December 16, 2021

Chairs DeFazio and Titus Release “Problems on Pennsylvania Avenue”— Report on GSA’s Mishandling of the Old Post Office Lease

DeFazio: “…the American people deserve to know their government is not for sale.”

Washington, D.C. — Today, Chair of the House Committee on Transportation and Infrastructure Peter DeFazio (D-OR) and Chair of the Subcommittee on Economic Development, Public Buildings, and Emergency Management Dina Titus (D-NV) released a staff report on the committee’s investigation into the General Services Administration’s (GSA) management of the Old Post Office (OPO) Building lease to Trump OPO LLC, to operate the Trump International Hotel in Washington, D.C. This report, prepared by majority staff, outlines the mismanagement, removal of ethical guardrails, and stonewalling of Congress by GSA. It also shows that GSA ignored its obligation to support and defend the Foreign and Domestic Emoluments clauses of the U.S. Constitution while Donald J. Trump was president, as the GSA’s Office of Inspector General (OIG) previously determined.

The records obtained by the committee also reveal that the hotel was financially struggling from its opening day, potentially putting federal taxpayers at risk. The data shows that the hotel lost more than $71 million between its opening in late 2016 and early 2021. Because of these losses, President Trump’s family businesses loaned Trump OPO LLC more than $75 million, but less than $3.5 million of these loans were repaid. The remainder of the loans, amounting to nearly $72 million, were ultimately forgiven. GSA seemed solely focused on the OPO Building lease’s payments and ignored critical ethical and constitutional issues involving President Trump’s financial interest in the hotel.

The report—which resulted from review of more than 24,000 pages of records—contains several key highlights. These include:

  • Stonewalling Congress. In April 2019, an attorney for the Trump OPO LLC, who had worked as the Deputy White House Counsel to President Trump the previous year, wrote to GSA objecting to the committee’s request for key financial records and asking GSA not to disclose confidential information to the committee. GSA did not provide all requested unredacted financial records until May 2021, over two years after they were first requested by the committee.
  • Lack of Foreign and Domestic Government Patronage Review. GSA essentially washed its hands of any responsibility to examine whether or not the emoluments clauses of the Constitution were being followed by failing to take any steps to identify expenditures at the Trump International Hotel by both foreign and domestic government officials.
  • GSA’s Inspector General Recommended Reform. After a review of GSA’s management of the OPO lease that largely focused on the Interested Parties clause in its outlease program, the GSA OIG recommended “that before continuing to use the language, GSA determine the purpose of the Interested Parties provision, conduct a formal legal review by OGC [the GSA Office of General Counsel] that includes consideration of the Foreign and Presidential Emoluments Clauses, and revise the language to avoid ambiguity.”
  • GSA Responded By Making Matters Worse. Rather than addressing the issues that existed in its Interested Parties clause, GSA’s “corrective actions” inexplicably expanded the ethical gaps, leaving even fewer guardrails to prevent conflicts of interest among senior federally elected officials, including the President of the United States.
  • Reform Recommendation Remains Unfulfilled. As of September 2021, the GSA OIG still considers its recommendation open—nearly three years after issuing its report— because GSA has failed to appropriately address these issues.
  • Net Losses. Financial records provided to GSA from the Mazars accounting firm obtained by the committee show that the Trump OPO LLC registered total losses of more than $71 million from September 2016 to January 2021. The hotel operated at a loss in 33 out of the 53 months during this period.
  • Foreign Profits. The Trump OPO LLC reported a total of $355,687 in profits on “foreign government patronage” in 2017, 2018, and 2019. This was the only category in which the hotel has consistently shown profits since its opening and some analyses found the hotel received millions in revenue from foreign governments.
  • Faulty Projections. From 2017 to 2020, the hotel regularly overestimated its projected monthly profits. During this period, the hotel’s net income—a measure of profit that includes all of a business’s expenses—met the projected target levels in only eight out of 48 months. The hotel’s net income fell short of what the company projected in 40 out of 48 months.
  • Poor Occupancy Rates. The occupancy rates for the hotel were consistently lower than its competitors, according to reports required by the GSA lease agreement.

“This report brings to light GSA’s flagrant mismanagement of the Old Post Office lease and its attempt to duck its responsibility to support and defend the U.S. Constitution’s emoluments clauses. It also details GSA’s failure to put important ethical guardrails and OIG recommendations in place that would have helped keep conflicts of interest at bay,” Chair DeFazio said. “What’s more, the Trump OPO LLC objected to GSA providing critical financial records to the committee and GSA complied with the request, stonewalling Congress for more than two years. GSA kept the American people in the dark about the poor financial health of the hotel, and most importantly who was spending money at the hotel and how it might be influencing the Trump administration. Now, it’s time to turn the page and make sure that these conflicts of interest are never repeated because Americans deserve to know their government is not for sale.” 

“Donald Trump’s decision to take money from foreign interests looking to curry favor with his Administration was unethical and unacceptable. We need to make sure this never happens again,” Chair Titus said. “The way the Trump hotel lease was structured makes it clear that we need to change how this program operates. I’ve said before we can’t just investigate; we have to legislate. We need greater accountability and reform of the outleasing program. As Chair of the Subcommittee responsible for overseeing the GSA, I’ll be working to bring more transparency to the process.”

To access the final report and newly released accompanying records, as well as past statements, hearing video, and more, click here.