GSA Selects Trump to Redevelop Old Post Office

GSA announced this afternoon that it has chosen the Trump Organization as the preferred team to redevelop the historic Old Post Office building.  This apparently concludes an effort which has been going on for more than a decade.  In December 2000 GSA submitted to Congress a plan for redevelopment of the Old Post Office; and, in 2004 GSA issued a Request for Expressions of Interest to redevelop the site, a process that was never successfully completed.  In 2008 Congress expressed its frustration by passing the Old Post Office Building Redevelopment Act, Public Law 110-359, which chronicled GSA’s failure to address the asset and specifically directed the Administrator of General Services to proceed with redevelopment of the Old Post Office Building.  Still unresolved, the issue culminated in October 2010 when the property was featured as an example of government waste in a U.S. House of Representatives Committee on Transportation and Infrastructure report (and subsequent congressional hearing) entitled “Sitting on Our Assets: The Federal Government’s Misuse of Taxpayer-Owned Assets“.  Given the title, one can guess at the tone of both the report and hearing.  The authors noted that operating the Old Post Office Building cost taxpayers $6.5 million annually.

With a follow-up hearing entitled “One Year Later: Still Sitting on Our Assets” scheduled to be hosted Thursday in the Old Post Office Building, is it any surprise that GSA hustled to select a developer?

Several other hoteliers and local developers submitted proposals, one from Hilton Worldwide that would have turned the building into a Waldorf Astoria, but GSA chose Trump’s offer because it “represented the strongest development team, the best long term potential for the local community, and most consistent stream of revenue for the Federal Government.”

According to GSA Public Buildings Service Commissioner Robert Peck, “Deciding to move forward with redeveloping this iconic property will save millions in taxpayer dollars.  The tremendous response from the public sector allowed us to select a proposal that will provide a positive economic return for the Federal Government and better utilize a historic property on our nation’s Main Street.”

The Trump Organization’s proposal calls for converting the property to a 250+/- room luxury hotel to be known as Trump International Hotel, Old Post Office, Washington, D.C.   Trump, in partnership with the Santa Monica, California–based private equity firm Colony Capital, plans to invest $200 million in acquiring and redeveloping the property.

GSA and Trump are expected to spend the next year negotiating a detailed agreement for the redevelopment project that will specify building usage, historic preservation requirements, and details of the government’s revenue stream.  As negotiations proceed, GSA will relocate the building’s existing federal tenants, including the Advisory Council on Historic Preservation, the National Endowment for the Arts, and the National Endowment for the Humanities.  If all goes as planned, construction is expected to begin in 2014 and be completed by 2016. At the end of the lease, control of the building will revert to the federal government.