Why Does the VA Own a 5-Star Luxury Hotel in Paris?
Policy + Politics

Why Does the VA Own a 5-Star Luxury Hotel in Paris?


Congress thinks it’s time the scandal-plagued Department of Veterans Affairs got out of the Parisian luxury hotel business.

Pershing Hall is a five-star boutique hotel in the heart of Paris, where rooms cost $500 to $900 a night. The building, which once housed a brothel among other unsavory businesses, was purchased by the America Legion in 1928 to honor World War I general John "Black Jack" Pershing and his troops. The U.S. government acquired the property in the 1930s after years of neglect and in 1991 transferred authority for the site to the VA, which almost immediately started looking for ways to sell the place.

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The agency found a solution in 1998 when it signed a 99-year-lease with a French firm. The extraordinarily long lease, due to expire in 2097, was required under French law so the firm could invest millions to renovate the building, eventually turning it into a fancy little hotel a few blocks from the Seine.

As the VA works to recover from last year’s scandal over mismanaged healthcare and regain trust on Capitol Hill, Rep. Mike Coffman (R-CO), who chairs a House Veterans’ Affairs Committee subpanel, plans to introduce a bill that would allow the department to divest itself of Pershing Hall and funnel the money toward domestic construction projects.

“Managing property leases in Europe is not a core-competency of the Department of Veterans Affairs,” Coffman, a Marine Corps veteran, said Wednesday in a statement. “It’s ridiculous that construction projects in Colorado and elsewhere remain unfunded while VA keeps a ritzy Parisian hotel on its books.”

How much VA would actually get for the property is unclear, since most of the price estimates were done before the building was rehabbed. In 1990 agency officials estimated the value between $80 and $100 million. In 1993 the non-partisan Congressional Budget Office assumed the department could sell it for about $14 million.

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Coffman’s legislation, which he plans to introduce with three Democratic cosponsors after ironing out kinks with the VA and the American Legion, would require the department to pick a non-department entity such as the General Services Administration or a private real estate firm to conduct an assessment of the property’s value.

The department received two initial fixed payments from the lease: $533,000 in 1998 and $467,000 in 2000. The lease also calls for payment of periodic rent of 800,000 French francs between 2001 and 2014, and 1.2 million francs between 2014 and 2097; presumably those payments would be converted to euros, which France adopted in 1999.

Any proceeds from the sale would be placed in the VA’s construction coffers. Those accounts have come under intense scrutiny in the last year, especially after the department announced earlier this year it would cost around $1.7 billion to build a replacement hospital in a Denver suburb, more than five times the facility’s original $328 million price tag.

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Congress found a way to pay for the 184-bed facility in September, so any money from selling Pershing Hall would go to other projects.

Influential veterans service organizations such as the Veterans of Foreign Wars and even the VA itself support Coffman’s idea.

“The VFW believes that VA should not be on the hotel business, but disposal of the hotel should be a business decision and not just an effort to no longer own the building,” Raymond Kelley, the group’s legislative director, said earlier this week during a House VA hearing.