It’s a glittering jewel in Donald Trump’s hotel empire. Securing the rights to use the government-owned building where it is housed took him more than a year of negotiating. The resulting lease itself runs hundreds of pages, complicated and dreadfully dull.
Dull save for clause 37.19 on top of page 103, which has suddenly become the subject of great discussion among experts on government contracting law, and not a few Trump critics.
If some of the experts are correct — a big if — the first 43 words of this clause could force Trump to relinquish his equity stake in the Trump International Hotel just down the street from the White House. The key part: No “elected official of the Government of the United States” shall be “admitted to any share or part of this Lease.”
“He’s going to have to divest himself of the hotel,” said John Sindelar, a former senior adviser to the head of the General Services Administration, the government agency that negotiated the lease three years ago. Sindelar left the agency in 2007.
Other contracting experts agreed, though not all of them. David Drabkin, once the GSA’s senior procurement officer, said he thinks the clause doesn’t apply to Trump because it only prohibits adding elected officials to the lease after it was signed, not banning original parties who subsequently get elected to office. He adds, though, that a president leasing the building is “absolutely untenable” because of other conflicts of interest issues.
The Trump Organization did not respond to e-mails asking for comment.
Whoever is correct, get ready for a battle over the issue.
On Wednesday, Trump wrote that legal documents were being prepared that would “take me completely out of business operations,” but made no mention of selling his ownership interest. He has previously said that he planned to have three of his adult children run his business. Contract experts say that would likely fall short of meeting the requirement for holding on to the hotel lease.
Since his election, government ethics lawyers have been urging Trump to sell his assets and put the money in a blind trust controlled by an outside party, not his children. They say that is the only sure way to avoid conflicts between his pursuit of private profit and the public good.
But aside from browbeating the president-elect, there is little critics can do. Federal conflicts of interest rule generally don’t apply to the president, a fact that Trump himself has emphasized.
The D.C. hotel may prove the exception, however, because he must follow the terms of the lease.
“It’s a breach of contract,” said Richard Painter, chief White House ethics lawyer for George W. Bush. “He’s got to get rid of the hotel.”
The Trump Organization won the right to lease the Old Post Office building on Pennsylvania Avenue in 2012, beating out several groups. Trump and the GSA took more than a year to hammer out a 60-year lease for its use.
The annual cost for Trump: $3 million a year, plus payments based on inflation and the success of the hotel, said Steven Schooner, a professor of government procurement law at George Washington University who has studied the contract.
Schooner has been one of the biggest critics of the deal remaining in place, and has called for the GSA to act fast to terminate the contract. Other lawyers familiar with the contract said GSA could simply alert Trump that he is in violation of the terms, and demand that he sell his ownership interest in the contract to another party.
Pressure is mounting on the agency. Rep. Elijah Cummings of Maryland and two Democratic lawmakers have called on it to take “concrete steps” to avoid “a clear and very real conflict” triggered as soon as Trump is sworn in next year.
The GSA declined to answer questions about its interpretation of the clause, what it might do or whether it is talking to the president-elect. The agency released a statement saying that it “plans to coordinate” with the president-elect’s team to “address any issues.”
For Trump, the loss of the hotel would be a blow. He poured roughly $200 million into refurbishing the building. And he has an equity stake in the hotel and isn’t just renting out his name, as is the case with many of his hotels around the world.
Charles Tiefer, an expert in government contract law at the University of Baltimore, said the language in the contract is “unambiguous” and that Trump will clearly be in violation when becomes president. Tiefer served as the general counsel of the House of Representatives for 11 years before he began teaching and said the words are similar to ones used in rules prohibiting members of Congress from doing business with the federal government.
Painter, the former chief ethics lawyer for Bush, said the hotel is a problem for Trump in another way. If foreign diplomats stay at the hotel, as has been reported, then Trump could be seen as running afoul of the emoluments clause of the Constitution banning payments to the president from foreign governments.
Other critics have pointed out that the contract requires negotiations over those additional payments each year, and that you cannot expect a GSA employee acting in taxpayer interest to take a tough stand against members of the president’s family or officials of his company to get more money for the government-owned property.
Drabkin, the former senior procurement officer at the GSA, thinks for this reason alone, the president-elect should give up the hotel.
But as far as the tool to force him to do that, Drabkin doesn’t think clause 37.19 is it.
“He was already a tenant,” he wrote in an e-mailed analysis of the contract. “Whether the language of the provision was inartfully drafted is another matter.”