When the coronavirus shut down spring break in March, the Wyndham Grand Clearwater Seashore shut down, too. The resort laid off workers, anticipating to rent them again quickly — however in the end extending the layoffs into fall.
Inside weeks, the resort’s developer, Okay&P Clearwater Property, acquired a federal Paycheck Safety Program loan worth greater than $2 million. The loan, obtained by way of the Bank of Tampa and backed by the U.S. Small Enterprise Administration, was forgivable so long as the cash went to payroll and different qualifying bills.
Okay&P Clearwater Property shares a Tampa tackle with 9 different firms working upscale inns and resorts in seven states. Every acquired a seven-figure loan.
All of them share a managing companion: Tampa entrepreneur and philanthropist Dr. Kiran Patel.
Patel’s firms acquired the loans because of a provision permitting particular person companies beneath a company umbrella to use for their very own loans. U.S. Division of the Treasury information analyzed by the Tampa Bay Instances reveals tons of of situations wherein a number of Florida firms working from the identical tackle did precisely that.
The multiple-loan provision was supposed to profit house owners and workers of chains and franchises within the hard-hit hospitality sector; native beneficiaries embrace the Columbia Restaurant, Metro Diner and MVP Holdings, a coalition of eating places that features PDQ and Glory Days Grill. But entities of all sizes took benefit, from Patel’s lodge portfolio to a Tampa dental care firm to an auto detailer in Brooksville.
“Every business in this country was expected to apply, and did apply,” stated Patel, who believes his inns would have gone bankrupt with out the loans. “Any business that had pre-COVID revenues dropping below 50 percent or 70 percent — pick a number — should be deserving to get some assistance.”
It’s not identified precisely how a lot all these firms acquired. The Treasury has solely recognized firms receiving loans worth greater than $150,000, nevertheless it solely disclosed a spread, similar to $350,000 to $1 million, or $5 million to $10 million. Some firms contacted by the Instances supplied extra particular figures; Patel, for instance, stated his 10 lodge firms acquired round $19 million. For loans of lower than $150,000, the federal government didn’t title recipients.
Some firms, together with publicly traded companies like Ruth’s Chris and Autonation, acquired a number of loans, however returned them after criticism from watchdogs and authorities officers. Benihana Nationwide Corp., which operates Japanese steakhouses and sushi eating places across the nation, was authorized for 46 loans worth between $19.25 million and $45.7 million by way of subsidiaries working from its Aventura headquarters, though a Benihana spokeswoman stated the corporate in the end turned the loans down.
For franchisees, even these working below an enormous title like Benihana, that cash can imply the identical as it will to a conventional mom-and-pop.
“Those big companies are not sending checks to help the franchisees,” stated Bernie Dandridge, an agricultural and small enterprise growth specialist at Florida Capital Bank in Jacksonville. “If you’re a franchisee, you own your own business.”
However Kyle Herrig, president of the nonpartisan watchdog group Accountable.US, which tracks federal pandemic spending, stated permitting for a number of loans isn’t sound coverage. That form of provision, he stated, inevitably advantages bigger organizations with extra sources — particularly people who acquired loans in April, when smaller companies had been burning by way of cash readily available.
“What was sold to the American people is, this was a program to help mom-and-pop stores keep their lights on and withstand the economic crisis that’s been caused by the coronavirus,” Herrig stated. “In reality, what we’ve seen is wealthy, well-connected businesses that were savvy were able to exploit those funds.”
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In Tampa, house owners of the Columbia Restaurant acquired eight loans worth between $5.75 million and $14 million for his or her companies and eateries, together with Ulele and Goody Goody. Caspers Firm, which owns a string of McDonald’s franchises, the Oxford Alternate in Tampa, the Library in St. Petersburg and a number of other ancillary firms, acquired six loans worth between $4.2 million and $10.35 million. Tampa-based Metro Diner acquired 22 loans worth $17.5 million for its community of franchisees, in keeping with co-chairman Hugh Connerty.
Are all of them small companies? It will depend on your definition.
The overall benchmark for Paycheck Safety Program loans was 500 workers or fewer, though an organization with extra may get one if it met different standards, similar to a cap on internet revenue. Add a number of 500-employee franchises collectively, although, and also you get much more. The Columbia has greater than 1,400 workers throughout its firms. Metro Diner laid off 4,000 workers early within the pandemic, Connerty stated. Caspers Firm would have laid off 4,000, stated CEO Blake Casper.
“Because of the PPP loans, we were able to keep our employment levels as close to the pre-COVID levels as we could,” Casper stated. “And that would not have been the case if we did not get those loans.”
Corporations with centralized accounting and payroll departments typically coordinated subsidiaries’ loan functions, normally from the identical company tackle.
“People think of us as a restaurant company. We think of ourselves as a company of restaurants,” Connerty stated. “Each one of them has different shareholders, different partners.”
Casper stated for his firm, it was the person eating places who benefited, not their mother or father firm.
“The money was meant to go to our employees, and that’s where the bulk of it went, was right to them,” he stated. “Did we need that? I think absolutely we did. I think it helped stabilize our economy. If it wasn’t there, we would have been in even worse shape than we are today.”
Restaurant firms tied to Tampa’s MVP Holdings, whose companions embrace Outback Steakhouse co-founders Chris Sullivan and Bob Basham, acquired 13 loans worth between $7.three million and $18.1 million. In an announcement, the corporate stated the loans “have been a lifeline to enable us to save thousands of jobs across our brands during this pandemic and most difficult time for businesses in the history of this great country.”
Whereas the multiple-loans provision was aimed particularly on the lodging and meals providers business, different companies took the identical method.
Coast Dental, a Tampa-based community of dental labs with about 120 areas in 4 states, acquired not less than eight loans worth between $6.15 million and $15.05. A coalition of companies tied to the Econo Auto Portray model obtained not less than six loans worth between $1.5 million and $4.05 million; all listed the identical tackle on Cortez Boulevard in Brooksville.
Coast Dental didn’t return voicemails and an electronic mail about its loans. Messages left with workers at two companies tied to the Econo loans, together with their accounting workplace, weren’t returned. Emails and a voice mail left with a Columbia Restaurant spokesman weren’t returned.
The concept that Metro Diner is “some huge, big corporation,” is a “misconception,” Connerty stated. The companions in every restaurant “compare themselves to the mom-and-pops that they compete against. They are independently separate. So they’re treated that way.”
Metro Diner has completely closed seven eating places for the reason that begin of the pandemic. However in any other case, staffing is again to round 70 p.c of its earlier degree, Connerty stated.
“I can assure you, we as a company would never have survived this without the assistance of the PPP money,” he stated.
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Patel, certainly one of Tampa Bay’s wealthiest and best-known philanthropists, feels the identical method.
Patel is a cardiologist-turned-entrepreneur who bought and later bought two massive well being care firms, together with WellCare Well being Plans, which below his stewardship turned a billion-dollar operation. He and his spouse, Pallavi, have pledged $200 million to construct a Clearwater campus of Nova Southeastern College and given tens of thousands and thousands to organizations just like the College of South Florida and the David A. Straz Jr. Heart for the Performing Arts.
(Patel is a part of an area funding group that in 2017 loaned the Tampa Bay Instances about $15 million. In April, the Instances and a number of other associated publications acquired a Paycheck Safety Program loan worth $8.5 million to revive wage cuts and keep away from layoffs.)
In 2004, Patel spent $40 million on a waterfront swath of Clearwater Seashore property that, after quite a few delays and one other $175 million in growth, opened in 2017 because the Wyndham Grand Clearwater Seashore. During the last 15 years, Patel has invested in not less than 9 extra upscale inns and resorts, some to totally different levels with totally different companions, however all by way of LLCs primarily based on the similar Tampa workplace. Every acquired a loan worth between $1 million and $5 million.
Like most hospitality companies, Patel’s inns have laid off staff throughout the pandemic: 114 on the Hyatt Regency Sarasota; 129 at Pennsylvania’s Wyndham Grand Pittsburgh Downtown; 70 at Tuscon, Ariz.‘s Westward Look Wyndham Grand Resort and Spa; 60 at Redmond, Ore.‘s Eagle Crest Resort.
Patel’s most up-to-date acquisition was the Hammock Seashore Golf Resort and Spa, a 650-acre Palm Coast getaway with programs designed by Jack Nicklaus and Tom Watson, bought round New Yr’s for $18.26 million. In March, the resort started non permanent layoffs of 246 staff.
“Nobody had planned for COVID,” Patel stated. “These are all cyclical companies, so typically, some go up, and a few go down. The technique was to have inns which might be in a wide range of areas, in order that they’re depending on several types of clienteles.
“We thought we had been overlaying our bases by having a portfolio that offers with tourism and enterprise. Hastily, if you drop from a income of $100 to zero over a interval of two to a few months, it’s a problem. Fortunately, the federal government got here up with a program that not less than helped preserve folks like us, inns and eating places, afloat for a bit of bit.”
Patel doesn’t consider his firms acquired preferential therapy for the loans; actually, he stated a number of of their functions had been denied within the first spherical of Paycheck Safety Program funding.
“I hope that people understand that, just like every citizen (was) getting $600 or $1,000 a week, the businesses also need and should get some support,” he stated. “And there should be a mechanism of converting these loans to debt if they’re not used for proper purpose, and should be paid back.”
Knowledge guide John McCambridge, working in coordination with the Nationwide Press Basis, contributed to this story.
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