January 28, 2020

Chairs DeFazio, Titus Statements from Hearing on GSA Outleases and the Trump Old Post Office Hotel

Washington, D.C. — The following are opening remarks, as prepared for delivery, from 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) during today’s hearing titled: “GSA Outleases and the Trump Old Post Office Hotel.”

Chair DeFazio:

Thank you, Chair Titus, and thank you, Administrator Murphy for making your first appearance before this Committee.

We are here today because of GSA’s failure to act. The General Services Administration (GSA), under successive Administrations, failed to properly consider the Emoluments Clauses to the U.S. Constitution when evaluating the Old Post Office (OPO) lease to the Trump International Hotel.

But only under this Administration did this lease present what seems to be a clear violation of the U.S. Constitution.

The GSA’s own internal watchdog, the Office of Inspector General (OIG), concluded that GSA failed to consider the Emoluments Clauses when evaluating this lease.

The IG recommended that GSA revise its leasing language to ensure GSA is abiding by the laws of our Nation, including the supreme law of our nation, the U.S. Constitution. Once again, the GSA chose not to act by refusing to implement the IG’s recommendation.

In October, I issued a subpoena to GSA for copies of legal memos and financial data regarding the Old Post Office lease to the Trump International Hotel that GSA has refused to provide to the Committee for over one year now. Once again, GSA failed to act.

They have outright refused to provide the Committee with legal memos related to the Trump Hotel, and while we engaged in good faith efforts to review the financial data in-camera, GSA wanted us to grant them veto power over our ability to reference or release any of this data publicly if we believed it served a legitimate oversight need of the Committee and was in the public’s interest.

What’s interesting is that GSA appears to be mimicking arguments made by the Trump Organization. In fact, the GSA provided the Committee with a copy of a letter that an attorney for the Trump Organization sent GSA about complying with the Committee’s original records request. That letter questioned the Committee’s oversight jurisdiction and our legitimate need for financial records. This leads me to question whose interests GSA is serving—the Trump Organization or the American public?

So, I am happy that Administrator Murphy has agreed to be here to help us understand why GSA appears more concerned about protecting the personal interests of the President of the United States than the financial interests of U.S. taxpayers.

But this is not the only reason we have invited the GSA Administrator here today. We expect Administrator Murphy to answer questions about the potential sale of the Old Post Office lease.

Exactly a month after our last hearing on the Old Post Office lease in September of last year, and three years after the Trump International Hotel grand opening, media reports surfaced that the Trump Organization was interested in selling their lease with GSA. 

The sales brochure for the hotel says, “potential exists for a new owner to fully capitalize on government related business.” It sounds like they’re speaking from experience.

Meanwhile, the Trump Organization claims that their refusal to solicit foreign business has cost the hotel over $9 million. That’s a pretty specific number considering we can’t seem to get any other financial performance data related to the hotel.

The lack of transparency and cooperation by GSA with the Committee’s legitimate oversight authority over the past three years is ridiculous. 

In October, Chair Titus and I requested that GSA conduct an audit of the Old Post Office lease, which they had acknowledged had not been done. Three months later we are still waiting on a response to that request.

In addition, I have serious concerns about how GSA administers its outleasing program. While there are extensive regulations for how GSA should acquire leased space, there seem to be very few formal rules outlining how the government should lease property to private parties. Further, since a lessee’s compliance with a lease is determined by a Lease Contracting Officer, I’d like to know what processes are available to review that decision.

I hope we can make some progress today, Administrator Murphy,+ and get you to commit to working with this Committee to ensure GSA is properly managing its outleasing program so that we can ensure it is being managed effectively, efficiently and ethically moving forward.

Thank you. I look forward to your testimony. I yield back.

Chair DeFazio’s remarks as delivered can be found here.

Chair Titus:

Today’s hearing will focus on the General Services Administration’s handling of the lease at the Old Post Office Building here in Washington, D.C.  Owned by the federal government, the building is being leased to the Trump Organization and now houses the Trump International Hotel.

This morning we are joined by Emily Murphy, Administrator of the General Services Administration, and I want to welcome her here to the Committee.

Administrator Murphy is in a difficult position: she is responsible for overseeing the Trump Organization’s lease of the Old Post Office Building and yet her boss is ultimately President Trump. That is a serious problem – and it’s one that could have been prevented if President Trump had divested from his business interests in the Trump International Hotel or put them in a blind trust, like every modern President before him.

Instead, President Trump is the single largest beneficiary of the Trump Organization’s hotel in Washington. He makes money when people stay there, and he loses money when people don’t.

So perhaps it’s no surprise that Administrator Murphy’s agency has refused to turn over documents that were subpoenaed by this Committee that would help us determine (1) whether the President is following the Constitution and (2) complying with the terms of the lease.

Let me repeat: President Trump is both the GSA’s tenant and its boss. That’s an obvious problem.

Yet, we know from dogged reporting that President Trump’s D.C. hotel isn’t doing as well as he had hoped. While, it’s being propped up by foreign governments, corporate executives, and lobbyists looking to curry favor, that apparently isn’t enough because the Trump Organization has announced that it’s looking to sell this lease.

Administrator Murphy, as you likely know, last Thursday, initial bids to purchase this lease were to be submitted by potential buyers.

The Trump Organization is asking for $500 million for this lease. That means that you are overseeing the potential transfer of hundreds of millions of dollars into the pockets of the President and his family.

Given the myriad of issues and concerns raised by the execution of this lease from the outset, I want to make sure that GSA and this Committee have a clear understanding of the process moving forward and we are not just repeating significant mistakes of the past.

We want to know what, if any, changes could be made to the terms of the lease with the new tenant. Additionally, we must determine the need for new legislation to guide the outleasing process.

Most importantly, American taxpayers deserve transparency in knowing who is buying this lease; we should all seek to ensure that it’s not some foreign government.

That arrangement would not only raise serious ethics questions, but it would also potentially bring into question the Emoluments Clauses to the U.S. Constitution.

Given that GSA’s Inspector General concluded last year that your agency “ignored the Constitution” and has said that you are continuing to ignore the Emoluments Clauses, we hope you will ensure that any potential sale of this lease abides by federal law.

Some us believe the Constitution matters. It is the law of the land, regardless of whether this Administration finds that to be inconvenient or not.

Thank you Administrator Murphy for being with us today and thank you in advance for answering our questions.

With that I recognize Ranking Member Meadows for five minutes for an opening statement.

Chair Titus’s remarks as delivered can be found here.