[House Hearing, 115 Congress]
[From the U.S. Government Publishing Office]
IMPLEMENTING THE FEDERAL ASSETS SALE AND TRANSFER ACT (FASTA):
MAXIMIZING TAXPAYER RETURNS AND REDUCING WASTE IN REAL ESTATE
=======================================================================
(115-20)
HEARING
BEFORE THE
SUBCOMMITTEE ON
ECONOMIC DEVELOPMENT, PUBLIC BUILDINGS, AND EMERGENCY MANAGEMENT
OF THE
COMMITTEE ON TRANSPORTATION AND INFRASTRUCTURE
HOUSE OF REPRESENTATIVES
ONE HUNDRED FIFTEENTH CONGRESS
FIRST SESSION
__________
JULY 12, 2017
__________
Printed for the use of the
Committee on Transportation and Infrastructure
[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]
Available online at: https://www.govinfo.gov/committee/house-
transportation?path=/browsecommittee/chamber/house/committee/
transportation
__________
U.S. GOVERNMENT PUBLISHING OFFICE
26-373 PDF WASHINGTON : 2019
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COMMITTEE ON TRANSPORTATION AND INFRASTRUCTURE
BILL SHUSTER, Pennsylvania, Chairman
DON YOUNG, Alaska PETER A. DeFAZIO, Oregon
JOHN J. DUNCAN, Jr., Tennessee, ELEANOR HOLMES NORTON, District of
Vice Chair Columbia
FRANK A. LoBIONDO, New Jersey JERROLD NADLER, New York
SAM GRAVES, Missouri EDDIE BERNICE JOHNSON, Texas
DUNCAN HUNTER, California ELIJAH E. CUMMINGS, Maryland
ERIC A. ``RICK'' CRAWFORD, Arkansas RICK LARSEN, Washington
LOU BARLETTA, Pennsylvania MICHAEL E. CAPUANO, Massachusetts
BLAKE FARENTHOLD, Texas GRACE F. NAPOLITANO, California
BOB GIBBS, Ohio DANIEL LIPINSKI, Illinois
DANIEL WEBSTER, Florida STEVE COHEN, Tennessee
JEFF DENHAM, California ALBIO SIRES, New Jersey
THOMAS MASSIE, Kentucky JOHN GARAMENDI, California
MARK MEADOWS, North Carolina HENRY C. ``HANK'' JOHNSON, Jr.,
SCOTT PERRY, Pennsylvania Georgia
RODNEY DAVIS, Illinois ANDRE CARSON, Indiana
MARK SANFORD, South Carolina RICHARD M. NOLAN, Minnesota
ROB WOODALL, Georgia DINA TITUS, Nevada
TODD ROKITA, Indiana SEAN PATRICK MALONEY, New York
JOHN KATKO, New York ELIZABETH H. ESTY, Connecticut,
BRIAN BABIN, Texas Vice Ranking Member
GARRET GRAVES, Louisiana LOIS FRANKEL, Florida
BARBARA COMSTOCK, Virginia CHERI BUSTOS, Illinois
DAVID ROUZER, North Carolina JARED HUFFMAN, California
MIKE BOST, Illinois JULIA BROWNLEY, California
RANDY K. WEBER, Sr., Texas FREDERICA S. WILSON, Florida
DOUG LaMALFA, California DONALD M. PAYNE, Jr., New Jersey
BRUCE WESTERMAN, Arkansas ALAN S. LOWENTHAL, California
LLOYD SMUCKER, Pennsylvania BRENDA L. LAWRENCE, Michigan
PAUL MITCHELL, Michigan MARK DeSAULNIER, California
JOHN J. FASO, New York
A. DREW FERGUSON IV, Georgia
BRIAN J. MAST, Florida
JASON LEWIS, Minnesota
------ 7
Subcommittee on Economic Development, Public Buildings, and Emergency
Management
LOU BARLETTA, Pennsylvania, Chairman
ERIC A. ``RICK'' CRAWFORD, Arkansas HENRY C. ``HANK'' JOHNSON, Jr.,
BARBARA COMSTOCK, Virginia Georgia
MIKE BOST, Illinois ELEANOR HOLMES NORTON, District of
LLOYD SMUCKER, Pennsylvania Columbia
JOHN J. FASO, New York ALBIO SIRES, New Jersey
A. DREW FERGUSON IV, Georgia, GRACE F. NAPOLITANO, California
Vice Chair MICHAEL E. CAPUANO, Massachusetts
BRIAN J. MAST, Florida PETER A. DeFAZIO, Oregon (Ex
BILL SHUSTER, Pennsylvania (Ex Officio)
Officio)
CONTENTS
Page
Summary of Subject Matter........................................ v
WITNESSES
Panel 1
Timothy O. Horne, Acting Administrator, U.S. General Services
Administration:
Testimony.................................................... 5
Prepared statement........................................... 52
Responses to questions for the record from the following
Representatives:
Hon. Lou Barletta of Pennsylvania........................ 55
Hon. Peter A. DeFazio of Oregon.......................... 59
Hon. Jeff Denham of California........................... 61
Hon. Barbara Comstock of Virginia........................ 63
C. Brett Simms, Director, Capital Asset Management Service, U.S.
Department of Veterans Affairs:
Testimony.................................................... 7
Prepared statement........................................... 66
Responses to questions for the record from Hon. Jeff Denham,
a Representative in Congress from the State of California.. 72
Kevin B. Acklin, Chief of Staff, Office of Mayor William Peduto,
City of Pittsburgh, Pennsylvania:
Testimony.................................................... 9
Prepared statement........................................... 73
Panel 2
Richard W. Painter, Professor of Law:
Testimony.................................................... 41
Prepared statement........................................... 75
SUBMISSIONS FOR THE RECORD
Submission of the following materials by Hon. Lou Barletta, a
Representative in Congress from the Commonwealth of
Pennsylvania:
Blog post of March 24, 2017, ``Did the GSA Properly Find
Trump's `Full Compliance' With the D.C. Hotel Lease?'' by
Andy Grewal, Notice & Comment, a blog from the Yale Journal
on Regulation and the ABA Section of Administrative Law and
Regulatory Practice........................................ 82
Report, ``The Foreign Emoluments Clause and the Chief
Executive,'' No. 2017-12, June 2017, by Andy S. Grewal,
University of Iowa, College of Law......................... 86
Article, ``Business Transactions and President Trump's
`Emoluments' Problem,'' by Seth Barrett Tillman, Harvard
Journal of Law & Public Policy, Vol. 40, No. 3............. 86
Letter of September 16, 1974, from Hon. Howard W. Cannon,
Chairman, U.S. Senate Committee on Rules and
Administration, to Hon. William B. Saxbe, Attorney General
of the United States, U.S. Department of Justice........... 86
Response letter of September 20, 1974, from Hon. Laurence H.
Silberman, Acting Attorney General, U.S. Department of
Justice, to Hon. Howard W. Cannon, Chairman, U.S. Senate
Committee on Rules and Administration...................... 86
Written statement of the Associated General Contractors of
America, May 3, 2017....................................... 87
Submission of the following materials by Hon. Henry C. ``Hank''
Johnson, Jr., a Representative in Congress from the State of
Georgia:
Email correspondence between Kevin M. Terry, Senior Realty
Contracting Officer, U.S. General Services Administration,
the Trump Organization, et al.............................. 94
Article of November 11, 2016, ``Federal Agency Doing Business
With Trump Is Trying To Avoid a Massive Conflict of
Interest,'' by Aram Roston, BuzzFeed....................... 110
Letter and exhibits of March 23, 2017, from Kevin M. Terry,
Contracting Officer, U.S. General Services Administration,
to Donald J. Trump, Jr., Trump Old Post Office LLC, c/o the
Trump Organization......................................... 112
Letter of February 10, 2017, from Kevin M. Terry, Contracting
Officer, U.S. General Services Administration, to Donald J.
Trump, Jr., Trump Old Post Office LLC, c/o the Trump
Organization............................................... 113
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IMPLEMENTING THE FEDERAL ASSETS SALE AND TRANSFER ACT (FASTA):
MAXIMIZING TAXPAYER RETURNS AND REDUCING WASTE IN REAL ESTATE
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WEDNESDAY, JULY 12, 2017
House of Representatives,
Subcommittee on Economic Development,
Public Buildings and Emergency Management,
Committee on Transportation and Infrastructure,
Washington, DC.
The subcommittee met, pursuant to notice, at 10 a.m., in
room 2167 Rayburn House Office Building, Hon. Lou Barletta
(Chairman of the subcommittee) presiding.
Mr. Barletta. The subcommittee will come to order.
Thank you for being here today. I called this hearing
because I wanted to ensure Chairman Denham's bill, the Federal
Assets Sale and Transfer Act, or FASTA, which will cut waste
and get rid of properties faster, is a complete success.
During a recent visit to Pittsburgh, I was reminded of the
importance of this legislation. The Pittsburgh VA facility is a
prime example as to why FASTA was needed. This 160-acre
facility was closed back in 2013, but only recently reported as
excess by the VA.
The city of Pittsburgh currently has dozens of law
enforcement and emergency management functions scattered across
the city on very valuable properties that could be better used
to drive economic growth and jobs. If acquired by the city, the
vacant VA facility would encourage economic development by
allowing the city to move and consolidate these scattered
functions to one location.
I personally toured this facility and know the longer it
sits vacant the more it will deteriorate. So far this fiscal
year, the Federal taxpayer has spent at least $300,000 to
simply maintain this vacant property. You would think the
Federal Government would have a procedure in place to quickly
dispose of this property.
Unfortunately, the Federal process is cumbersome and
costly. What would take a short time to get done in the private
sector takes years in the Federal Government. As a result, the
Federal Government sits on vacant and underutilized, high-value
assets. If sold and redeveloped, these properties would spur
economic development and create jobs in the communities where
they are located.
A recent example is the Volpe National Transportation
Systems Center in Cambridge, Massachusetts. The DOT facility
sits on a small portion of a 14-acre site, walking distance
from downtown Boston and next to MIT. That property is now
going to be redeveloped in a deal benefitting the Federal
taxpayer by $750 million.
The DOT will get a new building. MIT will redevelop the
property, and the local community is looking forward to the
economic growth that it will generate.
To facilitate more projects like this, FASTA waives many of
the hurdles that prevent the Federal Government from selling
property quickly and provides a funding mechanism to free up
even more properties through consolidation. And GSA's role in
this is critical.
For this to work, the Board created in FASTA must have
resources to identify these opportunities and develop
recommendations. To that end, FASTA authorizes the Board to use
GSA contracts to hire real estate experts. FASTA authorizes GSA
to detail staff and provide other support to the Board. For
FASTA to be successful, these and other resources are critical
in helping the Board carry out its duties and develop
recommendations to sell and redevelop properties.
I want to recognize and thank Chairman Denham of our
Subcommittee on Railroads, Pipelines, and Hazardous Materials
for his leadership in getting the Federal Assets Sale and
Transfer Act across the finish line last year. I know he worked
tirelessly with Members on both sides of the aisle to get FASTA
enacted into law.
FASTA, if implemented correctly, will cut waste, save
taxpayer money, and spur economic development and jobs. I hope
today to learn where we are on disposing of the VA property I
toured in Pittsburgh and what GSA is doing to support the
implementation of FASTA.
I want to thank you all for being here.
I ask unanimous consent that members not on this
subcommittee be permitted to sit with the subcommittee at
today's hearing and ask questions.
I now call on the ranking member of the subcommittee, Mr.
Johnson, for a brief opening statement.
Mr. Johnson of Georgia. Thank you, Mr. Chairman.
And I want to thank the chairman for holding this hearing
today. It has the stated topic of implementation of the Federal
Assets Sale and Transfer Act, FASTA, which is a worthy topic.
This is not, however, the most pressing issue before this
subcommittee as it relates to the GSA.
I intend to address some of the issues arising from the
lease that is held by President Trump on the Old Post Office.
On March 24th, 2017, GSA released a letter from a GSA
contracting officer asserting that the Trump Old Post Office
LLC is in full compliance with its lease agreement. I
categorically disagree with this conclusion.
The Trump Old Post Office LLC is a corporation completely
owned and controlled by President Trump and his three oldest
children. The lease agreement explicitly prohibits any elected
official of the U.S. Government from serving as a lessee or
from obtaining any benefit that may arise from the lease.
Specifically, the lease states that ``no member or delegate
to Congress, or elected official of the Government of the
United States or the Government of the District of Columbia,
shall be admitted to any share or part of this Lease, or to any
benefit that may arise therefrom.''
The last time I checked, the President of the United States
is an elected official. The GSA contracting officer provided no
clear legal rationale for his decision on behalf of the
American taxpayer. In fact, due to a Freedom of Information Act
request, we now know that as early as November 11, 2016, this
same key GSA contracting official was casting as, quote,
nonsense, end quote, news reports detailing the conflict of
interest for the Old Post Office Building.
This determination was presumably before any legal analysis
by the Office of General Counsel of GSA or the Department of
Justice.
So we are faced with the situation where GSA is negotiating
with President Trump's two sons, Donald Trump, Jr., and Eric
Trump, on the meaning of the plain language of the Post Office
lease agreement.
After repeated requests by the Trump Organization, GSA is
now twisting the word ``benefit.'' Forget about the traditional
benefit that Trump controlled. GSA now wants us to believe that
as long as the Trump Organization creates layers of corporate
shells and reinvests the profits of the lease agreement back
into the hotel while President Trump occupies the Oval Office
and delays receiving his profits until after his Presidency
concludes, then there is no benefit.
Although GSA and the Trump Old Post Office LLC have claimed
that the President is not benefitting from the lease, he is
clearly benefitting from the lease. The President has listed
the loan he took from Deutsche Bank to renovate the Old Post
Office Building as a personal liability. Under the new
operating agreement with the Trump Old Post Office LLC, the
President may use his share of the profits to back the Deutsche
Bank loan that he lists as a personal liability in his
financial disclosure.
It is clear that no matter how many Russian nesting dolls
President Trump may utilize to attempt to conceal his
improprieties, it remains inescapable that President Trump is
still gaining a significant benefit by doing business with the
GSA, an agency that he controls, an agency that he is supposed
to be leading on behalf of the American taxpayers.
It has also become clear that this private business being
run by the Trump family in the Old Post Office Building has
been a profitable business. Recent financial disclosures from
both President Trump and his daughter, Ivanka Trump, a White
House aide, showed that they have received over $20 million in
profits from the Trump International Hotel, operating in the
Old Post Office Building. It just opened in October, soft
opening, and for the first 2 months, I believe, they indicated
that there was a deficit. So that means over the last 8 months,
profits of $20 million have accumulated.
Because the Trump administration has refused to release
financial documents related to the Old Post Office, we have no
assurances that GSA has received a percentage of the profits
that it is entitled to under the lease agreement. There are no
assurances that all of the agreements between the Trump
Organization and its vendors are arm's-length transactions and
not designed to depress reportable profits.
All of these unanswered questions fall under a cloud of
conflict of interest. This committee needs to fulfill its
responsibilities and conduct its own bipartisan, independent
review of this lease agreement, and I am glad we are getting
started on that today.
We need to assure taxpayers that President Trump is not
enriching himself while serving in the ultimate position of
public trust. As ranking member of this subcommittee, I
consider it my top priority, and I look forward to working with
the other members of this committee to resolve this issue
satisfactorily.
And with that I yield back.
Mr. Barletta. Thank you.
I now call on the ranking member of the full committee, Mr.
DeFazio.
Mr. DeFazio. Thank you, Mr. Chairman. Thanks for this
hearing.
Obviously, I have a longstanding concern about the proper
disposition at full value of surplus Federal assets, and I am
pleased that we had legislation in the last Congress
facilitating that, and I am pleased we are having the hearing
here today.
But I do want to echo the concerns of the ranking member of
the subcommittee. There has been very unprofessional conduct at
GSA in recent months. I have sent five inquiries regarding the
terms of this lease and have had either incomplete or no
responses.
The ranking member mentioned this email to an official
associated with President Trump. We are not certain who it was
on November 11th, but having a contracting officer saying this
very complicated arrangement which involved both the Emoluments
Clause and an explicit part of the lease is nonsense, and then
he goes on to invite the same official out for coffee and talks
about his recent personal trip.
Also, GSA's General Counsel was included and copied on this
and took no action. I would find that extraordinary that this
person was not recused from any sort of judgment regarding this
complicated matter, given that email, and would bring that to
the attention of the acting head of GSA.
Given the stonewalling from GSA, given the serious concerns
outlined by the ranking subcommittee member regarding the
explicit terms of the lease, I have just got to repeat it. ``No
member or delegate of Congress, or elected official of the
Government of the United States or the Government of the
District of Columbia, shall be admitted to any share or part of
this Lease, or to any benefit that may arise therefrom.''
But somehow GSA has determined the fact that the President
is a large majority owner and that he owes personally a debt to
Deutsche Bank, which could be paid off by profits, and of
course, there is a profit-sharing arrangement between the
United States Government and the Trump Organization regarding
this hotel, they are refusing to produce those documents to
show that the Government, for which, Mr. Horne, I believe you
do work, is getting its proper share of the profits and
benefits from this lease.
Essentially, we have a situation where the President is
both the landlord and the tenant, and beyond that, there are
even more serious issues regarding the Emoluments Clause of the
Constitution.
There have been numerous news stories that foreign
governments, particularly the Saudis and others, are steering
business to the Trump Hotel to curry favor and, again, lacking
any transparency regarding the profits, we do not know what the
magnitude of those profits are, and that raises a very, very
serious concern.
So today we are introducing a resolution of inquiry that
asks for three things:
Guidance and direction to the Acting Administrator of GSA
regarding responses to requests for information from Members of
Congress. Apparently, Mr. Horne has been told to stonewall the
elected representatives of the people of the United States.
All documents associated with the Trump Hotel lease
agreement between the Government and the Trump Organization.
And all legal memoranda or opinions regarding the lease
agreement, if there are any, or if it has all just been made up
by the guy who said that this was nonsense. His determination
in a letter is that since the money can only be used by the
sons to pay down the debts of the President or to enhance the
assets of the President, the President is not a beneficiary.
And, of course, if the hotel were sold, they go on to say,
yes, well, the President would get credited his 77 percent
share, but he is not a beneficiary. Pretty extraordinary stuff
pretty simply resolved by the President divesting himself of
this particular investment and this lease, which he apparently
has violated.
So I am pleased we are here today. I hope that we can hear
some straight answers from Mr. Horne.
Thank you, Mr. Chairman.
Mr. Barletta. Today we have two panels. On our first panel,
we have Mr. Tim Horne, Acting Administrator, U.S. General
Services Administration.
Mr. Brett Simms, Director of the Capital Asset Management
Service, United States Department of Veterans Affairs.
And Mr. Kevin Acklin, chief of staff, the Office of Mayor
William Peduto, city of Pittsburgh, Pennsylvania.
Members are advised to limit questions directed to Mr.
Horne and Mr. Simms to factual matters of a non-political
nature. They are both career employees at their respective
agencies and will not be able to answer such questions.
I ask unanimous consent that our witnesses' full statements
be included in the record.
Without objection, so ordered.
For our witnesses, since your written testimony has been
made a part of the record, the subcommittee would request that
you limit your oral testimony to 5 minutes.
Mr. Horne, you may proceed.
TESTIMONY OF TIMOTHY O. HORNE, ACTING ADMINISTRATOR, U.S.
GENERAL SERVICES ADMINISTRATION; C. BRETT SIMMS, DIRECTOR,
CAPITAL ASSET MANAGEMENT SERVICE, U.S. DEPARTMENT OF VETERANS
AFFAIRS; AND KEVIN B. ACKLIN, CHIEF OF STAFF, OFFICE OF MAYOR
WILLIAM PEDUTO, CITY OF PITTSBURGH, PENNSYLVANIA
Mr. Horne. Good morning, Chairman Barletta, Ranking Member
Johnson, and members of the committee.
My name is Tim Horne and I am the Acting Administrator of
the U.S. General Services Administration.
Thank you for the opportunity to testify today on GSA's
management of Federal real property and the implementation of
the Federal Assets Sale and Transfer Act of 2016.
I have been a GSA employee for almost 25 years, starting
off as a facilities management intern at the Denver Federal
Center. Later in my career, I held the position of Federal
Acquisition Service Regional Commissioner, and I served as the
Public Buildings Service Regional Commissioner for GSA's Rocky
Mountain Region.
In 2008, I supported then-President-elect Obama as the
Director of the Presidential Transition Support Team. I served
as the Federal Transition Coordinator for the most recent
Presidential transition before being appointed as Acting
Administrator.
GSA is working with agencies on multiple fronts to reduce
the Federal Government's real estate footprint. GSA agrees with
members of this committee about the importance of and is
committed to the identification, consolidation, and disposal of
nonperforming and vacant Federal real property.
Last year, Congress passed the FASTA to encourage
landholding agencies to reduce the number of unneeded and
underutilized properties from their inventory. GSA strongly
supports FASTA, and we view this as a valuable tool to
incentivize agencies to be more efficient and effective in
their management of real property.
It also improves the Federal real property disposal process
by establishing an independent Board to make recommendations
for property disposals, along with other ways to reduce the
costs of Federal real property holdings.
Further, the act streamlines the process for identifying
and disposing of properties to benefit the homeless.
To help implement the FASTA, GSA, working with the Office
of Management and Budget, conducted two data calls to build a
more robust Federal Real Property Profile and develop
recommendations for disposal and consolidation projects to put
forward.
The act expanded the universe of 24 executive branch
agencies that previously reported real property data to GSA. A
total of 51 agencies have responded to the data calls.
Additionally, to support the implementation of the Board's
recommendations, the President's budget requests $40 million in
2018 to be deposited into the Asset Proceeds and Space
Management Fund. These funds will support the independent
activities of the Board and will be managed as a stand-alone
account.
Once the Board is in place, GSA looks forward to working
with the chairman and Board members, as well as OMB, to
implement the act.
As you know, GSA administers one of the largest and most
diversified public real estate portfolios in the country. The
agency's portfolio consists of 371 million rentable square feet
in 8,700 active assets across the United States. The owned
inventory accounts for approximately 49 percent of the
portfolio, and the leased inventory is approximately 51 percent
of the portfolio.
GSA is taking an aggressive approach to improving
utilization of Federal property and reducing our unneeded or
underutilized assets. From 2012 through 2016, GSA has disposed
of 976 properties, both those managed by GSA as well as other
landholding agencies, generating $273 million in gross sales
proceeds. The bulk of the disposals were executed through
public sales.
Other property disposals involved negotiated sales, public
benefit conveyances, and Federal transfers. For GSA-managed
properties, between 2012 and 2016, GSA disposed of 66
properties, generating $88 million in gross proceeds.
Earlier this year, GSA disposed of the Cotton Annex
building in Washington, DC. The $30 million sale of this
118,000-square-foot facility, which previously housed the U.S.
Department of Agriculture, resulted in a cost avoidance to the
Federal Government of almost $7 million over 2 years because
GSA no longer needs to make long-term repairs and upgrades to
the facility.
However, the Federal Government is not the only participant
and benefactor in this process. State, local, and nonprofit
partners play a vital role in helping GSA identify and unlock
an asset's value and benefit. For example, through a negotiated
sale, GSA sold underutilized acreage at the Denver Federal
Center to the city of Lakewood, Colorado. The city then
developed the property, which now contains a transit hub and
hospital that serve the citizens of the surrounding area.
This example showcases that Federal and non-Federal
stakeholders benefit when we collaborate together during the
disposal process.
In closing, GSA is committed to carrying out its mission of
delivering the best value in real estate. When GSA and other
Federal agencies more effectively and efficiently manage their
real property inventory, we realize improved mission and
workforce outcomes, while reducing housing and related costs.
These savings can be invested back into agencies' mission-
critical work.
I thank the committee for the opportunity to testify today
and I look forward to answering your questions.
Mr. Barletta. Thank you for your testimony, Mr. Horne.
Mr. Simms, you may proceed.
Mr. Simms. Good morning, Chairman Barletta, Ranking Member
Johnson, and members of the committee. I am happy to be here
today to discuss VA's real property portfolio and our ongoing
efforts to reuse or dispose of vacant property.
VA's mission is distinct compared to other Federal
agencies. We operate the largest integrated healthcare system
in the Nation, with more than 1,700 hospitals, clinics, and
other facilities, as well as a variety of benefits and
services, and operates 135 national cemeteries nationwide.
Our portfolio consists of approximately 180 million owned
and leased square feet and is one of the largest in Federal
Government. Unlike many Federal agencies, we own the majority
of our portfolio, about 86 percent.
Our portfolio is also aging. The average age of VA's owned
buildings is approaching 60 years old.
Lastly, most of our owned assets are large campuses that
consist of many different buildings and structures. As you can
imagine, managing a portfolio of this size and age is complex
and takes a significant amount of resources.
In light of VA's aging infrastructure and an estimated $50
billion capital need over the next 10 years, Secretary Shulkin
has made it one of his top five priorities to modernize VA
systems.
One of the ways VA is working to support his priority is by
getting rid of buildings that are no longer needed to support
our mission. We recently identified 430 individual vacant
buildings, totaling 5.9 million gross square feet, across
campuses nationwide. It costs VA about $7 million annually to
operate and maintain these buildings and we want to be able to
redirect those resources to serve veterans.
My office, in collaboration with other VA experts, is
leading the effort to initiate disposal or reuse actions for
these 430 vacant buildings over the next 24 months. These
buildings have varying characteristics, including historical
status and environmental concerns that impact disposal and
reuse options.
Our next steps will be to begin performing due diligence,
starting with evaluating for potential reuse. Once due
diligence is completed and options are evaluated, disposal or
reuse transactions would be initiated.
While we are working on an aggressive timeline to address
our vacant buildings, we do anticipate certain impediments that
might slow down but not stop the process. Some examples of
items that can impact our timelines include: compliance with
the National Historic Preservation Act, balancing funding
between disposal and operational needs, National Environmental
Policy Act compliance, the location and conditions of the
buildings on the campus, and stakeholder opposition to the
disposal or reuse.
While challenges do exist, we have made progress reducing
our vacant and underutilized building footprint. Since 2004, VA
has disposed or reused 1,059 assets totaling approximately 8.3
million gross square feet and 932 acres.
One of VA's most successful asset management tools is its
enhanced-use lease, or EUL, authority. EUL allows VA to
outlease assets to private and public-sector entities to
repurpose for supportive housing for homeless veterans. The
program has provided significant benefits in terms of cost
avoidance, improved facilities, increased healthcare services,
creation of jobs, and increased tax revenues for local
communities.
Approximately 4.5 million square feet have been outleased,
resulting in over 2,700 operational housing units for homeless
and at-risk veterans.
VA previously had broader EUL authority that allowed for
mixed use redevelopment beyond housing that was consistent with
VA's mission and operations. While the broader authority lapsed
in December 2011, VA will be submitting draft legislation to
Congress to expand the scope of the EUL authority to allow
greater reuse flexibility and improve services for veterans.
VA will also leverage the Federal Assets Sale and Transfer
Act of 2016 as an additional vehicle to reduce unneeded and
underutilized properties from our inventory. In April 2017, we
submitted to GSA recommendations regarding properties that no
longer met our needs and potentially could be sold for
proceeds, disposed, or were candidates for consolidation.
We identified 15 sites consisting of 551 acres and 2.3
million square feet. VA believes this is a robust submission
and includes properties with redevelopment opportunities.
VA also completed the data call for real property inventory
information as required by the FAST Act. VA looks forward to
continuing work with GSA and OMB on this and future FAST Act
submissions.
To summarize, VA has a complex real estate portfolio and
seeks to maintain an optimal mix of investments to care for our
Nation's veterans. The VA welcomes new or expanded tools,
including the FAST Act, to improve the effectiveness of our
portfolio and where possible reduce waste and save taxpayer
dollars.
Mr. Chairman, Ranking Member, and members of the committee,
this concludes my statement. Thank you for the opportunity to
testify today. I would be happy to respond to any questions you
have.
Mr. Barletta. Thank you for your testimony, Mr. Simms.
Mr. Acklin, you may proceed.
Mr. Acklin. Good morning, Mr. Chairman, Ranking Member
Johnson, and members of the committee. It's an honor to be with
you.
My name is Kevin Acklin. I am chief of staff to Mayor
William Peduto of Pittsburgh. I also chair our Redevelopment
Authority. So I'm the mayor's right arm or left arm, depending
on which side of the aisle you are on on economic development.
For purposes of today, I am just glad I did not stay last
night at the Trump Hotel, I suppose.
So a little bit about the history of Pittsburgh. I am very
proud to be here on behalf of our city. When you think about
where we are as a city today, I grew up in Pittsburgh. I am
actually a third generation worker for the city of Pittsburgh.
Before you call me a political hack, my grandfather was a
battalion chief in the city. My uncle was a fire captain, and
my brother is a cop. So we're a typical Irish Catholic family.
I was supposed to be the priest in the family, but instead went
to law school and was a private equity lawyer; went to Boston;
moved back to Pittsburgh.
And I came back like many Pittsburghers who grew up there
to be part of this economic revolution that we have happening
in Pittsburgh. And when I was a kid, if you think of the year
1979, the Steelers won the Super Bowl. The Pirates won the
World Series, and our economy collapsed. With the increasing
globalization of the steel industry, we lost about one-third of
our workforce, 30 percent unemployment. That is why our
Steelers travel so well. Perhaps in your districts you have
Steeler bars because we lost a whole generation of workers.
But if you think about the legacy of innovation of that
first Industrial Revolution, the titans of industry, the
Carnegies and the Mellons left us a great legacy. They seeded
investments in Carnegie Mellon University. We have a great
foundation community, and that has been the investments upon
which we built this new economy.
That is why we are a leader in autonomous vehicles, where
that technology that started 20 years ago, the smart folks at
Carnegie Mellon were doing robotic vehicles back in the late
1970s and early 1980s, and we are now just at a point where we
are looking to take advantage of that growth.
And we consider ourselves to be stewards of that public
wealth that has been left to us, and we stand on the shoulders
of those legacies and generations of Pittsburghers who came
before us.
So with that, how we approach government in Pittsburgh is
we think about that very creatively in terms of looking at how
we provide services and return of the social compact, taxpayers
paying money for services they receive. One of the first things
we did in this administration was we commissioned a facilities
study. Believe it or not, 4 years ago the city of Pittsburgh
did not even have a comprehensive list of all the facilities
that we owned. We did not know all of the different buildings.
They were siloed in different departments.
So that was the first thing that we did, was take a
comprehensive inventory about that to understand how we can
relocate. Now that we are perhaps the first administration that
is charged with managing growth--prior mayors were charged with
managing decline--how do we best utilize these public assets to
build economic development, to improve the quality of life for
our residents in the city, to invest in affordable housing in
neighborhoods using this vacant and abandoned property that we
have, and to create jobs and economic growth?
And one of the first things that we saw, if you can put up
the first slide, is we had a number of areas in the city, the
blue dots, where we are doing things in the city of Pittsburgh
perhaps, for example, parking garbage trucks every day on very
lucrative, perhaps developable riverfront property in areas of
the city.
[insert slide 1]
[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]
We do not have a comprehensive single place where our
public safety training facility could be located. We have
police officers and firemen come to the city, relocating in
trailers that flood when there is a flood, not the best way to
invite your public servants to put their lives on the line.
So the outcome of this study was to identify, as the
Administrator mentioned, which properties that we own in the
city that we want to convert to a higher and better use, again,
to serve the residents of the city in a better manner and to
build the tax base.
And that is really what brings us to the opportunity with
the VA site. Mr. Chairman, thank you for being with us last
month. I think you saw firsthand the opportunity that we have
here.
The site on the map is at the top right-hand corner, the
green dot. It is a fairly isolated site. The topography of
Pittsburgh, it is high up. It is disconnected from the
neighborhoods. It is 184 acres, about 19 buildings, again,
fairly isolated from other neighborhoods in the city of
Pittsburgh. It is disconnected from the power grid. There is a
plant there that any other use would have to reconnect and
restart that plant.
It is also depreciating rapidly. We started this
conversation in late 2014. It was my first visit as a new
public servant to the site, and you could already see the
decline that has happened just through Mother Nature.
So we would love to convert that declining asset to
productive use. The good news is we have a plan.
[insert slide 2]
[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]
The relocation of those different sites we could unlock for
economic development. We have commissioned a study to
understand how we could put on site there our city fleet, heavy
equipment maintenance, DPW operations. We can build a first-
class public safety training facility, multijurisdictional,
working with the county, surrounding communities to do the
right thing, and we are ready to go.
Again, we also realize that this is sacred ground. This was
the VA hospital for the city of Pittsburgh, where veterans went
and served and came back and were mended.
My own father who served as a Marine during Vietnam
received treatment there. My aunt served for 20 years after her
service in the U.S. Air Force and was a police officer on this
site.
So we as a member of the city of Pittsburgh will be good
stewards of this site to convert it to productive use.
And with that I just want to confirm and appreciate the
staff at the VA and the GSA. You have great people working
here. This is not a people problem. You have a process problem.
The folks that we have worked with have been responsive. They
are smart. They know their business. They are development
oriented, but the redtape that it takes to convert this process
and this property to productive use is standing in the way. It
is costing Federal taxpayers money. It is costing us an
opportunity cost to relocate our facilities to better use that
would benefit the residents of the city of Pittsburgh.
So with that, again, I appreciate the opportunity. I look
forward to working with you, and, Mr. Chairman, thank you for
your support and for your leadership.
Mr. Barletta. Thank you, Mr. Acklin.
And I just have to say I could not help but put my mayor's
hat back on while I was there, and this is a perfect example.
This is a model project where it is a win-win for the
taxpayers.
The taxpayers of Pittsburgh win by selling very valuable
property that can be turned into an economic development
project with more income coming into the city.
The Federal taxpayer benefits by getting rid of 160 acres
of properties that the meter is running on every day. I am sure
it is more than $300,000 since the last time I was there, and
why the FASTA is so important that we dispose of these
properties in a timely manner so that the taxpayers win, and
that is what this is all about. It is all about the taxpayer
dollars.
So thank you. I will now begin the first round of questions
limited to 5 minutes for each Member. If there are any
additional questions following the first round, we will have an
additional round of questions as needed.
I will begin with Mr. Horne. Just in a timely manner here,
yesterday the FBI and GSA officially canceled the FBI
headquarters exchange procurement. While the news was a shock,
I am not surprised that you did it.
In fact, this committee told the previous administration
that exchanging the Hoover Building for a new headquarters was
a mistake and would fail. The decision to pursue an exchange
strategy is what killed this procurement, and the people who
made that decision are gone now.
By structuring the procurement as an exchange, the previous
administration precluded the new headquarters from being built
in phases like the DHS headquarters. Instead, the developer
would have to build the entire facility before the FBI could
move and hand over the Hoover Building as payment to the
developer, and that can only happen with full funding of the
project, which GSA does not have.
But the need for a consolidation of FBI headquarters
remains, and I strongly encourage this administration to pursue
a public-private partnership strategy. I believe a P3 is the
only way to deliver a consolidated headquarters for the FBI.
I believe the administration will have strong bipartisan
support for allowing GSA to use a ground lease leaseback or a
discounted purchase option to acquire a new headquarters. I am
willing to do whatever I can to help GSA get OMB approval to do
this, and I hope that you will pursue such a strategy.
We have the opportunity to fix this project and get it back
on track.
My question is: is GSA willing to pursue options such as
these for acquiring a new consolidated FBI headquarters?
Mr. Horne. Thank you, Mr. Chairman, and thanks for the
opportunity to meet in your office yesterday with your staff. I
enjoyed our conversation about the good work that is happening
at GSA. I enjoyed meeting your staff and especially enjoyed
meeting Riley, your--what is he, a Golden Retriever?
Mr. Barletta. English Golden Retriever.
Mr. Horne. A Golden Retriever. I kind of wish he was here
with me today over on the stand here.
So I also want to take this opportunity for any GSA folks
that are watching the hearing back in the office to say thank
you for your great work. July marks the 68th birthday of the
General Services Administration. So I just wanted to thank the
GSA employees for their great work and wish GSA a happy
birthday.
In terms of the FBI project, you are correct. It really
came down to the structure of the deal plus the lack of funding
equals an inability to move forward, and we are absolutely
committed to working with this committee, the FBI, and with the
Office of Management and Budget on all options moving forward.
There is no doubt that the FBI consolidation is a priority
for this administration and for GSA.
Mr. Barletta. Thank you.
Mr. Acklin, thank you, again, for being here.
The city's approach is a good example of what we want to
see from FASTA, consolidating agency functions, the freed up
properties for economic growth.
What are the next steps on your end as this disposal
process is underway?
Mr. Acklin. Well, thank you, Mr. Chairman.
First of all, we have already budgeted. So the plan that we
have and presented to you today--and I have and I could share
with Members--we have a comprehensive plan. Our budget over the
next 5 years assumes that we will move forward with this site,
again, not even including the increase to the tax base that
will come from that development.
So we are ready to go. I think that there has been
conversation we had as recently as yesterday about the
timeline, understanding that the environmental work needs to be
done, the historical review, the section 106 review, as well as
the community conversation.
The good news is that we are willing to partner with the
Federal Government. There is an opportunity to pilot for this
project to show other cities and other municipalities that this
is a good way that we could collaborate as partners to save
taxpayer dollars both at the Federal and the State and local
level.
Again, my chairmanship of the Redevelopment Authority in
Pittsburgh, this is what we do every day, is converting
otherwise vacant, abandoned, derelict property to productive
use to build out to the vision of a more equitable city. So I
think that in terms of moving forward I do have some steps in
front of me as I understand the conversation between our staff
and the folks at the GSA now that it has been declared vacant
or surplus by the VA.
We had a great meeting a couple of months ago down here in
Washington with the VA and the GSA staff. So we are willing to
partner with them to have an efficient and more expedient
process because, as you mentioned, this is something that we
are all paying for right now, and moving forward, we are
committed to be partners.
Mr. Barletta. How closely has the city worked with VA and
GSA?
Mr. Acklin. Fairly closely. So this probably over the last
couple of years, again, going through the VA process of
declaring it surplus, there is a time period. There is a sense
of duplication, that some of the work that was done by the VA
has to be done again by the GSA, but again, all I can say is
that the staff is very professional, very action oriented to
dispose of this property, if so inclined, if this ends up being
a good deal for the Federal Government like we think it is.
And so my understanding is hopefully by early next year
that review will be completed, and if there is anything that we
can do on the local level to assume the risk of that
completion, we are willing and able to do it.
This is a good deal. If this was a private-sector deal, it
would be done already. You know, this is a good deal for the
Federal Government. It is a good deal for the city. Again, I
was a mergers and acquisitions lawyer before I took this job,
because of my love for the city of Pittsburgh. That is the type
of approach that we take.
We are talking about public money here. Public money is
just as green as private money, and we are spending public
money because we have a vacant and abandoned site, and we are
spending public money in Pittsburgh because we have sites that
could be put to more productive use.
In fact, I would say it is greener than private money
because every dollar we spend to maintain a vacant or abandoned
property is one fewer dollar that I can put into a police
officer's pocket who puts his life on the line every day, one
fewer dollar that I can put into affordable housing when we are
threatened with maybe the tax cuts to LIHTC [Low-Income Housing
Tax Credit] that we are facing for affordable housing down here
in Washington.
So, again, when you have an opportunity to do the right
thing, and again, Mr. Chairman, as the former mayor of
Hazleton, I think you understood it. Mayors are on the front
line of the issues here in the country, and it is a global
issue right now. We are closest to the people, and we are
willing to take on the risk to make this deal happen as soon as
possible.
Mr. Barletta. And I also realize when these buildings are
empty, when they start getting to third and fourth year that
they are empty is when the real danger comes because then the
roof starts leaking and water gets in, and then the properties
are worthless.
So the focus of this hearing is really to talk about FASTA
and why it is so important that we have a process to dispose of
these properties to protect the taxpayers.
I would now like to recognize Ranking Member Johnson for 5
minutes.
Mr. Johnson of Georgia. Thank you, Mr. Chairman.
I would want to not yield to Mr. DeFazio, but to allow him
to use his 5 minutes first and then it would come back to me if
that is fine with the chair.
Mr. Barletta. You may proceed.
Mr. DeFazio. Thank you. I thank the ranking member. I thank
the chairman.
``No member or delegate to Congress, or elected official of
the Government of the United States or the Government of the
District of Columbia, shall be admitted to any share or part of
this Lease, or to any benefit that may arise therefrom.''
Mr. Horne, is the President of the United States an elected
official of the Government of the United States? Yes or no? It
is simple.
Mr. Horne. Yes.
Mr. DeFazio. Good. Thank you.
So has there ever been to your knowledge a similar
situation where a President has been a signatory of a major
lease with the GSA?
Mr. Horne. No.
Mr. DeFazio. OK. So we can say this is an issue of first
impression then essentially in terms of legal interpretation?
Mr. Horne. Yes, I suppose.
Mr. DeFazio. Yes. It is unprecedented.
OK. So how is it then that this contracting officer, Kevin
Terry, 3 days after the election can send an email to the Trump
Organization, name redacted, either the son or the daughter,
saying, quote, ``that this is a fair amount of nonsense,'' that
people are questioning whether or not the President is in
violation of a lease when it says no elected official shall
benefit?
How could that be?
Mr. Horne. So thank you for the question.
We have had a busy couple of weeks at GSA, and last week I
was----
Mr. DeFazio. No, let's do this real simple. I do not want a
filibuster here.
Do you think that it was proper for the contracting officer
in an issue of first impression involving the newly elected
President of the United States when you have a clear lease
section that says no elected official of the Government of the
United States shall benefit, to say this is nonsense?
And what was the legal basis?
Is that the way your people work? I mean, do you consider
him to be not prejudiced? Why should he not be recused or
removed from that position?
He says no one has ever had to confront this before. It is
nonsense. Yet he ultimately becomes the arbiter, and there are
a few other suspicious things. Mr. Dong is appointed head of
GSA at 12:15. He is removed at 7:15. You are appointed.
Then he is the head of Public Buildings Service. Strangely
enough, he had nothing to do with this, the highest profile
lease in the history of the agency and a totally unprecedented
issue of first impression, and yet he had nothing to do with
it, and then suddenly he is detailed out to a nonprofit.
This all kind of stinks. So let's go back to Mr. Terry. Why
was he not removed since he prejudiced himself by saying
``Constitutional scholars, legal counsel, I do not need any of
that. This is nonsense. Hey, let's go out and have a cup of
coffee. I want to tell you about my trip to upstate New York''?
Do you consider that professional conduct? And do you think
that that person was capable of dispassionately making such an
extraordinarily critical decision?
Mr. Horne. So I have read the Bloomberg article that you
are referring to. When I read the article, I said, ``Boy, I
wish he would not have said it that way.''
And, frankly, my first selfish thought was, ``Boy, I am
going to have to testify next week and I am going to be asked
about this.'' But I quickly reminded myself that I am the
acting head of a 12,000-person agency responsible----
Mr. DeFazio. But, again, is this professional conduct to
say this is nonsense? Why at that point would you not say,
``How could you make a dispassionate ruling?''
Did you ask him? Why did he say it was nonsense and who did
he go have coffee with? Did he tell you?
Mr. Horne. I wish he would not have said it that way. I
wish he would have been----
Mr. DeFazio. Did he tell you who he went to have or wanted
to have coffee with? Was it Ivanka or Donald, Jr.?
Mr. Horne. I wish he would have been more clear in the
email. When it came to my attention, I knew that we had to look
into it more and find out the context of what was meant by that
email.
Mr. DeFazio. OK.
Mr. Horne. I asked our Deputy Commissioner of Public
Buildings to take a look into the situation, to provide me with
or to seek out the context from the email.
Mr. DeFazio. OK. Thank you. That is good.
If I can reclaim my time, this is nonsense. Yet he is going
to then ultimately render decisions. His ultimate decision is
because they created yet another shell and the President will
not get paid today, he will get a hamburger on Monday, you
know, that he is not benefitting from this.
You can pay down the debt. You can enhance the asset, which
he owns the majority interest. He is not benefitting. He is not
admitted or sharing in this lease or any benefit that may arise
therefrom.
Can you really justify that and say there is no benefit to
an individual who ultimately is going to benefit? If he just
does not benefit today, he might benefit tomorrow, next week or
whenever he is not President again?
Mr. Horne. So my job as the Administrator is to create an
environment where contracting officers can make decisions,
business decisions, free from political or senior leadership
influence.
Mr. DeFazio. And legal advice?
Mr. Horne. Kevin Terry worked closely with our Office of
General Counsel.
Mr. DeFazio. Could we have the legal documents that were
provided to Mr. Terry to justify this ruling, please?
We have asked for those. They have not been provided.
Mr. Horne. We will continue to work with the committee.
Mr. DeFazio. So you will not provide those documents? We
have not seen the documents. You will not provide them?
Mr. Horne. We will continue to work with the committee on--
--
Mr. DeFazio. Mr. Chairman, you are the committee. I am not
the committee. So, Mr. Chairman, would you like to request
those documents?
He said he will work with us.
Mr. Barletta. We will work with him on this.
Mr. DeFazio. Well, does ``work'' mean we will request?
Mr. Barletta. I will consider it.
Mr. DeFazio. OK. Thank you, Mr. Chairman.
Mr. Barletta. Thank you, Mr. DeFazio.
Let's be clear. There is no breach of contract. The
determination of a breach is made by the contracting officer.
In this case, he determined there is no breach of contract, and
this is reasonable.
I submit for the record an article by Professor Andy Grewal
published in the Yale Journal on Regulation blog concluding the
decision by the contracting officer is reasonable.
The plain language of the contract itself demonstrates his
decision was reasonable. It says that no elected official shall
be admitted to any share or benefit. It does not prohibit a
party from becoming an elected official after he is admitted to
the contract.
Now, we can disagree about the interpretation, but the
fundamental question is whether the decision was a reasonable
one, and I think the record shows that it was.
I would like to recognize Representative Denham, who was
responsible for leading and getting the FASTA across the finish
line, which will benefit the American people for a long time to
come.
So, Mr. Denham, you have 5 minutes.
Mr. Denham. Thank you, Mr. Chairman, and thank you for
holding a hearing on this very important issue and this very
bipartisan bill.
It was signed into law last December, something that we
worked on for over 5 years to not only get it signed into law,
but now making sure its implementation goes through very, very
quickly.
The Federal Government manages over 267,000 buildings,
comprising 2.8 billion square feet of space, and the GAO has
consistently said that the Federal Government just does not do
a very good job of managing those properties. In fact, early
on, we had to embarrass agencies on the Old Post Office, first
of all, then the Georgetown Heating Plant, Federal courthouses
across the country, areas that have been sitting vacant for
years, if not decades, costing us millions of dollars every
single year in maintenance and upkeep.
We can do a much better job reducing cost, but also coming
up with funds that will help us to reduce our debt and move our
priorities forward.
But getting FASTA implemented is key. You know, this is a
new tool that will get rid of burdensome reviews and make sure
that we are waiving a lot of the disposal process and making
sure that we streamline the process as well.
These tools provide a great opportunity for the Federal
Government and the taxpayer, but first the Public Buildings
Reform Board must be established. A nonpartisan and
professional Board is integral to identifying not only the
waste, but a lot of the unneeded properties and help us to move
those forward.
I am glad to see that the administration as well as the
Appropriations Committee have both recognized from the budget
perspective that we have got to allocate money to establish the
Board, but we have got to get this Board up and running very,
very quickly.
While the resources will be important next year, there are
actions that can occur right now that will benefit FASTA. We
have got to leverage existing authority for public-private
partnerships and innovative ways like ground lease, leaseback,
and discount purchase options.
The potential to save billions of dollars is real, but the
window to implement FASTA has to be precise. It will take a
coordinated effort to achieve the goals of housing more Federal
employees in less space, reducing our reliance on costly lease
space, and selling high-value assets that are too valuable for
housing Federal employees.
So I am proud that we have worked on a bipartisan level.
Chairman, thank you very much for not only your partnership on
this, but helping us to get this across the finish line. Now
the important piece is getting it implemented and disposing,
liquidating these properties that are costing us millions of
dollars every single year.
I have got time for just a couple of quick questions. Mr.
Horne, in June I wrote a letter to OMB requesting assistance
with structuring the Board this year and the importance of
doing so. Appointment of the Board triggers a 180-day deadline
for board recommendations to OMB and GSA.
A concern that I raised in the letter is the Board is
appointed, but commercial real estate consultation is
unavailable because salaries and expenses have not been
provided.
What is GSA doing to make its own resources available to
the Board so we can move quickly?
Mr. Horne. Thank you for the question.
Obviously, we very much appreciate the legislation. We
think it is a terrific way to help better manage underutilized
properties.
While we are waiting for the Board, we have collected all
of the data. We have a list of 82 projects from 14 agencies,
many from GSA and from VA. We are working with following up
with agencies who submitted information to resolve questions
and concerns and will have the information 100 percent ready
for the Board when they are established.
Mr. Denham. Thank you.
Oftentimes, due to budgetary scoring rules, GSA undergoes
successive operating leases, also resulting in paying for
properties multiple times their value over the long run. If the
Federal Government were to buy the property, the total cost
would need to be provided upfront.
Under an operating lease, only the value of 1 year of the
lease needs to be provided in accordance with the current
scoring rules. If GSA could utilize public-private partnerships
like ground lease, leasebacks without needing to provide the
total project cost upfront, would GSA be interested in pursuing
such opportunities?
Mr. Horne. We would. We would very much be interested in
working with the committee and with OMB to pursue those
opportunities.
Mr. Denham. And could that also prevent GSA from paying for
the properties beyond their total value and yield taxpayer
savings?
Mr. Horne. It would.
Mr. Denham. Thank you.
Mr. Chairman, I yield back.
Mr. Barletta. Thank you, Mr. Denham, and thank you for your
work.
The Chair now recognizes Ranking Member Johnson for 5
minutes.
Mr. Johnson of Georgia. Thank you, Mr. Chairman.
Mr. Horne, are you aware that article 1, section 9, clause
8 of the Constitution expressly forbids a Federal office holder
from receiving things of value from foreign governments without
the consent of Congress?
Mr. Horne. Yes.
Mr. Johnson of Georgia. And you are aware that the
Emoluments Clause, which is that clause, protects against
foreign governments and other foreign powers being able to
exert undue influence over federally elected officials,
including the President of the United States?
Mr. Horne. I am not an expert on the Emoluments Clause, but
it sounds like that is what it does.
Mr. Johnson of Georgia. All right. And section 37.19 of the
GSA lease with Donald Trump's Old Post Office LLC, is a
standard and material term included in every GSA lease
agreement and is included to protect the public interest and to
protect against and to prohibit Emoluments Clause violations by
the lessee; is that not correct?
Mr. Horne. I am not familiar. You read the numbers of the
clause. What is the clause that you are referring to?
Mr. Johnson of Georgia. Yes, that is the clause that says
``no member or delegate to Congress, or elected official of the
Government of the United States or the Government of the
District of Columbia . . . '' That is the one that you agreed
with Mr. DeFazio about, the clause that he read to you.
That is a standard clause in lease agreements, is it not?
Mr. Horne. It is my understanding that the clause has been
used before in outlease contracts.
Mr. Johnson of Georgia. And it is in there to protect
against lessees being able to accept foreign gifts without
approval of Congress, and it requires that the public official
divest themselves of any interest in the lease if they should
become a federally elected official or a District of Columbia
elected official, correct?
Mr. Horne. It is my understanding that the clause is used
in some outlease contracts, which is the case like the Old Post
Office.
Mr. Johnson of Georgia. OK.
Mr. Horne. Not our standard leases where we lease property.
Mr. Johnson of Georgia. So OK. Are you aware of a meeting
on December 8th, 2016, between then-Deputy Public Buildings
Service Commissioner and now Acting Public Buildings Service
Commissioner Michael Gelber and the Democratic staff of this
committee wherein the Deputy Commissioner gave an initial
assessment that President Trump would be in breach of the lease
agreement when he became President unless he fully divested
himself of all financial interest in the Trump Old Post Office
lease?
Are you familiar with that meeting?
Mr. Horne. That was before I was Acting Administrator and
have not talked to Mr. Gelber about that.
Mr. Johnson of Georgia. Are you familiar with the GSA
Public Buildings Service Leasing Desk Guide?
Mr. Horne. I could not quote chapter and verse, but I know
that it exists.
Mr. Johnson of Georgia. But that guide provides some best
practices for the management of GSA leases, correct?
Mr. Horne. Again, I need to distinguish between an
outlease----
Mr. Johnson of Georgia. Well, no. I am asking. It gives
best practices.
Mr. Horne. OK.
Mr. Johnson of Georgia. And one of the best practices is
that if a potential breach of the lease occurs, then you would
send the tenant a notice to cure letter; is that correct?
Mr. Horne. Sure.
Mr. Johnson of Georgia. And no notice to cure letter ever
went out to President Trump or any of his children, correct?
Mr. Horne. In the----
Mr. Johnson of Georgia. There was no notice to cure letter
that was ever sent out; yes or no?
Mr. Horne. The contracting officer made the determination
that the tenant was in compliance with the lease.
Mr. Johnson of Georgia. But there was no notice to cure
letter that went out.
Mr. Horne. There was no reason for a cure letter.
Mr. Johnson of Georgia. OK. That was because President
Trump anticipated that he might have a problem with the
Emoluments Clause under the lease. So he took it upon himself
to set up what has been described as a shell operation, to
remove his interest to another corporation and on down the
line, correct?
Mr. Horne. I am not going to speculate on the structure of
the limited liability company.
Mr. Johnson of Georgia. His interest was restructured, and
based on the restructure, that is what led Mr. Kevin Terry to
opine that under the new setup Trump was not in violation of
the lease and did not have to divest himself; is that correct?
Mr. Horne. The contracting officer made the determination
that the tenant remains in full compliance with the terms of
the agreement.
Mr. Johnson of Georgia. That contracting officer is not a
lawyer, correct?
Mr. Horne. I do not know if he is a lawyer or not.
Mr. Johnson of Georgia. Well, let me ask you this question.
Are you familiar with the fact that this lease has never been
submitted to GSA's Office of General Counsel or to the
Department of Justice or the Office of Government Ethics or to
any other legal office for an official legal opinion?
Mr. Horne. I can tell you that the lawyers at GSA have
spent a tremendous amount of time----
Mr. Johnson of Georgia. There has been no legal opinion
rendered by the Office of GSA Counsel, correct?
Mr. Horne. I do not know if they have issued a legal
opinion.
Mr. Johnson of Georgia. You are the Acting Director, and
you are not familiar with whether or not there has been a legal
opinion?
Mr. Horne. I am familiar with the fact that the contracting
officer, along with the guidance of the Office of General
Counsel, has determined that the tenant----
Mr. Johnson of Georgia. OK. Well, you have answered that
question, and we know that. You have answered that question.
Now, Kevin Terry's decision that there was no Emoluments
Clause violation provides no rationale or legal justification
in support of the decision, other than the exhibits and legal
arguments provided to him by President Trump's personal
lawyers; is that not correct?
Mr. Horne. GSA's role is to determine compliance with the
terms and conditions of----
Mr. Johnson of Georgia. Sir, if you will, answer my
question.
Mr. Horne [continuing]. The lease. GSA's role is not to
determine compliance with the Emoluments Clause in the
Constitution.
Mr. Johnson of Georgia. OK.
Mr. Horne. Its role is to determine compliance with the
terms and conditions of the lease.
Mr. Johnson of Georgia. Well, who is in the best position
to make that determination? Would it be a contracting officer
who is a non-lawyer or would it be the Office of General
Counsel of GSA?
Mr. Horne. The Office of General Counsel at GSA does not
make decisions. Contracting officers make decisions.
Mr. Johnson of Georgia. It gives opinions though, legal
opinions, correct?
Mr. Horne. Makes decisions based on legal advice from the
Office of General Counsel.
Mr. Johnson of Georgia. And no decision by the Office of
General Counsel underlaid Kevin Terry's opinion letter.
Mr. Horne. I respectfully disagree.
Mr. Johnson of Georgia. Do you have a copy of the opinion
letter from the GSA Office of General Counsel?
Mr. Barletta. The gentleman's time is up. We will entertain
a second round of questions.
Mr. Johnson of Georgia. I will yield back then.
Mr. Barletta. Thank you, Mr. Johnson.
The President is not the first businessman who has become
President. In fact, a number of our Founding Fathers, including
George Washington, Thomas Jefferson, and James Madison, not
only held businesses, but ran them as President.
Were all of these Presidents in violation of the very
Constitution that they helped to draft?
I want to submit for the record two articles of legal
studies, a paper written by Andy S. Grewal, professor at the
University of Iowa, College of Law, and a Harvard Journal of
Law and Public Policy article by Seth Tillman.
Thank you.
The Chair now recognizes Mr. Ferguson for 5 minutes.
Mr. Denham. Mr. Chairman, can I ask for a point of inquiry?
Mr. Barletta. Yes.
Mr. Denham. Being familiar with this lease, when President
Obama agreed to this lease and Dan Tangherlini announced to
this committee that it was going to be done, did they not do an
inquiry?
Can we request what inquiries were done out of the previous
administration when they signed this lease?
Mr. Nadler. Would the gentleman yield? Would the gentleman
yield for a question?
Mr. Denham. I don't think I control time right now.
Mr. Barletta. No. I recognize Mr. Ferguson for 5 minutes.
Mr. Ferguson. Thank you, Mr. Chairman.
And, gentlemen, thank you for taking time to be here today.
Mr. Acklin, thank you for your work in Pittsburgh with the
redevelopment. I was a mayor before wading up into all of this,
and I will tell you that some of the most rewarding work that
you can ever do in a community is to redevelop areas that have
fallen on hard times or that have historically lacked strategic
investments either from the private sector or the public
sector.
I do think that it is vitally important where we have
underutilized or unused public assets to be able to find ways
to put those into productive use for communities, whether it is
for the sale of those properties. In a lot of cases what we
were able to do is to do long-term leases that not only
satisfied the question about who maintains ownership of the
property and will it continue to be used for its ultimate
purpose, but also it created long-term revenue streams back
into our community to further the redevelopment plan.
Do you have any experience in that type of model?
Mr. Acklin. Yes, sir. Thank you, Mr. Ferguson.
In fact, the work that resulted in the presentation that I
showed today about the vacant and abandoned properties in the
city, we have taken a comprehensive view. When you have a city
like Pittsburgh that in 1960 housed over 600,000 people and
today is just over half of that, it has been overbuilt. We have
a lot of aging infrastructure. We have a combined sewer
overflow problem. Every time it rains in the city, raw sewage
pours into our rivers.
We are actually in negotiations right now with friends down
the hall in the DEP and the DOJ to try to get a consent decree
done.
So when we think about property in the city, public
property, there are sort of three lanes that we talk about. We
talk about economic development, properties that are ripe for
development based on a market analysis. For example, some of
those blue dots along the Allegheny River to the north, that is
called the Strip District. So 30 years ago, that is where
produce came to the city on rails, and it is a very organic,
vibrant place that we are trying to recreate.
You have got a lot of housing happening there. So you have
this organic conversion from industrial to housing. So it made
sense 30 years ago to park garbage trucks there. It no longer
does.
That lane of for-profit redevelopment to rebuild the tax
base is a lane. Dealing with green infrastructure to deal with
the water issue is another lane, and then sort of land bank,
stockpiling property to hold for the future for community
development for affordable housing and rebuilding neighborhoods
to guard against gentrification and provide for affordability.
So this is a comprehensive plan. This is but one piece of
what we have been doing for the last 4 years.
Mr. Ferguson. Along those same lines, one of the things
that we found, and you may be able to speak to this as well at
the local level, you know, sometimes up here, and I have seen
this in the short period that I have been up here, we tend to
think that we can solve all of the problems from Washington.
Really what we are able to do at the local level and what
communities can do is they can create a tremendous amount of
economic activity by using these resources that then also
provide a tremendous amount of revenue that flows back into the
school systems and various infrastructure projects. So I think
it is important.
So the other piece is a lot of this stuff focuses on urban
areas, but there is also a lot of land outside of our
communities, whether it is property that is around Corps of
Engineer owned lakes that could be developed.
Can you see a scenario where, and maybe, Mr. Horne, you
could address this one; can you see a scenario where GSA can
enter into long-term leases with local development authorities
or enter into it with the State and then local development
authority where some of these Federal properties could be
leased long term to create those long-term revenue streams back
to the Federal Government?
Mr. Horne. That is an interesting question, one that I had
not considered, and we would be happy to go back and follow up.
I do know that it is a priority for us to move vacant
properties off the inventory and transfer them in opportunities
like this via a public benefit conveyance to local
municipalities, and so far that is the best tool in our
toolbox, to make that progress.
Mr. Ferguson. Mr. Chairman, I yield back. Thank you.
Mr. Barletta. Thank you.
The Chair now recognizes Ms. Norton for 5 minutes.
Ms. Norton. Thank you very much, Mr. Chairman.
I appreciate this hearing for several reasons, in part
because I believe this is the first opportunity that the
committee has had to do any oversight of the GSA, particularly
given the controversies that are surrounding the agency at this
time.
Mr. Horne, I recognize you are a civil servant, but you are
who the administration has given us for this hearing. Thus, I
believe that the questions of my colleagues are entirely
appropriate.
These are public interest questions, but they are
particularly important for oversight of a GSA property, a
property still owned by the United States of America.
Now, recognizing that you are not the appointed head of
GSA, I am going to try to ask questions that I think anyone in
the agency today should be able to answer.
I am interested in protecting the interests of the United
States in what appears to be the profitability of the Trump
Hotel. It was my bill that resulted in the renovation of the
Old Post Office for the Trump Hotel in the first place.
It was during the Obama administration that that contract
was competitively let. I have no reason to believe that Mr.
Trump did not win it fair and square. He had to put up millions
of dollars to renovate that hotel. The importance of it for
this committee is that the profits must be shared with the
United States itself.
Unlike other properties that we typically authorize, 3
percent of the profits for the first 10 years must go to the
people of the United States, and it does appear that the
Government was correct in leasing this property. We were
spending $12 million just to keep it up. It is a priceless
property.
And it does appear to be profitable. We know from the
financial disclosure statements of the President, that he
received $20 million in income from the Trump Hotel. We know
that Ivanka Trump, who is a White House aide, received $1.5
million.
What I want to know is what the United States received. Has
the GSA received its share of profits from the hotel thus far?
Mr. Horne. Thank you for the question.
And I just want to affirm that we are, in fact, committed
to transparency.
Ms. Norton. Look. Everybody's time is limited here. Has the
GSA received its 3 percent?
Mr. Horne. It is my understanding that the terms and
conditions of the lease require a report at the conclusion of
the first year of the operation of the hotel, and that is what
would trigger the profit sharing, if you will, for lack of a
better term.
Ms. Norton. All right. We are past the first year.
Mr. Horne. The hotel opened in October.
Ms. Norton. So you are saying that you are waiting to see
whether or not you received. We already know that, of course,
the family has received profits.
Your report has not been issued because it is not a full
year.
Mr. Horne. Right.
Ms. Norton. Do you know whether or not the GSA has received
profits at all from the Trump Hotel?
Mr. Horne. We received $250,000 a month payment, and then
the lease requires----
Ms. Norton. So it has received $250,000 each month?
Mr. Horne. Yes.
Ms. Norton. Why has GSA not shared the monthly financial
reports? You are required to have monthly financial reports.
The deal was structured for transparency so that the people of
the United States would know that they were getting their money
out of it.
So if there are monthly financial reports, why can we not
receive the financial reports for each month?
Mr. Horne. It is my understanding that the reporting
requirement is after a year, not on a monthly basis.
Ms. Norton. Have you been receiving them on a monthly
basis?
Mr. Horne. I am not aware of monthly reports that----
Ms. Norton. Well, let me just say this for the record. You
do not have a deal that says you must receive monthly reports
and not make those reports available to the public and to the
Congress of the United States. So if they have been received,
you can at least tell us that you are receiving these monthly
reports.
Mr. Horne. If we have, I will be happy to follow up and
answer that question.
Ms. Norton. You know that those are required by the lease,
and I wish you would, indeed, follow up and submit that
information to the chairman.
Mr. Horne. Sure.
Ms. Norton. I also know that you have been put in a
position where the Department of Justice has issued a legal
opinion stating that the ranking minority member--this is the
first time, I think, in the history of the Congress--does not
have the authority to conduct oversight and, therefore, unlike
my experience with this committee where the ranking member
could always get documents, that has not been the case here.
Have you been directed not to provide documents to minority
members, including the minority member of this committee?
Mr. Horne. I have not been directed to not provide any
specific documents; I have been given an overall general policy
of the administration that for matters of oversight, that those
requests need to come from the chair.
I will add that our staff meets frequently with the staff
from this committee. We are in constant communication. Not
every inquiry requires a formal letter. Sometimes it is a phone
call; sometimes it is an email.
You know, I sit down the hall from those guys and see them
getting in an Uber all the time to come up here and talk. So I
know that there is communication back and forth between our
Office of Congressional Affairs and this committee.
Mr. Barletta. The gentlewoman's time has expired.
We will move on to our next Representative. Mr. Mast, you
have 5 minutes.
Mr. Mast. Thank you, Chairman.
And thank you all for your testimony here this morning. It
has been great to hear it.
Mr. Horne, specifically in your testimony you have
highlighted a lot of the importance of going out there working
with local communities. You spoke about it in terms of the
local community of Cambridge, the work that the DOT has done
there, and I wanted to touch a little bit on that.
You know, I think this has helped to really significantly
lower risk and increase value. This has been something that has
been spoken about. So could you speak a little bit about the
importance for GSA to work with those kinds of local officials
to maximize the value of property that it plans to sell?
And then also if you can find space in there, I would love
to hear a little bit of speculation from you on if there has
been work specifically done to go out there and lend a hand to
our federally qualified community health centers that are out
there doing work who are constantly looking for space to go out
there and meet some of those healthcare challenges and if you
see a road to work with them.
Mr. Horne. OK. Thank you. Thank you for the question.
You know, one of the great parts of the mission of GSA is
the opportunity to have impact on local communities. We are
here today to talk about a real chance to make an impact on the
city of Pittsburgh through a property disposal, but also the
Federal presence is the anchor of just about every downtown
major city in the country.
So we take that responsibility very seriously. We have a
local presence in every major market and most submarkets where
we have GSA representatives on the ground in that city. Part of
their basic job description is to be a good neighbor and
understand the impact that the Federal presence has there.
In terms of the disposal process and how that can
positively impact the local communities, one of the authorities
under the Property Act is the idea of a public benefit
conveyance. So it is really a local entity like the city of
Pittsburgh and perhaps community health organizations. I do not
know enough about the rules of what would qualify an
organization for a public benefit conveyance, but it is really
the mechanism where a community for public good, whether it be
like what is happening in the city of Pittsburgh, whether it is
for a fire station, sometimes for redevelopment, where they get
priority before it goes to public sale, and the process allows
for us to do that.
We have done several public benefit conveyances all across
the country.
Mr. Mast. Thank you for that.
And, Chairman, I yield back.
Mr. Barletta. Thank you.
The Chair recognizes Mr. Nadler for 5 minutes.
Mr. Nadler. Thank you, Mr. Chairman.
I just want to before I start my questioning ask if I
understood Mr. Horne to reply to Ms. Norton that you would
respond only to requests from the chairman and, therefore, not
to requests from any other member of the committee?
Mr. Horne. The administration's policy is to respond on
matters of oversight, to respond to requests from the----
Mr. Nadler. Only from the chairman. I do not have time. So
your answer is yes, only to the chairman, nobody else.
Mr. Horne. Only to the committee, yes.
Mr. Nadler. To ignore everybody else on the committee. Not
the committee; to the chairman. Only if a request comes from
the chairman, correct?
Mr. Horne. Yes.
Mr. Nadler. Thank you.
Let me just say that that is obnoxious and unprecedented. I
understand you did not set it. It is an obnoxious and
unprecedented contempt for Congress which is intolerable.
Mr. Horne, at a January press conference the President
promised to track profits received by his hotels from foreign
governments and to donate those profits to charity or to the
U.S. Treasury.
In May in response to a bipartisan request from the
Oversight Committee, the Trump Organization stated it was,
quote, ``impractical,'' unquote, to, quote, ``fully and
completely identify all patronage,'' unquote, at its hotels.
Now, Mr. Horne, do you have any reason to believe that the
President and his company, that is, his private company, are
following through on his January promise to track and donate
all foreign monies received by his hotels?
Mr. Horne. My role is to make sure that the agency is
administering the lease, and as far as I know that clause is
not in the lease.
Mr. Nadler. So your answer is you do not know.
Mr. Horne. I don't know.
Mr. Nadler. OK. Thank you.
Has GSA sought to amend the lease or otherwise enter into
an agreement to require the Trump Organization to track
payments by foreign governments?
Mr. Horne. No.
Mr. Nadler. It has not.
Mr. Horne. Not to my knowledge.
Mr. Nadler. OK. Have you contacted the Department of
Justice or the Office of Government Ethics and asked for
assistance or direction on evaluating whether the Trump
Organization is violating the Foreign Emoluments Clause of the
U.S. Constitution by not tracking these payments by foreign
governments?
Mr. Horne. Again, our role is to administer the lease. We
will leave judgment about emoluments to----
Mr. Nadler. But in administering the lease, you have to
determine presumably whether you are administering something
legally. You cannot simply ignore it.
Mr. Horne. As I have stated, the contracting officer has
made the determination that the tenant is in full compliance
with the lease.
Mr. Nadler. OK. Now, the Foreign Emoluments Clause that has
been mentioned before applies not just to the present Members
of Congress, but to anyone holding an office of profit or trust
under the United States.
Are any other GSA properties leased by an elected official,
officer or employee of the Federal Government?
Mr. Horne. I do not know the answer.
Mr. Nadler. Do you make any attempt to find out?
Mr. Horne. I would be happy to look into it and follow up.
Mr. Nadler. No, no. But do you make any attempt?
Is it a normal practice to try to find out when someone
signs a lease or are you ignoring that provision of the
Constitution? Which is it?
Mr. Horne. It would be a normal practice for the
contracting officer who makes the decision about lease award to
make sure that the awardee was in compliance with the lease.
Mr. Nadler. But you do not know if that includes looking
into whether the lessee is an employee of the U.S. Government?
Mr. Horne. To the degree that that is a term and condition
of the lease, then----
Mr. Nadler. No, it is not a term and condition of the
lease. It is a term and condition of the Constitution.
Mr. Horne. Again, GSA's role is to determine compliance
with the lease and applicable laws.
Mr. Nadler. And the Constitution is not applicable?
Mr. Horne. Of course it is.
Mr. Nadler. OK. So it would seem that it would be incumbent
on you to look into that in every case, or at least to ask
about it.
Mr. Horne. Well, again, you know, we have 12,000 employees
that make these decisions all across the country. It is their
role to look into it.
Mr. Nadler. OK. And you have no policy.
Mr. Horne. It is my job to oversee----
Mr. Nadler. And you have no policy to obey the law.
Do any other GSA properties help to facilitate payments
from foreign governments to federally elected office holders?
Mr. Horne. Please repeat the question.
Mr. Nadler. Do any other GSA properties help to facilitate
payments from foreign governments to federally elected office
holders?
Mr. Horne. I am not aware of any.
Mr. Nadler. OK. Between October 1st and March 31st,
lobbyists working on behalf of the Kingdom of Saudi Arabia
spent $270,000 on rooms, catering, and parking at the Trump
Hotel.
In December of last year, Bahraini diplomats moved the
country's National Day festivities to the hotel's ballroom.
In February, Kuwait moved its annual gala from the Four
Seasons to Trump International.
Is it appropriate for the GSA to maintain a lease that
allows foreign governments to make payments as I have just
mentioned in each case that directly benefit a Government
official, in this case the President of the United States?
Mr. Horne. Sir, we manage the terms and conditions of the
lease. The contracting officer has determined that the tenant
is in compliance with the lease. We do not manage day-to-day
operations. Our job is to administer the lease. We do not get
involved in day-to-day operations of the hotel.
Mr. Nadler. But your Legal Department has made no
determination one way or the other whether payments from
foreign governments to an entity leased from the GSA by a
Government official, in this case the President of the United
States, constitutes a violation of the Emoluments Clause or
not. You are simply agnostic on that point.
Mr. Horne. Our Legal Department supported the contracting
officer while he made his decision----
Mr. Nadler. Has it made an opinion on that?
Mr. Horne [continuing]. That the tenant is in full
compliance with the terms and conditions----
Mr. Nadler. Has it made an opinion on it that we can have?
Mr. Horne [continuing]. Of the lease.
Mr. Nadler. Has it made an opinion on that? That is my
question.
Mr. Horne. Our Office of Legal Counsel supports the
contracting officer.
Mr. Nadler. Has it made an opinion?
Mr. Barletta. The gentleman's time has----
Mr. Nadler. No, no. But he has got to answer the question.
Mr. Barletta. The gentleman's time has expired.
Mr. Nadler. You have got to answer the question.
Mr. Barletta. The gentleman's time has expired.
Mr. Nadler. But he should be----
Mr. Barletta. The gentleman's time has expired.
Mr. Nadler. But he should answer the question.
Mr. Barletta. Your question was asked after the time has
expired.
Mr. Nadler. No, it was not.
Mr. Barletta. We will have a second round.
There are three basic issues: one, the contract only
restricts an elected official from entering the contract. There
is no breach.
Two, there are no conflicts. The President is exempted by
law.
And, three, there are respected legal experts who say there
is no constitutional problem.
The Chair now recognizes Mrs. Comstock for 5 minutes.
Mrs. Comstock. Thank you, Mr. Chairman.
And as I am actually chairing another hearing right now
that I am going to have to get back to, my apologies for not
being here and maybe not being all up to date on what everyone
is talking about here in the hearing.
But I am from Virginia--obviously--my district is adjacent
to the Springfield area that was in contention for this, and it
is my understanding that legislation enacted before I came to
Congress in 2015 had directed GSA to go about this in a way in
which they were never supposed to be really having to request
direct appropriations for this project or at least as much as
they needed.
So I am wondering. Didn't the FBI propose a public-private
partnership so that they could take the valuable asset that
they have in DC and be able to use that?
I mean, obviously, when you buy a new house you use your
old house as collateral to be able to buy the new one, and so
why wasn't that normal process followed?
Mr. Horne. It is my understanding in looking into this
process that at the beginning of the FBI project, multiple
options for the way to structure a way forward were considered.
I believe that things like seeking full funding, public-private
partnerships, doing the exchange authority were all considered,
and the decision was made at the time to move forward with the
deal as previously structured where the Hoover Building would
be part of an exchange that would bridge the funding gap.
I do not know exactly why it was structured the way that it
was, but I do know that everyone felt that it was unlikely that
we would receive the full appropriation and needed to seek ways
to bridge that funding gap.
Mrs. Comstock. And I believe the chairman may have been
addressing this before, and I hope going forward because I
think what we need for the FBI is to have a fully functioning
operation. It is certainly my view that it should be in
Virginia, but I know others prefer Maryland, but we need to
have something that is sufficient and upgraded and going to
serve the FBI and its important mission.
I know we have a lot of blame game here, but can we now go
back to what the original legislation was intended to do and
look at these public-private partnerships so that we can
salvage this and get back on track with this and hopefully not
have too much of a delay in finding that?
Is that something that you would participate in?
Mr. Horne. Absolutely, the FBI is a critical project on a
variety of fronts. Aside from the money that it will save from
consolidating FBI functions, from expensive leases, the most
important part is supporting the mission of the FBI.
It is absolutely critical that we move forward. It is the
right thing to do, and it is a priority for GSA. It is
obviously still a priority for FBI.
We are committed to working with the committee and the
Office of Management and Budget on the best way forward.
Mrs. Comstock. OK. So it is not the situation now that this
is going to be a left where it is. There is still an
understanding that we need to consolidate, that we need to
update, and that we need to have a different facility.
Mr. Horne. That is absolutely the position of GSA.
Mrs. Comstock. Now, how can we make sure that the timeline
is expedited on this so that there is not a lag on getting this
consolidated facility?
It is unfortunate that it took so long as it is.
Mr. Horne. I am committed to making sure that the agency
makes this a priority and works with this committee in whatever
way we can to speed up the process.
Mrs. Comstock. OK. And the other witnesses, can you weigh
in on that?
Mr. Simms. So speaking specifically about public-private
partnerships, VA has an enhanced-use lease authority that
allows us to outlease and then have third-party developers,
private sector, cities, localities, municipalities redevelop
that property for use.
A previous authority prior to 2011 actually allowed us to
lease back that space, which would be a prime example of this,
where you could have a third party develop it and then lease it
back under that.
We are pursuing legislation to reenable that so that we
could do third-party development and then lease back the
facilities on that. Any kind of alternative financing structure
like a P3 scenario, like the EUL would be helpful to meet a lot
of the capital needs from VA's standpoint.
Mrs. Comstock. OK. Thank you.
And thank you, Mr. Chairman. I appreciate your time.
Mr. Barletta. Thank you.
We will now begin our second round of questions. I am going
to ask Members to restrict their questions to 5 minutes since
we have a second panel that we want to get to.
I will begin. Mr. Horne and Mr. Simms, the traditional
disposal process can be slow and cumbersome. However, there are
ways the process can go faster, such as doing certain reviews
at the same time.
What are the VA and GSA doing to look for these
efficiencies?
Mr. Simms. Chair, we agree with that. We actually engaged
GSA early in the process to do what we call a targeted asset
review of the facility that helped us line up what due
diligence was completed and what due diligence still needed to
be done before any kind of transaction could occur.
So we got that on the radar, and we were able to complete
some of that due diligence before we excessed to GSA. Now that
it has been excessed to GSA, we are working with them on dual
tracking both the remaining due diligence for environmental,
historic, and things like that, as well as the Federal
screening process and some of the other GSA steps.
Mr. Horne. When we look at our traditional disposal process
and plot it out on a line and you have areas where you diverge,
if there is Federal or homeless interest, we are doing as much
of that screening concurrently while we are doing the phase 1.
Specifically about Pittsburgh, it is while we are doing the
phase 1 environmental assessment. This allows us to compress
the timeframe a little bit.
The other thing that we have been able to do is to give the
city access. Mr. Acklin mentioned the central utility plant. We
have given the city access to the facility so that they can
review what their investment might need to be, what work might
need to be done prior to taking title so that they are able to
do some of that due diligence upfront.
Mr. Barletta. Mr. Horne, are there ways that the city can
help speed up this process? I understand there are certain
studies and reviews that need to be done. Is there a mechanism
for the city to help complete any of those?
Mr. Horne. I think some of that will depend on what we find
in the phase 1 environmental assessment. I think the one thing
that I do know is that we are committed to a partnership with
the city, and we will continue to work together on what we find
going forward.
Mr. Barletta. And this question is to Mr. Horne and Mr.
Simms.
Obviously, I am very concerned and interested that this
process moves quickly because, as I said, the meter is running
and the taxpayers are paying as we speak.
So do both of you commit to providing this committee with
regular updates on the Pittsburgh disposal and alerting us to
any potential delays or problems?
Mr. Horne. Absolutely.
Mr. Simms. Yes, sir.
Mr. Barletta. Thank you.
The Chair now recognizes Mr. DeFazio for 5 minutes.
Mr. DeFazio. Thanks, Mr. Chairman.
Mr. Horne, does GSA have a formal process by which
individuals may recuse themselves or be recused from working on
certain matters? Yes or no.
Mr. Horne. Yes.
Mr. DeFazio. OK. Good. Thank you.
Have either of the following Government employees been
recused from participating in decisions regarding the Old Post
Office: Ivanka Trump, assistant to the President? Yes or no?
Mr. Horne. I do not know.
Mr. DeFazio. Jared Kushner, senior advisor to the
President?
Mr. Horne. I do not know.
Mr. DeFazio. Well, that is interesting because that seems
to be in contracting officer Kevin Terry's letter that it is a
critical component. It is actually included. It says, in fact,
in that letter that ``it is our further understanding that Mr.
Kushner has,''--this is before Ivanka had a formal position--
``or will, file necessary confidential financial disclosure
forms which, among other things, will include among his listed
assets Ivanka Trump's interests in and flowing from Tenant. It
is our further understanding that Mr. Kushner has, or will,
recuse himself from participating in, among other things, any
matters related to the Lease.''
But you do not know whether, since that is in a critical
letter from your contracting officer and he based his decision
on that recusal, in part, has he received information regarding
the recusal of either Mr. Trump or Ms. Trump?
Mr. Horne. I am not sure what information he has received.
It is his job to administer the contract, and I do know that he
has determined that the tenant is in full compliance with the
terms and conditions of----
Mr. DeFazio. I know, but, sir, sir, but in his letter, he
says this will be done. But you are saying we do not know if it
was done. That is correct?
Mr. Horne. I am saying it is Mr. Terry's job to make that
determination.
Mr. DeFazio. Well, but if Mr. Terry made that a condition
and he does not know, then should he not inquire as to whether
or not they met the conditions that he stated in his letter?
Mr. Horne. I did not say that Mr. Terry did not know. I
said that I did not know.
Mr. DeFazio. OK. Is this something that only the chairman
can ask for? Because it seems that Mr. Terry, based on no legal
opinion that we are allowed to see, and apparently there was
legal advice but not an opinion; that is my understanding. We
cannot see it. He did say that the Trumps were going to recuse
themselves. We do not know if they did that or not, but this is
all in Mr. Terry's head, and it is all OK, and the people of
the United States of America in a profit-sharing agreement with
this family have no right to know whether or not they recused
themselves from any decisionmaking, including appointing, of
course, the next GSA Administrator.
Mr. Horne. We are committed to working with the committee
to provide information on this project.
Mr. DeFazio. OK. Well, just referring back to the legal
opinion by the chairman, I might agree--I am not a lawyer--with
his reading of the first part of the lease agreement about
``shall be admitted,'' but there is a second clause which
stands on its own fully: ``or to any benefit that may arise
therefrom.''
It does not matter when the President was or wasn't
admitted into the lease. This is a separate clause. It says,
basically, ``or to any benefit that may arise therefrom.''
Now, Mr. Terry has determined apparently that there is no
benefit to the President even though the profits have been
reported by the family, including the President, even though
the money now under a new agreement will be applied by his son,
Donald, Jr., potentially to paying off Mr. Trump's personal
obligations to Deutsche Bank or it will accrue to the benefit
of the property and enhance it, which Mr. Trump is the most
substantial owner, and there is no benefit.
So you are saying that ``or to any benefit that may arise
therefrom.'' Did the legal counsel who provided the non-opinion
rule on the ``shall be admitted'' or the benefit part?
Mr. Horne. I am saying that the contracting officer, with
the support of our Office of General Counsel, has made the
determination----
Mr. DeFazio. In conjunction with.
Mr. Horne [continuing]. Has made the determination that the
tenant is in full compliance----
Mr. DeFazio. Did they give a formal legal opinion? Did they
give a formal legal opinion?
Mr. Horne. I do not know.
Mr. DeFazio. You do not know. OK. Thank you very much for
your non-answers.
Mr. Barletta. This is not my opinion. I entered into the
record opinions of legal experts that the decision is
reasonable.
The Chair now recognizes Mr. Mast for 5 minutes.
Mr. Mast. Mr. Simms, I do not want you to feel left out. So
I am going to speak to you for a few minutes here. It is
certainly of importance to me, issues pertaining to the
Department of Veterans Affairs, our homeless veterans.
So I want to talk a little bit about the VA has 180 million
square feet of space, and it was noted in the testimony 430
individual vacant buildings, about 5.9 million square feet of
unused space there, and I want you to discuss a little bit if
you can the reuse actions that are going on there, how many
beds have been able to be created perhaps for homeless
veterans.
What have been the challenges to work with local county
commissions that may not want shelter type facilities within
their counties? Can you address some of that and how that is
going on?
Mr. Simms. Certainly, and thank you for including me in the
question there.
VA's enhanced-use lease authority is specifically geared
towards supportive housing for homeless veterans. VA by
definition does not have the authority to provide that housing.
So we look at our enhanced-use lease authority to provide that.
We can leverage up to 75-year long-term outleases of both
property and buildings for conversion into supportive housing.
We do partner with a wide variety, some nonprofit
organizations, some local municipalities, housing authorities.
Those are all partners that we have.
We have almost, I think, 98 signed enhanced-use leases that
have resulted in about 2,700 operational beds for housing
homeless veterans across the country. We have enhanced-use
leases at many of our VA sites. Some of them have been so
successful we are looking at phase 2 and phase 3 to continue
expanding that.
It is important to note that the supportive housing
component of it is all private. So VA is not part of the
operation of the facility, the design, the construction. They
bring the financing to the table. They do the renovation, the
construction of the buildings, and they fully operate it. So
not only does it save taxpayer dollars by us not having to
support a vacant or unneeded building, but it provides a lot of
benefits on the veterans' side by allowing them to be housed.
Veterans would receive priority, but they certainly do
house non-veterans in some cases if there are not veteran
demographics to support that.
Mr. Mast. Beyond that, have you seen some of the veterans
service organizations attempt to reuse some of these facilities
that have been out there?
Mr. Simms. So VSOs, not directly. Certainly, we work with
the VSOs as a voice of the veteran in different areas. We would
look to them to help define the types of supportive housing
that might be necessary, but in general we would not enter into
any specific agreements directly with the VSOs, but they are
very active in working with us on where the needs do exist.
Mr. Mast. Very good. And, Mr. Horne, I know you would feel
left out if you had a round of questioning that somebody did
not include you. So I wanted to pivot back to you here and get
a little bit back to FASTA here and whether it would be useful
to allow GSA to do some short-term leasebacks under FASTA.
And if you could expound upon that a little bit, that would
be very helpful.
Mr. Horne. Yes. So that is something that we consider a
challenge as we implement FASTA. The Congresswoman mentioned
moving from one house to another. What we would be looking to
do is to have the authority to do a short-term leaseback so
that the Federal tenants and functions are in place until a new
location is identified.
Absent the leaseback authority, the only properties that
may be disposed of using the FASTA authority would be
properties that were completely vacant.
I understand there are challenges around that. There are
scoring rules around that. However, we would be interested in
having conversations with the committee and OMB on a way
forward.
Mr. Mast. Thank you again.
I yield back, Chairman.
Mr. Barletta. Thank you.
The Chair now recognizes Mr. Johnson for 5 minutes.
Mr. Johnson of Georgia. Thank you.
Mr. Horne, before you came today you knew that you were
going to be asked questions about the Old Trump Hotel lease;
isn't that correct?
Mr. Horne. It is.
Mr. Johnson of Georgia. And you prepared for your testimony
today; is that not correct?
Mr. Horne. Yes.
Mr. Johnson of Georgia. And is it fair to say that you have
not seen an opinion letter issued by GSA Office of General
Counsel, the Department of Justice, or the Office of
Governmental Ethics, or any other legal department, Federal
legal department, on the issue of whether the President is in
violation or not in violation of the Trump Hotel lease insofar
as the Emoluments Clause is concerned?
You have not seen any opinion letter from any of those
entities; is that correct?
Mr. Horne. As it relates to the Emoluments Clause, I have
not seen any legal opinions.
Mr. Johnson of Georgia. All right. Thank you.
Mr. Horne. That would be outside the purview of GSA's
Office of General Counsel.
Mr. Johnson of Georgia. OK. I understand. Let me ask you
this question, sir. You are a career employee with GSA for the
past 25 years, I think you said.
Mr. Horne. Yes.
Mr. Johnson of Georgia. And you take pride in your work; is
that not correct?
Mr. Horne. Absolutely.
Mr. Johnson of Georgia. And you love your career.
Mr. Horne. Yes.
Mr. Johnson of Georgia. And you love your job.
Mr. Horne. Yes.
Mr. Johnson of Georgia. And you are a member of the GSA
transition team and the chief GSA liaison with the Trump
transition team, correct?
Mr. Horne. Yes.
Mr. Johnson of Georgia. And, in fact, you were appointed to
the position of Acting Administrator on the day that the
President took office, January 20th; is that not correct?
Mr. Horne. Yes.
Mr. Johnson of Georgia. And is it not also correct that 7
hours earlier Norman Dong was appointed to be Acting
Administrator of the GSA, correct?
Mr. Horne. Mr. Dong was appointed by the previous
administration as part of the succession planning so that
critical positions would have somebody.
Mr. Johnson of Georgia. I understand. So a mere 7 hours
after Mr. Dong, who was another career GSA employee, was
appointed Acting GSA Administrator, you replaced him, correct?
Mr. Horne. I was asked by the President to serve as the
Acting Administrator of GSA.
Mr. Johnson of Georgia. All right. Got you. While you were
still serving on the transition team, did you at any time
discuss the issues of the Trump International Hotel or GSA's
initial position on this matter, which was that the President
would be in breach of the agreement if he took office?
Mr. Horne. No.
Mr. Johnson of Georgia. You never did?
Mr. Horne. No. I was involved in discussions about----
Mr. Johnson of Georgia. Well, let me ask you this question
because my time is running out. Were there any other Trump
administration, any Trump administration officials or campaign
officials that you discussed Trump International Hotel with?
Mr. Horne. Absolutely not. To this day I have not discussed
the matter with any Trump officials.
Mr. Johnson of Georgia. So that includes President Trump,
Ivanka Trump, Eric Trump, and Donald Trump, Jr.?
Mr. Horne. I have never spoken on this matter or any other
matter to any one of those individuals.
Mr. Johnson of Georgia. Have you communicated via emails or
text messages to any of those individuals about this issue?
Mr. Horne. No, not this issue or any other issue.
Mr. Johnson of Georgia. Who has interviewed you for your
job as Acting GSA Administrator?
Mr. Horne. I was not interviewed. I am proud of the work
that I did with the transition.
Mr. Johnson of Georgia. Well, let me ask you this question.
Was any member of the President's family involved in any way in
your appointment as Acting GSA Commissioner?
Mr. Horne. Not to my knowledge.
Mr. Johnson of Georgia. Was anyone involved with the Trump
Organization involved in any way in your appointment as Acting
Commissioner?
Mr. Horne. No.
Mr. Johnson of Georgia. And was the disposition of the
Trump Hotel discussed in any interview that you held for this
position?
Mr. Horne. I was not interviewed for the position, and have
not discussed the hotel project with any member of the
President's family. Again, I have never spoken to the President
or any of his family.
Mr. Johnson of Georgia. All right. Thank you. Good enough.
Has any White House official directed you not to respond to
inquiries from Members of Congress regarding the Trump
International Hotel issue?
Mr. Horne. Not specifically to this issue. However, we have
received a policy that says on matter of oversight we will
respond to committee requests, not individual Member requests.
Mr. Johnson of Georgia. OK. Has the Trump administration
provided you with any direction on how to handle inquiries from
the Democrats on the Transportation and Infrastructure
Committee about the Trump International Hotel lease?
Mr. Horne. No.
Mr. Johnson of Georgia. And with that, Mr. Chair, I will
ask unanimous consent to include in the record the November 11,
2016, email from Kevin Terry. That email referenced the
BuzzFeed article about the, quote, ``fair amount of nonsense''
assessment by Kevin Terry. So Kevin Terry's November 11th
email.
Also, the BuzzFeed article that discusses that comment by
Mr. Terry along with the letter from the contracting officer,
dated March 23rd, which is from Mr. Terry, which is his opinion
about Trump's compliance with the lease.
I would ask unanimous consent to include those in the
record.
Mr. Barletta. So noted.
Mr. Johnson of Georgia. And also the Jared Kushner recusal,
the letter that memorializes Jared Kushner's recusal offer.
Mr. Barletta. So noted.
The Chair recognizes Mr. Nadler for 5 minutes.
Mr. Nadler. Thank you.
Mr. Horne, you have stated repeatedly that the contracting
officer made the decision that the lease was in compliance with
the Emoluments Clause and with all necessary legal things,
correct?
Mr. Horne. I said that the contracting officer made the
determination that the tenant remains in full compliance with
the terms and conditions of the lease.
Mr. Nadler. OK. And this was based in part at least on a
written opinion, on written advice from legal counsel?
Mr. Horne. I do not know if it was written advice. I know
that there were multiple meetings where multiple GSA lawyers
participated in conversations about----
Mr. Nadler. Excuse me.
Mr. Horne [continuing]. The proposed ownership structure.
Mr. Nadler. Mr. Horne, GSA has told us it was written
advice. So someone in your operation knows that it is written
advice and has told us that.
So my question is: can we get a copy of that written
advice?
Mr. Horne. We are committed to working with the committee.
Mr. Nadler. I did not ask that. I said: can we get a copy
of that written advice? I am requesting that right now.
Mr. Horne. We are committed to working with the committee
to provide----
Mr. Nadler. Can you give me a yes or no answer? My request
and the request of the ranking member, I assume: will you give
us a copy of that written advice, assuming it exists?
Mr. Horne. We will provide all materials associated with
this project when requested by the committee.
Mr. Nadler. By which you mean by the committee chairman?
Mr. Horne. Yes.
Mr. Nadler. Or his staff. So, in other words, the answer
is, no, you will not give it to us unless the committee
chairman requests it because you are ignoring the minority
party.
Mr. Horne. We are complying with the administration----
Mr. Nadler. You are complying with the order to ignore the
minority party.
Now, Mr. Chairman, or rather, Mr. Horne, our staff has
learned that Mr. Kushner has held discussions regarding
candidates for the permanent Administrator position. We have
also learned he has been engaged in selecting the FASTA Board.
How is this activity consistent with his recusal from Old
Post Office matters, considering the OPO lease is one of the
highest profile matters in GSA's portfolio?
Mr. Horne. I am not aware of Mr. Kushner's role at the
White House.
Mr. Nadler. OK. Let me rephrase the question. Assuming he
has that role, that he is involved in screening or interviewing
candidates for the permanent Administrator position, would this
be a violation of his recusal?
Mr. Horne. I am not going to speculate.
Mr. Nadler. I'm not asking you for speculation. I am saying
if that is true, would this be.
Mr. Horne. I am not going to comment on hypotheticals.
Mr. Nadler. OK. Now, you said in answer to a question
before that you did not get monthly statements. You only got
annual statements.
Mr. Horne. I said that I am not aware of monthly
statements. I am aware that there is a requirement for an
annual report that will decide what the profit-sharing
arrangement will be.
If there are monthly reports, I have not seen them.
Mr. Nadler. You are not aware of monthly----
Mr. Horne. Which is consistent with my approach to this
entire project, that it is the contracting officer's job.
Mr. Nadler. All right. You are not aware of a requirement
for monthly statements that would give the same information as
you just mentioned.
Mr. Horne. Correct.
Mr. Nadler. OK. Section 5.3 of the lease requires that
monthly statement. Shall I read the whole thing to you?
Mr. Horne. Sure.
Mr. Nadler. Well, I am going to read only part of it
because it is lengthy. ``Tenant will furnish Landlord on or
before the 45th day after the end of each calendar month the
following items, accompanied by a certificate of the Chief
Financial Officer of Tenant certifying that such items are
true,'' et cetera, et cetera, ``monthly and year-to-date
statements of income, expenses on an accrual basis,'' et
cetera, et cetera. I can give you the rest of it.
Mr. Horne. OK.
Mr. Nadler. This requires the monthly statement that you
said you did not know existed. So my question is: what will you
do to make sure (a) that the monthly statements are being filed
and then to answer the questions that you have received from
members of the committee regarding information that would
appear on that monthly statement?
Mr. Horne. So I will go back, work with the leadership of
the Public Buildings Service to make sure that monthly
statements as required by the lease are being received from the
tenant, and once again, we are committed to providing
information about this project to the committee.
Mr. Nadler. And are you committed to making those monthly
statements available to members of the committee?
Mr. Horne. We are committed to responding to requests from
the committee for information.
Mr. Nadler. OK. So once again you are saying the answer is
no unless the Republican leadership of the committee wants and,
and as long as the coverup is being continued, we are not going
to see that information. That is what you are saying.
Mr. Horne. I am saying that we will comply with the
administration's policy and the----
Mr. Nadler. OK. And the administration's policy is that, as
you have acknowledged it, is that minority members of the
committee are entitled to no information and, therefore, they
can continue the coverup.
I yield back, and I thank you.
Mr. Barletta. Thank you.
That concludes our questions to the panel. Again, I want to
thank you all for your testimony. Your comments have been
helpful to today's discussion. Thank you.
On our second panel we will have Mr. Richard W. Painter,
Professor of Law.
I ask unanimous consent that our witness' full statement be
included in the record.
Without objection, so ordered.
Mr. Barletta. For our witness, since your written testimony
has been made a part of the record, the subcommittee would
request that you limit your oral testimony to 5 minutes.
Professor Painter, if you are ready, you may proceed.
TESTIMONY OF RICHARD W. PAINTER, PROFESSOR OF LAW
Mr. Painter. Thank you, Mr. Chairman, ranking member and
members of the committee.
I am a law professor at the University of Minnesota Law
School. I was previously the chief White House ethics lawyer
and Associate Counsel to the President for President George W.
Bush.
I also serve as the vice chair for Citizens for
Responsibility and Ethics in Washington. I was a founding
member of another organization called Take Back our Republic, a
founding director of that organization. I am still a director
of Take Back our Republic. It is an organization of political
conservatives and libertarians who are committed to reforming
our campaign finance system.
I should emphasize here that I, like everyone else in the
room, have a financial interest in the subject matter of this
hearing. I am a taxpayer. I pay tens of thousands of dollars in
taxes every year, some years over $100,000 of taxes. I have
quite consistently supported for public office persons of both
political parties who I believe will reduce the size of
Government, increase the efficiency of Government, and reduce
the burden of taxation on the American people.
The legislation we are talking about today, the Federal
Assets Sale and Transfer Act, FASTA, involves the sale over 6
years, I believe, of up to $8 billion worth of Federal
property, and I hope these transactions can be carried out in a
manner that maximizes the return for the taxpayer and is
without conflicts of interest for the Government officials who
are involved in the transactions.
I spent about the past 30 years of my career focusing on
conflicts of interest, conflicts of interest in corporations
and partnerships, in business law, conflicts of interest in
Government, and I want to emphasize that conflicts of interest
have consequences.
Mr. Chairman, you referred to the businesses of Presidents
Washington and Jefferson and other Presidents. President Trump
has referred to those businesses as well and that Presidents
Washington and Jefferson visited their plantations when they
left the Capitol.
Presidents Washington and Jefferson were great Presidents,
did a lot to make this country great, but those businesses
involved conflicts of interest that were amongst the most
tragic conflicts of interest for our country. The assets of
those businesses included human beings who were held against
their will, forced into labor, and in some situations to
perform sexual services for overseers and others in the
plantations. This was a very tragic conflict of interest that
resulted ultimately in a Civil War in which half a million
Americans lost their lives and, of course, the difficulties we
have in race relations in this country to this day.
So conflicts of interest in Government have consequences.
When the President, leading Members of the House and the Senate
own businesses, such as those plantations, and then make
decisions about issues, such as in that case, the slavery
question, those decisions have consequences.
Turning to the present day, conflicts of interest for
Government officials cannot be allowed to be present in any of
the transactions by the United States Government concerning
Government property, and that is critically important, whether
the transaction is with the President of the United States or
members of the family of the President, Members of Congress or
any other Government official.
How do we address conflicts of interest? Well, there are
two approaches that I emphasize in the corporation and
securities law classes that I teach. One is a categorical ban
on transactions between the fiduciary who is making decisions
in a fiduciary context and himself. You do not allow the same
person to stand on both sides of the transaction.
That is the way trust law works. That is the way I think
the Government law should work with respect to Government
property and the disposition of Government property. The same
person does not stand on both sides of the transaction. That
should be prohibited.
There are other ways to deal with it, and I am happy to
discuss that. I am happy to discuss in answers to your
questions my views on the lease at the Old Post Office or other
transactions to the extent I am familiar with the context of
those transactions.
But I want to emphasize how critically important it is that
we address conflicts of interest that the public, that the
taxpayer, people in my situation having to send that check in
every year to the IRS, and I usually owe money. Yes, I will
admit it, that we are confident that Members of Congress and
other elected officials are not simply helping themselves; that
the Government is not going into transactions with private real
estate developers who then after the deal is closed cut in
Members of Congress or other Government officials to get a
piece of the action; that when people are prohibited from
receiving the benefits of a lease under the terms of the lease,
that someone does not just go set up a shell corporation or a
trust or some other entity that receives it for them; that
those of you who are charged with the fiduciary obligation of
watching over our taxpayer money are spending it wisely, but
that you also are living up to the spirit of the law, not just
the letter of the law.
You can find an expert, a lawyer, who will tell you what
you want to hear, but I will emphasize. Please, Mr. Chairman,
members of the committee, look at us, the taxpayers. Do what is
right. Do what is right for our country.
Thank you.
Mr. Barletta. Thank you for your testimony, Professor
Painter.
I want to enter into the record a DOJ opinion indicating
conflict laws do not apply or did not apply to Vice President
Rockefeller with his vast businesses. Subsequently, Congress
amended the law to explicitly exempt the President and Vice
President.
I will now begin the first round of questions limited to 5
minutes for each Member.
Mr. Painter, FASTA requires properties be sold to the
highest bidder getting the maximum return to the taxpayer. That
number is driven up the more bidders that there are. You are
not suggesting that a lower return is OK so long as we ensure
no winning bidder has a connection to a Government official,
are you?
Mr. Painter. What I am suggesting, firstly, we deal with
different types of transactions. One is sale and the other is
lease. When you sell the property, usually there is no further
relationship between the seller and the buyer. If there is, it
is nowhere near as significant an ongoing relationship as you
have in the case of a lease.
When you sell a property, you need to make sure at the time
of the sale it is a fair transaction. If you are admitting into
the bidding process a United States Government official, you
could do that, but you have to make absolutely sure that the
bidding process is fair, and it is designed to get the absolute
highest price.
With respect to leases though, it is a very different
situation because that is an ongoing relationship. So it is not
just what happens at the inception of the lease. You have
ongoing enforcement issues and a range of different issues over
the course of a lease.
So I think that bringing in United States Government
officials is highly likely to reduce the return to the
taxpayer. There are not a lot of situations where United States
Government officials are interested in leasing or buying
Government property. I believe the GSA Administrator was not
aware at least of previous Presidents and I do not believe of
other officials who wanted to do that.
I think the risks far outweigh the benefits, particularly
in the concept of a lease.
Mr. Barletta. What is not clear from your testimony is
whether you are offering your opinion on what the law should be
or whether you are stating your opinion on what the law
actually is.
A number of points you make would mean that George
Washington himself acted unethically. Ultimately the goal is
getting the best return for the taxpayer. Should that not be
this goal?
Mr. Painter. I am saying that George Washington, I did say
that George Washington, Thomas Jefferson and others violated, I
believe, the laws of God and what was set forth in the
Declaration of Independence with respect to their businesses.
And I am offended as a taxpayer when those businesses are
mentioned in public discourse as if somehow those conflicts of
interest were OK. They cost our country a great deal.
Yes, it was unethical, and I am willing to say that to you,
Mr. Chairman.
Mr. Barletta. Are you stating your opinion or what the law
actually is? Did George Washington violate the law?
Mr. Painter. He violated the laws of God, and I will say
that to you, Mr. Chairman. Slavery was wrong, and it was a
conflict of interest that resulted in that question not being
addressed at the inception of this Nation, a conflict of
interest not only of George Washington and Thomas Jefferson,
but Members of the House and the Senate.
Conflicts of interest have consequences. It was unethical.
It was wrong, and there is a higher law beyond that which is
written in the statute books. The law, the specific law from
which the President is exempt is one statute, 18 United States
Code 208. There are other statutes, plenty of them, to which
the President is bound.
Mr. Barletta. Thank you.
The Chair now recognizes Mr. DeFazio for 5 minutes.
Mr. DeFazio. Thank you, Mr. Chairman.
Mr. Painter, I think you were here earlier when we had some
discussion of section 37.19, ``no member or delegate to
Congress, or elected official of the Government of the United
States or the Government of the District of Columbia, shall be
admitted to any share or part of this Lease, or to any benefit
that may arise therefrom.''
The chairman has mentioned some opinion pieces and articles
that have been written regarding this. Do you want to opine a
bit?
I mean, we have the ``shall be admitted'' part, but then we
have ``or to any benefit that may arise therefrom.'' They are
separate clauses, correct?
Mr. Painter. Well, yes. The question here is whether you
want to interpret the lease as the landlord to accomplish the
purpose that you were seeking to accomplish through that
provision. When you say no employee of the Government shall be
admitted to a share of the lease, do you really want to allow a
real estate developer who is a private real estate developer to
enter into the lease, and then the minute the lease is signed
walk out the door and bring Members of Congress in to share in
the proceeds?
Does that not undermine the entire purpose, which is to
avoid Government officials being on both sides of the lease,
whether it is the President of the United States or Members of
Congress?
I do not understand how that interpretation of the lease
makes any sense in light of the purpose of the lease. If that
interpretation is correct, that language dies upon the signing
of the lease and that subsequently Members of Congress, other
Government officials can be given a piece of the lease, or if
the tenant becomes an elected official, they can just hold onto
the lease, if that is true, then whoever drafted that lease was
a fool because it does not accomplish the purpose, which is to
make sure that Government officials are not standing on both
sides of the transactions.
So we can bring in lawyers and you can always bring in a
lawyer who will tell you this is a reasonable interpretation
and so forth, but it makes no sense.
And so if that is the proper interpretation, whoever
drafted that lease for the Government should not be working for
the Government.
Mr. DeFazio. Well, there are certainly some questions about
that. But, again, I would rely on the second part, ``or to any
benefit that may arise therefrom.'' If you just omit the first
part, that would take care of the issue you are opining about,
which is subsequent benefit to an elected official.
Mr. Painter. I would think so. I mean, the way I understand
that language is you cannot bring in a subsequent elected
official or the real estate developer cannot go out and bring
in current Government officials. That is not the way it works.
It does not make any sense for it to work that way.
I do not understand the plain language to say that, and
that is, by the way, only one of the issues. The other issue is
whether you can somehow dodge this by saying, ``Well, the money
does not go to me. It goes to a trust for my benefit,'' or,
``it is going to increase my wealth later.''
I mean, we are talking about Government officials who have
billions of dollars. They do not need to spend all of the money
today. We do not say, ``Well, you cannot receive the money, but
you can set up a shell corporation to receive the money,'' you
know, or a trust to receive the money. That is the kind of off
balance sheet financing Enron was doing.
You set up a bunch of special purpose entities to do things
you yourself cannot do, and I have taught plenty to that over
the years. And I know lawyers who play that game, and lawyers
will sign off on that game, and that is why we have had some of
the corporate messes we have.
But at least can we have the United States Government deal
straightforwardly and honestly with the American people? If the
President cannot take the money, neither can a trust of which
the President is a principal beneficiary.
Mr. DeFazio. Thank you. Thank you for your testimony.
Thank you, Mr. Chairman.
Mr. Barletta. Thank you.
And, again, I want to say that the Congress has explicitly
exempted the President and Vice President from conflicts of
interest laws.
Mr. Painter. That one statute, I believe, 208. Is there
another one?
Mr. Barletta. The Chair now recognizes Mr. Johnson for 5
minutes.
Mr. Johnson of Georgia. Yes, thank you, Professor Painter,
for being here today.
You heard the testimony from the Acting Administrator today
that he is the hand-picked Acting Administrator. You have heard
from him that he loves his job. He wants to continue. He has
got 25 years in. I guess he will probably retire at 30, and
certainly being at the Acting Administrator, at the top of the
heap, he is making a lot of money at the top end of the
schedule, and human nature, you know, causes you to want to
maintain that status as an employee.
And you have heard that GSA is not collecting the kinds of
information, financial information, that would enable it to
adequately scrutinize this Trump lease and the revenues flowing
therefrom.
You have heard testimony that perhaps there is no mechanism
in place for generating reports about any foreign government or
foreign actor spending at the Trump Hotel, and you know the
ramifications and implications of what that means in terms of
foreign actors impacting U.S. policy through spending money at
the Trump Hotel.
And you have also heard testimony that high-level Trump
family members and also those serving in high levels in the
Trump administration are not recused from dealing with the GSA
insofar as the Trump Hotel is concerned, and you have heard
that there are no legal opinions that have been rendered, or at
least we have not had any evidence of any legal opinions being
rendered about the compliance with President Trump with this
lease.
And so having heard all of those things, what is your
opinion about what actions GSA should take to shield the Acting
GSA Administrator, along with the contracting officer and
others who are associated with administering this lease? What
actions do you think GSA should take to protect those officials
from undue influence with respect to the lessee who is the
President of the United States?
Mr. Painter. Well, first I should disclose it is probably
commonly known that I am counsel to Citizens for Responsibility
and Ethics in Washington in a case pending in the Southern
District of New York against the President in his official
capacity with respect to not just the payments at the hotel,
but payments from foreign governments in violation of the
Emoluments Clause of the Constitution. The Justice Department
is defending the President in that litigation.
I think with respect to GSA, the one thing that they can do
that I would like to see a lot more of here, in addition to
strictly construing the terms of the lease to protect the
taxpayer, not the President, but the second thing is
transparency.
It is critically important that information about this
lease and other leases, including this $8 billion worth of
leases, but I have no confidence--not just leases, but sales
and whatever is going to happen with this property that is
going to be sold in the next 6 years pursuant to this statute
of FASTA--I have no confidence that there is not going to be
just a lot of self-dealing, whether it is Government officials
or campaign contributors or someone else.
And if we want confidence, public confidence in this
Government and in GSA, they need to be transparent. They need
to disclose the relevant documents for transactions that
Members of Congress are interested in, and that means Members
of Congress of both parties.
I don't know what happened during the first 2 years of the
Obama administration when the Democrats controlled the House
and the Senate. I do not know what the practice was, but I will
tell you what it should have been, and that is that if the
Republicans wanted documents from that administration, they
should have been delivered here, and the same with the
Democrats today.
We don't have one-party oversight of the executive branch,
particularly not by the President's party, and I have got to
say this. I have been a Republican for 30 years. That is not a
very good way for any political party to stay in power.
We need dual oversight, both Democrats and Republicans
working together. So if you want a document as ranking member,
you work with the chairman. Those documents should be delivered
to this committee by GSA, and then we have the transparency
that we as taxpayers feel that we need, both parties overseeing
the executive branch, not just the President's party.
Mr. Barletta. Thank you.
Mr. DeFazio. Mr. Chairman, I have a point of personal
privilege.
Mr. Barletta. OK.
Mr. DeFazio. I am certain the chairman is not aware of
this, and I am sure it is some zealous little twerp working for
the committee, but I have just been made witness to the fact
that the livestreaming has been edited, and significant
portions of my remarks were edited out, and Mr. Nadler's
remarks were edited out, and I find this extraordinary, and if
there is not an immediate resolution to this issue, I will be
taking this issue to the floor of the House of Representatives
as a point of personal privilege.
I mean, this is unbelievable. I mean, what have you got to
hide that you cannot even put our damn questions to a
Government official online and you have to cut us out?
Mr. Barletta. The chairman is not aware of it. We will
check into it. If there is a technical problem, it will be
checked out.
Mr. DeFazio. It was not technical, Mr. Chairman. This was
editing.
Mr. Barletta. The Chair is not aware, but we will check it
out.
Mr. DeFazio. I suspected that you were not, but it is going
on.
Mr. Barletta. The Chair now recognizes Mr. Nadler for 5
minutes.
Mr. Nadler. Thank you.
I am glad to hear the Chair will check this out. I hope to
hear the Chair say that it is unacceptable and will be
corrected.
Mr. Barletta. I have no evidence that it was done
intentionally. So we will check it out, but that is your
answer.
Mr. Nadler. OK. Mr. Painter or Professor Painter, I should
say, between October 1st and March 31st, lobbyists working on
behalf of the Kingdom of Saudi Arabia spent $270,000 on rooms,
catering and parking at the Trump International Hotel.
In December of last year, Bahraini diplomats moved the
country's National Day festivities to the hotel's ballroom,
December, after the election.
In February, Kuwait moved its annual gala from the Four
Seasons to Trump International.
Now, first, is it appropriate for the GSA to maintain a
lease that allows foreign governments to make payments that
directly benefit a Government official, as is the case here?
Mr. Painter. Well, this is the subject matter of the
litigation by CREW [Citizens for Responsibility and Ethics in
Washington], and there are other cases pending, one by Members
of Congress against the President, one by the Attorney General
of Maryland and the District of Columbia against the President
with respect to the Emoluments Clause of the Constitution.
I mean, this is the most fundamental conflict of interest
that was contemplated by the Founders. As I said, they were not
very good at identifying their own conflicts of interest with
respect to the slave labor, but they were well aware of the
conflict of interest of other governments trying to influence
the United States Government by buying off Government
officials.
So they had a categorical ban on emoluments and presents,
and that is emoluments and presents, not just presents, which
are value-added transactions, but emoluments as profits or
benefits going to a United States Government official from a
foreign government or entity controlled by a foreign
government.
And I know the Justice Department is arguing for a narrower
interpretation of the Emoluments Clause to only apply to
payments received in connection with an office that you have,
as if somehow the only concern is whether the President or some
other official is two-timing the Government by having an office
overseas as well as here. I do not think that was the Founders'
point.
And so I believe that these payments, in addition to other
payments that are received by the Trump business empire, are in
violation of the Emoluments Clause.
You know, the question of what GSA can do about that when
the Justice Department is taking a different position on behalf
of the President is a difficult one, but I am firmly convinced
that payments from foreign governments and entities controlled
by foreign governments that go into a business owned by the
President or any other Government official are in violation of
the Emoluments Clause.
That provision is in the Constitution for a reason, because
these European governments were busy bribing the English House
of Commons, and by the way, Russia was busy doing all sorts of
strange things.
Mr. Nadler. And the President of England or France at one
point was on the payroll of the other. I forget which way.
Mr. Painter. Oh, yes.
Mr. Nadler. Let's not get into that.
Mr. Painter. Yes, right.
Mr. Nadler. Let me just ask you: if the Emoluments Clause
did not exist, this would still be a violation of straight
conflict of interest principles?
Mr. Painter. Well, I think that we have the broader
problem, not just with respect to foreign governments but
lobbyists who, of course, have been generous with their
campaign contributions to both parties, one serious conflict of
interest, but now we have compounded that by the fact that what
they do is they rent out a ballroom at the Trump Hotel, the
money goes to the President's business, and then every lobbyist
shows up there, but members of the administration are much more
likely to go to a party at the Trump Hotel than another hotel.
Mr. Nadler. So your answer is yes?
Mr. Painter. Absolutely, yes.
Mr. Nadler. Thank you.
Mr. Painter. It is very profitable.
Mr. Nadler. I only have 1 minute left.
Does the payment from a foreign government for services
rendered by a business owned by the President, and I think you
have answered this, constitute a violation of the Emoluments
Clause?
You would say yes, obviously.
Mr. Painter. Yes.
Mr. Nadler. And does the current ownership and control
structure of the OPO lease absolve the President of any such
violation?
Mr. Painter. I do not think it absolves, no, sir. You focus
on follow the money. I mean, that is what I have been doing as
a corporate securities lawyer for 25, 30 years. You focus on
where is the economic benefit going to.
You can create all sorts of shell entities and trusts and
the rest of it, and the lawyers are good at doing that, but you
have got to focus on where is the money going. Where is the
economic value?
Mr. Nadler. Thank you.
Mr. Painter. We get all caught up in those entities. That
is what happened in Enron, and that is not the way to run the
United States.
Mr. Nadler. Thank you.
My last question for 23 seconds is you are the vice
president or president of CREW, the Committee for
Responsibility and Ethics in Washington.
Mr. Painter. Yes.
Mr. Nadler. I have often seen it referred to in the
newspapers as a liberal group or left-leaning group. You do not
sound like you are a liberal or left-leaning person with your
Republican background. Would you consider that an accurate
characterization of CREW?
Mr. Painter. No. I am not a liberal. This is not a liberal
or conservative issue. This is about responsibility in
Government and how our money, our taxpayer money is used, and I
think this is why taxes are so high in this country. There are
a lot of conflicts of interest, and there is a lot of waste,
and we do not now have the President of the United States
setting a good example. I think it is atrocious.
Mr. Nadler. Thank you.
I yield back.
Mr. Barletta. Thank you.
Thank you, Mr. Painter, for your testimony.
This concludes our hearing. If Members have any further
questions, they can be submitted for the record.
I would like to submit for the record a statement provided
by the Associated General Contractors of America detailing the
importance of implementing FASTA.
Without objection, so ordered.
I would ask unanimous consent that the record of today's
hearing remain open until such time as our witnesses have
provided answers to any questions that may be submitted to them
in writing, and unanimous consent that the record remain open
for 15 days for any additional comments and information
submitted by Members or witnesses to be included in the record
of today's hearing.
Without objection, so ordered.
I would like to thank our witnesses again for their
testimony today.
If no other Members have anything to add, this subcommittee
stands adjourned.
[Whereupon, at 12:24 p.m., the subcommittee was adjourned.]
Witnesses' Prepared Statements and Responses to Post-Hearing Questions
for the Record
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Submissions for the Record From Hon. Barletta
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Report, ``The Foreign Emoluments Clause and the Chief Executive,'' No.
2017-12, June 2017, by Andy S. Grewal, University of Iowa, College of
Law, Submitted for the Record by Hon. Barletta
[This report is retained in committee files and is available at
https://ssrn.com/abstract=2902391.]
Article, ``Business Transactions and President Trump's `Emoluments'
Problem,'' by Seth Barrett Tillman, Harvard Journal of Law & Public
Policy, Vol. 40, No. 3, Submitted for the Record by Hon. Barletta
[This article is retained in committee files and is available at
https://ssrn.com/abstract=2957162.]
Letter of September 16, 1974, from Hon. Howard W. Cannon, Chairman,
U.S. Senate Committee on Rules and Administration, to Hon. William B.
Saxbe, Attorney General of the United States, U.S. Department of
Justice, Submitted for the Record by Hon. Barletta
AND
Response letter of September 20, 1974, from Hon. Laurence H. Silberman,
Acting Attorney General, U.S. Department of Justice, to Hon. Howard W.
Cannon, Chairman, U.S. Senate Committee on Rules and Administration,
Submitted for the Record by Hon. Barletta
[These letters are retained in committee files.]
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Submissions for the Record From Hon. Johnson, Jr., of Georgia
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Letter and exhibits of March 23, 2017, from Kevin M. Terry, Contracting
Officer, U.S. General Services Administration, to Donald J. Trump, Jr.,
Trump Old Post Office LLC, c/o the Trump Organization
[These materials are retained in committee files.]
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