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Paper Cuts: Location, Location, Location

The President has always had a keen eye for real estate.

The General Services Administration (GSA) is charged with maintaining the vast portfolio of real estate owned by the U.S. government. It is effectively America’s property manager. President Trump, an experienced real estate developer who leases the GSA’s Old Post Office, which his company turned into the Trump International Hotel, has long had a reported “obsession” with another nearby property in the GSA’s care. A recent report by the GSA’s watchdog office shines a light on just how deep the privileged executive’s interest goes. 

The GSA building at 935 Pennsylvania Ave. NW is occupied by the Federal Bureau of Investigation (FBI). The 1974 building, named for the Bureau’s first director, J. Edgar Hoover, has had 44 years of hard use. President Trump has called the architecturally brutalist FBI headquarters “one of the ugliest buildings in the city.” More importantly, it’s overcrowded and structurally unsound. It is what business owners in a commercial area would normally want to see razed and redeveloped.

Soon after the new President was sworn in on January 20, 2017, the FBI procurement project hit a snag.

Until recently, the GSA sought such a move. The GSA has spent five years assembling a plan to build its law-enforcement tenants a new facility in the DC suburbs and repurpose the site for commercial purposes. By mid-2016, GSA had nearly completed a protracted contractor bidding schedule to award the project. The winner would get the construction contract worth over $2 billion to build a new FBI complex outside of DC and keep the former downtown plot and facility as part of the fee.

Pennsylvania Avenue NW covers 16 blocks of road running from the Capitol to the White House. President Trump’s private family business, the Trump Organization, leases a separate plot of GSA-managed land directly across the Avenue from the Hoover Building. Just after signing his 2013 60-year lease to build the Trump International Hotel at 1100 Pennsylvania Ave., Mr. Trump expressed interest in also acquiring the FBI building. “We’ll be watching the FBI as to what’s going to happen,” Mr. Trump told The Washington Post. “Whether or not we will bid on it, we may, we may not.”

By the time the listing at 935 Pennsylvania came on the market, the developer had his eye on another location farther down the Avenue at 1600.

In Washington, presidents come and go, but government contracting goes on forever. A month after the presidential election, GSA winnowed the bidders down to three finalists (including Steven Roth, a long-time real estate partner and sometime competitor of the President-elect).

But, soon after the new President was sworn in on January 20, 2017, the FBI procurement project hit a snag. That spring, President Trump’s 2018 budget proposal didn’t request a penny of funding for the stalled project, nor did the 2018 spending bill include money for the project.

On July 10, 2017, Congress cut the funding for the FBI relocation, and soon thereafter the GSA effectively halted the new headquarters plan, leaving three bidders out in the cold and three potential new sites without hope. The FBI building was again a real estate deal waiting to happen.

FBI Director Christopher Wray was sworn in on August 2, 2017. That same day, the Senate gave the GSA and the FBI until November 30 to come up with a way to move forward.

After nearly a yearlong vacancy in the post, GSA Administrator Emily Murphy was finally sworn in on December 12, 2017. Two days later, according to the August 2018 GSA Inspector General report on the agency’s revised FBI headquarters plan, GSA Public Buildings Service Commissioner Daniel Mathews alerted her that “WH has been talking to FBI” about the GSA’s plan for the Bureau’s headquarters. Bythat time, the Senate’s deadline had been extended by another two months.

Five days before Christmas, at Chief of Staff John Kelly’s request, Murphy and Mathews met at the White House with Kelly and Office of Management and Budget Director Mick Mulvaney for “an update on the FBI headquarters project,” according to the GSA watchdog report. Kelly and Mulvaney told the GSA leadersthe FBI “was concerned” about relocating, and directed the GSA team to “make the FBI happy.” Murphy later told GSA Inspector General investigators she “recollected that Mulvaney or Kelly may have mentioned that the President would want an update on the project.”

In the weeks that followed, the FBI pressed the GSA to let the Bureau remain at its current address but to renovate. The GSA insisted there was not a practical way to remodel the existing building securely or cost-effectively.  

On January 24, Murphy was again summoned to the White House, this time to meet with President Trump. After a preliminary meeting, Murphy, Kelly, Mulvaney, Wray, and Deputy Attorney General Rod Rosenstein met with the President in the Oval Office to recap the proposed outcome. The GSA had agreed to tear down the Hoover Building and rebuild a new headquarters in the same location, despite “challenges” in “securing appropriations for the project” and “potential resistance from local congressional delegations.”  

In early February, Murphy made a presentation to the Senate Environment and Public Works Committee on the GSA’s plan to temporarily relocate the 11,000 FBI headquarters employees, demolish the Hoover Building, and build a new facility on the same site, where most of the displaced staff would return. The plan was met with outrage.

Representative Steny Hoyer of Maryland (D), whose district had been a contender for the scuttled construction plan, called on Congress to reject the proposal and investigate. “Why the Trump Administration would so suddenly forgo years of study that led to careful recommendations—not to mention the millions of dollars spent in the effort to move the Bureau’s headquarters—is beyond astounding, and quite frankly, extremely alarming,” Hoyer said.

Representative Gerry Connolly of Virginia (D), whose district had also been a possible site for the canceled complex, called for a review by GSA Inspector General Carol Ochoa.

When Ochoa began the investigation in March 2018, she faced resistance from within the GSA. Her report stated some witnesses “refused to answer any questions” related to “White House meetings” because they were “told or believed the information was subject to executive privilege.” 

(Executive privilege is used to protect a president’s private deliberations from other branches of government. Former President Richard Nixon lost a lawsuit against the GSA over control of his presidential records.)

As Ochoa’s investigators struggled to determine “whether GSA took the position that executive privilege precluded sharing information with the [Office of Inspector General], which is part of GSA and within the Executive Branch,” as the resulting watchdog report details, they learned White House Counsel’s office directed GSA employees they “were authorized to disclose to the [Office of Inspector General] the existence of the White House meetings,” but “not to disclose any statements made by the President.” (GSA responded, in an appendix to the OIG report, regarding White House Counsel’s direction, that since Murphy was “not authorized to disclose the content of presidential communications from those meetings. A formal assertion of executive privilege, therefore, was not necessary.”)

As the stonewalling continued, GSA’s Murphy was asked to testify before Congress in an April 2018 hearing. Anticipating she might “be asked at the hearing if the White House was involved,” Murphy told Ochoa’s investigators that prior to the hearing she participated in at least “four preparatory sessions” and rehearsed the non-answer, “it would be inappropriate to comment on any discussion I had or did not have with the President.” As she expected, Murphy was questioned about whether “the [P]resident or any of the other officials at the White House” consulted “in the decision making process.” She deflected answering directly three times. Ochoa’s office wrote that Murphy “may have left the misleading impression that she had no discussions with the President or senior White House officials in the decisionmaking process about the project.”

Then, on July 29, Axiosreported that President Trump has been openly preoccupied with the fate of the FBI building, and the Washington Post followed up with a story that “President Trump has become personally involved in plotting a new FBI headquarters in downtown Washington.”

The President’s interference prompted allegations of self-interest from Congressional Democrats. Senator Chris Van Hollen (D-MD) stated, “there is no question that the President stands to gain financially by keeping the FBI in its existing building and blocking any competition for the Trump Hotel from being developed there.”

For the President’s part, White House Press Secretary Sarah Huckabee Sanders explained, “The President is interested in making sure taxpayer dollars spent on new buildings are being spent wisely and appropriately. He has been a builder all of his life and it should come as no surprise he wants to take the skills and great success he had in the private sector and apply it here.”