Eight members of Congress are calling on the Small Business Administration to investigate whether the operator of a luxury Santa Monica hotel and dozens of other properties properly spent tens of millions of dollars in pandemic relief funding.
Rep. Katie Porter (D-Irvine) and seven of her Democratic colleagues issued a letter Tuesday urging the SBA to investigate how a hotel conglomerate that owns or operates at least 50 hotels spent the money it received — as much as $63 million — from the Paycheck Protection Program.
The group of lawmakers said in the letter that the PPP was designed to keep workers employed but that the hotel company, Columbia Sussex, accepted the funding through multiple affiliates and still laid off thousands of workers.
“Columbia Sussex appears to have taken advantage of these policies — borrowing taxpayer money at artificially low interest rates through multiple entities while laying off workers,” their letter to SBA Administrator Jovita Carranza says.
Phone calls and emails to the Kentucky headquarters of Columbia Sussex were not returned Tuesday.
The PPP, part of the $2-trillion stimulus funding package approved by Congress in March, was promoted as a tool for keeping workers employed during the economic crisis. But experts, academics and union leaders told the Los Angeles Times that loopholes and flaws in the program allowed businesses to accept millions of dollars in forgivable loans without retaining or recalling most of their workers.
The program requires loan recipients to use at least 60% of the money on payroll and lets them wait as late as December to spend that money on payroll. If the recipient doesn’t follow the guidelines, the loan is no longer forgivable — but it converts to a low-interest loan that is much cheaper than loans offered by traditional lenders.
The PPP launched in April with $349 billion for forgivable loans. Congress added $320 billion later that month. The program ended Aug. 8 with more than $100 billion left unused.
Columbia Sussex, through affiliates, employed about 6,500 people nationwide before the pandemic. Porter and her colleagues accused the hotel conglomerate of receiving the PPP funding through 17 affiliates, registered at the same Kentucky address, and double counting employees of the various companies to justify the need for more PPP money.
The letter asks the SBA to investigate the 17 loans and respond by Monday.
Porter’s office said the call for an investigation is supported by Unite Here Local 11, which represents thousands of hotel workers in Southern California and Arizona. The union has been critical of the Columbia Sussex-operated JW Marriott Santa Monica Le Merigot hotel, accusing management of firing a housekeeper after she was infected with COVID-19 and of failing to provide enough training and personal protection gear for other workers.
A representative for Marriott Corp. has said that Marriott “has well-established cleaning processes and training in place.” The Le Merigot general manager said the housekeeper was fired for endangering guests and co-workers with her infection, but she has said she suspects she was terminated for being a union organizer.
“Wealthy hotel conglomerates that have violated the Paycheck Protection Program at the expense of struggling workers should be prosecuted to the fullest extent of the law,” said Kurt Petersen, co-president of Unite Here Local 11.
In addition to Porter, the congressional members who signed the letter are Democratic Reps. Alan Lowenthal of Long Beach, Ted Lieu of Torrance, Linda T. Sánchez of Whittier, Greg Stanton and Ruben Gallego of Arizona, André Carson of Indiana and Jan Schakowsky of Illinois.
This story originally appeared in Los Angeles Times.