Dive Brief:
- At least two contractors that performed work on President-elect Donald Trump’s new $212 million Washington DC, luxury hotel allege they are owed past-due amounts totaling more than $3 million, according to The Washington Post.
- DC-area contractors Joseph J. Magnolia Inc. and A&D Construction have filed mechanics’ liens on the Trump International Hotel in order to secure compensation.
- Magnolia, which is owed the lion’s share of the supposed late payments — $2.98 million — said Trump Old Post Office LLC had paid most of what was owed on the project, but that the contractor needed to protect its interests in case there is a change in hotel ownership before final payment.
Dive Insight:
John D. Magnolia, president of Magnolia, told the Post that the decision to file a lien was purely a business move amid a public push for Trump to divest himself of certain assets prior to taking office. Magnolia performed the plumbing and air conditioning work at the hotel. A&D claims it’s owed almost $80,000 for trim and crown molding work that it performed as a subcontractor on the project.
Allegations of a pattern of contractor nonpayment on several projects dogged Trump through most of the 2016 campaign, and Trump himself has made public comments that he uses payment as a negotiating tool when a contractor performs substandard work. However, under his lease deal with the General Services Administration, which owns the hotel building, Trump is required to resolve liens within 30 days of their filing dates.
Despite a controversial payment reputation, stock prices for public construction companies and related businesses shot up the day after the election in anticipation of Trump's infrastructure program and business-friendly campaign promises. At the heart of Trump's construction plan is a $1 trillion infrastructure investment program that would rely on private equity in exchange for tax credits as high as 82%. The need to repair crumbling roads, bridges and other public assets is a bipartisan issue, but coming to an agreement that pleases both sides of the aisle is already proving to be a challenge.
Senate Minority Leader Charles Schumer (D-NY) has repeatedly said he would not support what he calls the plan's "gimmick" of tax credits as a way to fund infrastructure investment, instead leaning toward more direct federal spending. However, Senate Majority Leader Mitch McConnell (R-KY) said any proposal resembling a stimulus plan would not win favor with Republicans.