The federal agency that oversees the government-held lease on the Trump family's Washington, D.C. hotel has ruled that the lease is in "full compliance," though a clause in the lease explicitly forbids "any elected official" of the federal government from receiving "any benefit" from the property.
In a letter to Donald Trump's sons Donald and Eric, the contracting officer for the General Services Administration said the terms of the lease on the Trump International Hotel had been met because President Trump had resigned from any position with the firm, and had agreed to receive no direct earnings from the hotel.
"In other words, during his term in office, the president will not receive any distributions from the trust that would have been generated from the hotel," said contracting officer Kevin Terry. Profits will instead be held by Old Post Office LLC and used to "support and enhance the business of Tenant and operation of the hotel."
He also applauded the conversion of what had been a "wasting asset" into a "revenue-generating asset."
The Trump Organization thanked the GSA in a statement for its review, and said it looked forward "to providing our guests with an unrivaled luxury experience for years to come."
Four years ago, Donald Trump signed a 60-year lease on the government-owned Old Post Office building, and then spent millions converting it into a five-star hotel that opened last year. Recent rack rates ranged from $800 up to $1,690 per room, and many representatives of foreign governments have spent money at the property.
Two top House Democrats said in a statement that the GSA's decision had rendered the "lease provision completely meaningless."
"GSA changed the position it held before Trump took office," said Rep. Elijah Cummings of Maryland, ranking member of the House Oversight Committee, and Rep. Peter DeFazio of Oregon, ranking member of House Transportation Committee. "Any elected official can now defy the restriction by following this blueprint."
"This decision allows profits to be reinvested back into the hotel so Donald Trump can reap the financial benefits when he leaves the White House. This is exactly what the lease provision was supposed to prevent."
Before and after Trump's victory in the 2016 presidential election, experts had predicted his stake in the Pennsylvania Avenue property would create an ethics issue if he became president. Several told NBC News he would be in violation of the terms of the lease the day he took office.
Steven Schooner, an expert in government procurement law at George Washington University, was among those who said Trump's ownership of the hotel would present a clear problem.
Reacting to Thursday's decision, he said, "Not only is the conclusion unexpected and unpersuasive, as a matter of law, but, as a matter of policy, it is harmful to the integrity - and thus credibility - of GSA, the presidency, and federal procurement process."
Schooner said the contracting officer's decision favored President Trump, "who, in effect, is his supervisor … but it also pleases [the officer's] ultimate supervisor - the head of the agency - who serves at the President's pleasure.
Richard Painter, who was chief ethics officer for the George W. Bush White House from 2005 to 2007, said the decision "puts form over substance. I don't care how many LLCs and trusts are created to hold the hotel and its assets; president Trump still has an economic interest in the lease and is receiving the profits therefrom."
Said Painter, "I am surprised to see the GSA buy into this type of gamesmanship that ignores the economic reality of what is going on."