notice from the Trump Organization about its intent to sell its interests in the outlease.  You pointed out multiple times during your testimony that the outlease was signed prior to your arrival at GSA. But the potential sale of the outlease is happening on your watch, so we encourage you to be prepared. 

Further, we recognize that the sale of a GSA outlease may occur again in the future and that having clear policies and regulations that define the terms of the sale would help to avoid the uncertainties defining the proposed sale of the Old Post Office building’s outlease. Toward that end, we look forward to working with you on legislation regarding GSA’s outleasing activities.  Please contact Investigations and Oversight Counsel Lauren Dudley at (202) 225-4472 with any questions.

Sincerely,

 

PETER A. DeFAZIO                                     DINA TITUS 

Chair                                                                Chair

Subcommittee on Economic Development, Public Buildings, and

Emergency Management

cc:        The Honorable Sam Graves, Ranking Member

The Honorable Mark Meadows, Ranking Member, Subcommittee on Economic Development, Public Buildings and Emergency Management