When the coronavirus shut down spring break in March, the Wyndham Grand Clearwater Seaside 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, Ok&P Clearwater Property, obtained a federal Paycheck Safety Program mortgage price greater than $2 million. The mortgage, obtained by way of the Financial institution 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.
Ok&P Clearwater Property shares a Tampa handle with 9 different firms working upscale resorts and resorts in seven states. Every obtained a seven-figure mortgage.
All of them share a managing accomplice: Tampa entrepreneur and philanthropist Dr. Kiran Patel.
Patel’s firms obtained 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 knowledge analyzed by the Tampa Bay Occasions reveals a whole lot of cases wherein a number of Florida firms working from the identical handle did precisely that.
The multiple-loan provision was meant to profit homeowners 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 resort portfolio to a Tampa dental care firm to an auto detailer in Brooksville.
“Each enterprise on this nation was anticipated to use, and did apply,” stated Patel, who believes his resorts would have gone bankrupt with out the loans. “Any enterprise that had pre-COVID revenues dropping under 50 p.c or 70 p.c — decide a quantity — must be deserving to get some help.”
It’s not identified precisely how a lot all these firms obtained. The Treasury has solely recognized firms receiving loans price greater than $150,000, but it surely solely disclosed a spread, equivalent to $350,000 to $1 million, or $5 million to $10 million. Some firms contacted by the Occasions supplied extra particular figures; Patel, for instance, stated his 10 resort firms obtained round $19 million. For loans of lower than $150,000, the federal government didn’t title recipients.
Some firms, together with publicly traded firms like Ruth’s Chris and Autonation, obtained 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 price 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 underneath a giant title like Benihana, that cash can imply the identical as it will to a standard mom-and-pop.
“These large firms are usually not sending checks to assist the franchisees,” stated Bernie Dandridge, an agricultural and small enterprise improvement specialist at Florida Capital Financial institution in Jacksonville. “For those who’re a franchisee, you personal your individual enterprise.”
However Kyle Herrig, president of the nonpartisan watchdog group Accountable.US, which tracks federal pandemic spending, stated permitting for a number of loans is just not sound coverage. That kind of provision, he stated, inevitably advantages bigger organizations with extra assets — particularly people who obtained loans in April, when smaller companies have been burning by way of money readily available.
“What was offered to the American individuals is, this was a program to assist mom-and-pop shops maintain their lights on and face up to the financial disaster that’s been attributable to the coronavirus,” Herrig stated. “In actuality, what we’ve seen is rich, well-connected companies that have been savvy have been capable of exploit these funds.”
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In Tampa, homeowners of the Columbia Restaurant obtained eight loans price 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 Trade in Tampa, the Library in St. Petersburg and several other ancillary firms, obtained six loans price between $4.2 million and $10.35 million. Tampa-based Metro Diner obtained 22 loans price $17.5 million for its community of franchisees, in response to co-chairman Hugh Connerty.
Are all of them small companies? It depends upon 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, equivalent to a cap on web earnings. Add a couple 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.
“Due to the PPP loans, we have been capable of maintain our employment ranges as near the pre-COVID ranges as we may,” Casper stated. “And that might not have been the case if we didn’t get these loans.”
Firms with centralized accounting and payroll departments typically coordinated subsidiaries’ mortgage functions, normally from the identical company handle.
“Individuals consider us as a restaurant firm. We consider ourselves as an organization of eating places,” Connerty stated. “Every certainly one of them has completely different shareholders, completely different companions.”
Casper stated for his firm, it was the person eating places who benefited, not their father or mother firm.
“The cash was meant to go to our workers, and that’s the place the majority of it went, was proper to them,” he stated. “Did we’d like that? I feel completely we did. I feel it helped stabilize our economic system. If it wasn’t there, we might have been in even worse form than we’re as we speak.”
Restaurant firms tied to Tampa’s MVP Holdings, whose companions embrace Outback Steakhouse co-founders Chris Sullivan and Bob Basham, obtained 13 loans price between $7.three million and $18.1 million. In an announcement, the corporate stated the loans “have been a lifeline to allow us to save lots of 1000’s of jobs throughout our manufacturers throughout this pandemic and most troublesome time for companies within the historical past of this nice nation.”
Whereas the multiple-loans provision was aimed particularly on the lodging and meals companies trade, different companies took the identical strategy.
Coast Dental, a Tampa-based community of dental labs with about 120 areas in 4 states, obtained at the least eight loans price between $6.15 million and $15.05. A coalition of companies tied to the Econo Auto Portray model obtained at the least six loans price between $1.5 million and $4.05 million; all listed the identical handle on Cortez Boulevard in Brooksville.
Coast Dental didn’t return voicemails and an e 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 large, large company,” is a “false impression,” Connerty stated. The companions in every restaurant “evaluate themselves to the mom-and-pops that they compete towards. They’re independently separate. In order that they’re handled that manner.”
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 stage, Connerty stated.
“I can guarantee you, we as an organization would by no means have survived this with out the help of the PPP cash,” he stated.
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Patel, certainly one of Tampa Bay’s wealthiest and best-known philanthropists, feels the identical manner.
Patel is a cardiologist-turned-entrepreneur who bought and later offered two massive well being care firms, together with WellCare Well being Plans, which underneath his stewardship grew to become 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. Middle for the Performing Arts.
(Patel is a part of a local investment group that in 2017 loaned the Tampa Bay Occasions about $15 million. In April, the Occasions and several other associated publications received a Paycheck Protection Program loan worth $8.5 million to revive wage cuts and keep away from layoffs; the publications as we speak make use of 450 full-time and 170 part-time workers.)
In 2004, Patel spent $40 million on a waterfront swath of Clearwater Seaside property that, after quite a few delays and one other $175 million in improvement, opened in 2017 because the Wyndham Grand Clearwater Seaside. Over the past 15 years, Patel has invested in at the least 9 extra upscale resorts and resorts, some to completely different levels with completely different companions, however all by way of LLCs based mostly on the similar Tampa workplace. Every obtained a mortgage price between $1 million and $5 million.
Like most hospitality companies, Patel’s resorts have laid off employees in the course of 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 Seaside 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 employees.
“No one had deliberate for COVID,” Patel stated. “These are all cyclical companies, so generally, some go up, and a few go down. The technique was to have resorts which can be in a wide range of areas, in order that they’re depending on several types of clienteles.
“We thought we have been protecting our bases by having a portfolio that offers with tourism and enterprise. Impulsively, whenever 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 at the least helped maintain individuals like us, resorts and eating places, afloat for a little bit bit.”
Patel doesn’t imagine his firms obtained preferential remedy for the loans; in actual fact, he stated a number of of their functions have been denied within the first spherical of Paycheck Safety Program funding.
“I hope that individuals perceive that, similar to each citizen (was) getting $600 or $1,000 per week, the companies additionally want and will get some assist,” he stated. “And there must be a mechanism of changing these loans to debt in the event that they’re not used for correct function, and must be paid again.”
Knowledge advisor John McCambridge, working in coordination with the Nationwide Press Basis, contributed to this story.
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