The State of Mississippi on Wednesday awarded a tax break worth up to $6 million for a hotel project involving the Trump family business, a public subsidy that could indirectly benefit President Trump.
The board of the Mississippi Development Authority approved the so-called tourism tax rebate, which had been requested by the development’s local owners, Dinesh and Suresh Chawla. The Trump Organization will brand and manage the hotel and collect fees from the Chawlas for doing so.
The subsidy, to be paid out over a period of many years, is expected to offset nearly a third of the Chawlas’ projected $20 million in costs for building the hotel, which is scheduled to open this fall in Cleveland, Miss. The property, called Scion West End, is to be the first in a new line of four-star Scion hotels that the Trump Organization announced late in the 2016 presidential campaign.
The state’s approval of the tax rebate is the culmination of more than two years of efforts by the Chawlas that predate their partnership with the Trumps, according to emails obtained by The New York Times through a public records request. After the Chawlas announced plans last June to team up with the Trumps, Suresh Chawla alerted an array of personal contacts and state and local officials, including an aide to Mississippi’s governor, Phil Bryant, in emails with the subject line “Trump Hotels Coming to the Mississippi Delta.”
In December, the Chawlas formally applied for the tax rebate from the state development agency, which is led by Glenn McCullough Jr., an appointee of Mr. Bryant, both of whom are supportive of President Trump.
In an email on Wednesday, Dinesh Chawla said he and his brother were pleased by the approval, though they said the development agency had not notified them of it.
The development agency declined to comment.
The decision to approve the request was not unusual for the agency, which evaluates applications for the tourism rebate program based on set criteria and has granted similar subsidies to other hotels.
The award renews legal questions about a Trump-affiliated property receiving benefits from a state or local government. Ethics watchdogs and the president’s critics say the Mississippi tax break would benefit the president, albeit indirectly, because he continues to own the Trump Organization through a trust.
Such benefits, they say, could violate the Constitution’s emoluments clauses, which essentially prohibit the president from accepting certain gifts from foreign or domestic governments. Other legal experts, however, contend that domestic emoluments are allowable so long as Mr. Trump does not earn them from his service as president.
Dinesh Chawla said in an email to The Times earlier this month that the Trump Organization had played no role in the rebate application and that the Trumps and the Chawlas had agreed that any rebate would not figure into fees paid to the Trumps.
Mr. Chawla said he and his brother had sought the rebate to “improve our cash flow.”
A spokesman for the Mississippi development agency said the Trump name was not mentioned anywhere in the Chawlas’ application.
The development agency’s tourism rebate program is part of an effort to draw tourists to Mississippi and help the local economy. According to the development agency, the program allows a developer to recoup some of the sales taxes collected on a property to “reimburse the applicant for eligible costs incurred during the project’s construction.” The agency said earlier this month that 23 other tourism rebate applications had been approved under the program, including 10 for hotels.
The partnership between the Chawlas and the Trumps materialized after Mr. Bryant, a Republican, introduced members of the two families during the 2016 presidential campaign. The governor and the Chawlas have known each other for years.
Clay Chandler, a spokesman for Mr. Bryant, said earlier this month that the Chawlas had followed the same procedure as other applicants for the tax rebate. “State law guides the application process, and state law alone will determine if any application is approved,” he said.
In his earlier email to The Times, Dinesh Chawla said that “no contact with Governor Bryant or his executive staff has been made regarding the project, other than our general discussion about what the project contains.”
Still, the Chawlas contacted state officials for more than two years, seeking to get the project on their radar, according to the emails obtained through a public records request.
“I would really appreciate your efforts in advocating this idea with the Governor’s office, MDA executive director Glenn McCullough, and MDA staff and others,” Suresh Chawla wrote in a July 2015 email to Robert Morgan, an aide to Mr. Bryant, using the acronym for the development agency.
“We did not ask for any favors, other than an honest referral,” Dinesh Chawla said in his email to The Times on Wednesday. “We wanted to introduce it to the state hierarchy, because in our state, a $20 million project is of significant note.”
Last summer, Suresh Chawla alerted Mr. Morgan to the partnership with the Trumps within minutes of its being announced, sending him and other officials a news release about the deal.
When Mr. Morgan received the message, he shared the news release with three other members of Mr. Bryant’s administration, including his chief of staff, along with an official at the development agency.
Dinesh Chawla said that he and his brother had emailed more than 1,000 people with the news of the deal. “It had nothing to do with the people in high offices,” he said.