A half a mile from the White House on Pennsylvania Avenue stands Donald Trump's new hotel, the largest and nearest example of Trump's looming conflicts of interest — perhaps literally as well as figuratively.
On Wednesday, Democratic members of Congress released a letter documenting responses to questions they'd asked the General Services Administration (GSA) about the hotel. The issues are broader than what's contained in that letter, though, so it's worth running through why the building poses such a problem.
The building that houses Trump's hotel was built to be a post office. Completed in 1899, it only served as a post office for about 15 years. For much of the next century, it mostly existed as the focal point for debates over whether it should be torn down. It was reconfigured to serve as retail space in the late 1980s, but that didn't really work.
In 2001, the GSA, which is responsible for the building on behalf of the government, decided to try converting it into a hotel. It took a while to get the process moving, but in 2011, the GWSA released a request for proposals allowing bids on the space.
In February 2012, the Trump Organization won the bid to redevelop the space as a hotel, and it finalized a 60-year lease with the agency in 2013. The hotel formally opened during an event held a few weeks before Election Day. Trump — candidate and business owner — was the master of ceremonies.
The Trump Organization is the vaguely named and sprawling corporate arm of Donald Trump. Unless the expected transition to his sons has already taken place, the chairman and president of the Trump Organization is Donald J. Trump, according to the organization's website. (The biography of Trump excludes some of his recent accomplishments.) Skip over a few pages on that website and there's Trump International Hotel in the old post office building in Washington.
At the moment Trump runs the company that runs the hotel. What's more, his financial disclosure forms indicate that he owns 76.725 percent of the project personally, through a limited liability corporation called DJT Holdings.
Trump pledged in a tweet this week (what a phrase!) that sons Eric and Donald, Jr. would assume control of the company. But it's not clear that Trump intends to disconnect himself from ownership or from the profits that the Trump Organization earns; there are many indicators that he has no intention to do so.
That is where things get tricky.
The letter from the Democratic members of Congress this week focuses on a part of the lease that the GSA and the Trump Organization finalized in 2013. As reported by GovExec last month, the lease includes a stipulation that “[n]o member or delegate to Congress, or 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.”
It's obvious what the intent is. The government holds the lease for the building and it's therefore a conflict for a government official to be on the other side of that contract, much less the most powerful government official there is. Imagine a renegotiation of the lease in which a representative of the GSA — representing the public — is sitting down across from a lawyer working for his boss.
The Democrats who were questioning the GSA indicate that the GSA deputy commissioner was clear during their conversation that the clause didn't apply only at the time of signing. “[T]he GSA's position is that this provision applies to all elected officials, regardless of when they are elected.”
Notice, too, that Trump doesn't intend to include all of his oldest children in the management of the Trump Organization. His daughter Ivanka has been rumored to be seeking some position within the administration, though nepotism rules make that tricky. Ivanka is also the main point person on the Trump hotel project, the letter notes, as well as serving as a member of the Trump transition team. She also has a 7.425 percent ownership stake in the hotel.
The next step on the contract conflict, the letter indicates, is that Trump must either fully divest from any financial interest in the hotel or the GSA will bring the lease agreement to the Civilian Board of Contract Appeals, an independent group within the GSA. There, the conflict would be litigated and the lease potentially voided.
A law professor who spoke with NPR last month figured that the agency “should simply terminate” the contract, given the key clause.
Even if the conflict with the lease could be worked out so that the Trump Organization maintains control of the hotel and the president-elect maintains a financial stake in the organization, there's another problem.
You've probably heard a bit about the “emoluments clause” of the Constitution of late. It states:
No Title of Nobility shall be granted by the United States: And no Person holding any Office of Profit or Trust under them, shall, without the Consent of the Congress, accept of any present, Emolument, Office, or Title, of any kind whatever, from any King, Prince, or foreign State.
The key parts for our purposes here: “foreign state” and “emolument.” Emolument means “salary or fee.” It means payment.
The Post reported last month that foreign governments were already eagerly scooping up rooms at Trump's new hotel. The most important quote from that article is this one:
“Why wouldn’t I stay at his hotel blocks from the White House, so I can tell the new president, ‘I love your new hotel!’ Isn’t it rude to come to his city and say, ‘I am staying at your competitor?’ ” said one Asian diplomat.
For the diplomat, it makes sense. For Trump, it's a problem. That foreign government is paying money to stay in that Trump Organization hotel, and part of that money — perhaps only a tiny part, but a part — flows upstream to Trump himself. He has received an emolument.
It doesn't matter right now, since Trump isn't yet president. But once Trump takes office, this flow violates a prohibition outlined in the Constitution. That's not something that can be resolved with a new lease.
During the campaign, Trump mentioned the new hotel frequently, using it as an example of how positively the government viewed his business prowess and to highlight his claim that the project was done early and under budget. (That's not entirely true.) He would joke that, regardless of the outcome of the election, he had a place to stay on Pennsylvania Avenue.
Now, that hotel is more of a problem than a talking point.