Thread: Law Professor: Trump Can't Hold Lease On His Hotel Near White House

Law Professor: Trump Can't Hold Lease On His Hotel Near White House

November 29, 2016 2:36 PM ET
Jackie Northam

President-elect Donald Trump, flanked by his wife and grown children, cuts a ribbon during the grand opening of the Trump International Hotel, just a few blocks from the White House, on Oct. 26.

After Donald Trump is sworn in as president on Jan. 20, he will follow a time-honored tradition and make his way from the U.S. Capitol down Pennsylvania Avenue.

Along the way, just a few blocks before he reaches the White House, he'll pass the Trump International Hotel. The 263-room luxury hotel is becoming the focus of a debate over conflict of interest between Trump and his business dealings.

Trump doesn't actually own the landmark building, which was once the headquarters of the U.S. Post Office. In 2013, he signed a 60-year lease for the building with the General Services Administration, which helps manage and support federal agencies. The Trump Organization spent upwards of $200 million on renovations and reopened it as a hotel about a month before the Nov. 8 presidential election.

But there's a hitch, according to Steven Schooner, a government procurement expert who is also a law professor at the George Washington University School of Law. Schooner has studied the 100-plus-page contract and says there's a clause that clearly states elected officials should have no role in the lease.

"The contract between GSA and the Trump Organization specifically says that no elected official of the United States government shall be party to, share in, or benefit from the contract," he says, citing clause 37.19 of the contract.

Schooner says the GSA should terminate the lease before Trump becomes president.

Many potential conflicts

There are a host of reasons to cancel the deal besides the specific language in the contract, according to Schooner. He says foreign diplomats or special-interest groups could book rooms at the Trump International as a way to curry favor with Trump.

Once Trump becomes president, he will effectively be both the tenant and the landlord of the building. The administrator of the GSA, an independent body, is also a political appointee.

"So the Trump transition team would be naming the person responsible for the agency that's managing Trump's lease. Obviously that's a problem," he says.

The Trump transition team did not respond to requests for comment.

Trump has said he plans to divest himself of his business dealings once he takes office, handing them over to his grown children.

Even if Trump does hand over all his business dealings to his children, these negotiations could still present a problem.

Schooner says, for example, the complicated contract requires that each year Trump disclose financial information, after which the GSA is supposed to sit down and negotiate an adjustment in the rent, which is currently $3 million per year.

"Some civil servant at GSA is going to sit down with the president of the United States' children to negotiate adjustments to a multimillion-dollar lease on an annual basis. That's incomprehensible," he says.

The GSA would not directly answer questions about the termination clause. But a spokesman says the GSA plans to coordinate with the president-elect's team to "address any issues that may be related to the Old Post Office building."

http://www.npr.org/sections/thetwo-w...ar-white-house

None of this is right.

First of all, Trump finished this project and signed this lease BEFORE he was an elected official. He's still not an "official". When he becomes an official on Jan 20, the interests in the hotel lease will already be assigned to his children as part of the Trump Organization deal where he is transferring everything to them.

There are no grounds to terminate the lease when there is no "elected official" holding the lease. His children are not elected officials.

The GSA isn't free under this lease to pick and choose whatever rent increase they want, it's not a discretionary deal. It's based on the revenues of the hotel's performance. This is a common rent increase condition, the landlord in this case GSA doesn't get to pick a number, it's a number based upon an agreed to formula that's in the lease, usually based on gross sales, the same thing the $6.5 million dollars in hotel and bed taxes are based upon.

The Trumps invested over $200 million of their money to renovate this Old Post Office. If you really want a government that's already $20 trillion in debt to terminate this lease, this it will have to come up with the $200 million plus a nice fat cap rate or probably $1 billion to buy out this going concern. The Trumps didn't work their asses off for years on this, win the bid, do the beautiful work all with their money, to walk away without all their money and a nice big fat profit.

Of course this is something Law Professors who hate Trump probably wouldn't understand which is why he refused to disclose the actual details of the rent provision and termination clause which he claims he read.

He also failed to discuss the importance to the federal government of the hotel being a success, the government owns it, and wants to make money from it. Well, the Trumps know how to do that for the government better than anyone else. The "emolument clause" refers to gifts and favors from foreign governments which has absolutely nothing to do with business. If Trump's name on the hotel and his family owning it draws diplomats to the hotel, that is business, not gifts, and guess who benefits from this? The US government. When the US government benefits, there is no conflict, the purpose of the President of the United States is to promote the hotel, because it's government property, no different than a park or museum. The purpose of the bid approved by the by GSA was to renovate the Old Post Office as a hotel for diplomats. The large suites Trump put in were for long stays for diplomats who don't want the apartment but hotel living while in DC. No one else has this.

So stop hating on Trump. Let Trump be Trump and the governments from the feds to DC will make a lot of money and have a wonderful place for diplomats to stay in close proximity to those with whom they meet during their stays in our capital city.

Business is not a "gift" or an "emolument".

Geez. Media is supposed to inform US, instead we have to inform them. Disgusting.