The General Services Administration granted a $534,000 rental credit to the Trump Organization’s D.C. hotel for providing “security, utilities and janitorial services” to support tours of the building’s clock tower run by the National Park Service, federal officials said, an adjustment that contracting experts say illustrates the highly unusual arrangement between the company owned by President Trump and the federal government.
When Trump leased the federal Old Post Office Pavilion from the government in 2013 and opened his hotel there three years later, he agreed to pay $3 million annually in base rent — plus a percentage of profits depending on the hotel’s performance — minus credits to the company for services it provided for the clock tower tours.
Last year, the Trump Organization paid $2,901,904.96 after the government credited the company for maintaining the clock tower, elevators and corridors where the Park Service tours take place, according to the GSA. In 2016, the company paid the government $3,045,541.24 in rent, the agency said.
There is no evidence of any wrongdoing in the adjustment. Trump’s lease allows for such credits, in a clause saying the GSA is responsible for paying clock tower costs “either directly to Tenant or via a Rent credit.”
But the decision to grant the rental credit highlights what critics call a challenging position for GSA officials in their dealings with the Trump Organization, now run by Trump’s adult sons, Donald Trump Jr. and Eric Trump.
Leasing experts said it’s difficult to determine whether the government was justified in giving the Trumps a credit toward their rent, which according to the GSA amounted to a total of $533,996.28 for 2016 (a year when the hotel was mostly under construction) as well as all of 2017.
The property comprises a unique mix of public and private uses, with the Trump Organization running a 263-room luxury hotel, the GSA charged with overseeing the historic 315-foot structure and Park Service staff — dressed in dark green and beige uniforms — operating free elevator rides in the northwest corner of the building up to an observation deck offering some of the best views of Washington.
GSA said it could not provide details of how the calculation of the credit was made by the end of the work day on Friday. The agency typically calculates such costs by considering what portion of a building’s services and utilities are provided on the government’s behalf, vs. a property at large.
The uniqueness of the arrangement, however, means there is not a template for the government’s decisions regarding the Old Post Office, said Kurt Stout, a government leasing expert at Colliers International. “I can’t think of a single transaction that is a true public-private deal in the nature of this one that GSA has done,” he said.
Last month, a federal judge allowed a lawsuit brought by Maryland and the District to proceed against the president based in large part on allegations that his hotel violates the Constitution’s “emoluments” clauses barring him from accepting gifts or benefits from governments.
In his July 25 decision, U.S. District Judge Peter J. Messitte wrote that the plaintiffs plausibly argued that Trump may have violated the domestic emoluments clause when the GSA allowed the lease to stay in place. Justice Department attorneys argue that the president has not received any emoluments under the correct definition of the term and that the case ought to be dismissed.
Steven L. Schooner, a George Washington University professor of government procurement, has argued since Trump was elected that the hotel lease should be voided. “It’s hard to imagine a more stark, compelling or blatant conflict of interest,” Schooner said.
Trump’s company received the credit after correspondence between an unnamed Trump Organization executive and the GSA in June of 2017, according to redacted emails obtained by The Washington Post.
“We continue to get bills for [the Old Post Office], which do not reflect the fact that we have been current on our rent payments. We would like to get this, as well as the other rent-related issues we have discussed, resolved as soon as possible,” the Trump Organization executive wrote. The executive asked for a meeting with the project’s managers at the GSA.
Both sides say there was no dispute. A GSA spokeswoman, Pamela Dixon, said in a statement that the email exchange resulted from “an administrative issue, and did not result in any changes to the lease contract.”
The statement also said the lease continues to follow agency policies and that Trump’s company is current on its rent. “The amount in rent that the tenant has paid to GSA is in accordance and compliance with the terms and conditions of the lease,” Dixon said.
“There is absolutely no rent dispute with the GSA,” said Trump Organization spokeswoman Amanda Miller.
The Park Service halted tours during construction of the hotel and restarted them in February of last year. A seven-page agreement between the Park Service and the GSA, inked in tandem with Trump’s lease, requires the GSA to provide maintenance including “elevator maintenance, repair and rehabilitation of space and audiovisual equipment” as well as bathrooms, outside signage and utility services including “electricity, heat, air conditioning, water, local phone services.”
In its statement, the GSA said it “issued credits to the Tenant for certain operating costs pursuant to the lease in the total aggregate amount of $533,996.28. The majority of these costs are for security, utilities and janitorial services.”