The COVID-19 pandemic is a terrible time to own a chain of dry cleaning stores.
“When you don’t go to the office, when you don’t go to church, when you don’t go to weddings or funerals, etc., you don’t wear any clothes that you need to pay someone else to clean for you,” said Utah Senate Majority Whip Dan Hemmert, manager and vice president of the Red Hanger chain.
“Our revenues declined 80% over a four-week period,” said the Orem Republican, so his firm applied for a Paycheck Protection Program loan of between $350,000 and $1 million from the federal government. “The only reason we actually avoided bankruptcy was the PPP loan.”
Hemmert was among a number of Utah’s part-time legislators who sought or were helped by such loans for their regular day jobs, records show.
Three of Utah’s 29 senators are owners or officers of firms that sought loans worth more than $150,000, as are seven of the 75 Utah House members.
Another seven legislators are employees or close associates of companies that received them. The spouses of another five legislators work for firms that obtained PPP loans. And three — Sens. Jake Anderegg and Luz Escamilla and Rep. Robert Spendlove — work for Zions Bank, which handled the applications for hundreds of of PPP loans in Utah, the most of any local bank.
PPP loans generated national controversy when some big well-financed groups obtained them, from the Los Angeles Lakers to the elite Ruth’s Chris Steak House and the large Shake Shack chain. Amid outcry to name loan recipients to allow checking for other possible abuse, the government recently released names of recipients of loans worth more than $150,000.
Utah’s lawmakers say the loans they obtained were truly needed and helped to save jobs — as designed.
“We had actually closed stores. We changed our entire operation to reduce costs because our revenues dropped off,” Hemmert said about his dry cleaning business. With the help of the loans, “We didn’t fire anyone.” While his business had cut back employees’ hours, “we restored a lot, but not always back up to 100%.” The company still met requirements of the loan.
House Majority Whip Mike Schultz, R-Hooper, was involved in seeking two PPP loans, each for between $150,000 and $350,000. One was for Castle Creek, a homebuilding company he owns, and the other was for Richland Hotel Partners, a partnership that owns a hotel in Richland, Wash.
Schultz said loans were needed for both to help avoid layoffs.
(Steve Griffin | Tribune file photo) Rep. Mike Schultz, R-Hooper, on the floor of the House of Representatives on Feb. 2, 2018.
“We had a couple of pretty bad months for home sales. We were looking to tighten our belts pretty heavy with visions of 2008 [the Great Recession] bouncing around in my head,” he said. “Our payroll is our biggest expense, so we were likely to lay off six or seven people. We chose not to, and the loan covered payroll costs for a couple of months.”
While he said home sales have recently rebounded, “we’re still losing money right and left on that hotel, as I’m pretty sure is the case with about every hotel in the country” — but the loan helped preserve some jobs there, too.
Job savers
Rep. Adam Robertson, R-Provo, is chief technology officer and co-founder of Fortem Technologies, which he said builds drones for defense. It applied for and obtained a loan of between $1 million and $2 million, and reported on applications that it had 77 employees.
“It definitely helped keep our employees,” he said. “This is all about people who otherwise would have lost their jobs were able to retain their jobs,” thanks to the loan.
Rep. Lowry Snow, R-Santa Clara, is a partner in the law firm of Snow Jensen & Reece, which obtained a loan of between $150,000 and $300,000. He said his firm quickly decided to go after the loan because of how hard the Great Recession a decade ago had hit it.
(Trent Nelson | Tribune file photo) Rep. Lowry Snow, R-Santa Clara, on Oct. 26, 2017.
“It was a wise decision” that likely helped avoid layoffs, he said. “I don’t know at this point whether we will make application for forgiveness” of the loan as allowed if jobs are preserved and employee wages are not reduced by more than 25%.
Rep. Ray Ward, R-Bountiful, is a physician who is a co-owner of the Ogden Clinic, which operates facilities in Weber and Davis counties. It received a loan of between $5 million and $10 million — which he, too, said helped to preserve jobs.
As COVID-19 hit and people avoided nonemergency treatment, “we had one month of about 40% less [business], one month of 20% less and one month of 10% less. Now we’re back,” he said. “So everybody was kind of scared and didn’t know what would happen next.”
Rep. Keven Stratton, R-Orem, is the managing partner of Stratton & Bratt Landscapes, which obtained a PPP loan of between $350,000 and $1 million. He said it was needed when construction companies, his biggest clients, delayed projects as the pandemic hit.
(Steve Griffin | Tribune file photo) Rep. Keven J. Stratton talks at the state Capitol on Feb. 6, 2017.
“We pay our employees weekly. So I would wake up on Monday and ask, ‘How am I going to make payroll for these 120 employees that are excellent.‘” He said the availability of the loans helped solve the problem temporarily.
Other recipients
Among other lawmakers who are officers or owners of companies that obtained loans was House Speaker Brad Wilson, R-Kaysville, who is president of Destination Homes, which obtained a loan between $350,000 and $1 million, and manager of Destination Real Estate, with a loan of $150,000 to $350,000.
Also, Sen. Lyle Hillyard’s law firm obtained a loan of $350,000 to $1 million, but the Logan Republican said he has not been working there much in recent years and didn’t know about the loan until partners told him he could not use secretaries there for any political work under terms of the loan. Sen. Curt Bramble, R-Provo, is treasurer of Alexander’s Print Shop, which secured a loan of between $350,000 to $1 million, but said he has little involvement with the firm and did not know about the aid.
Rep. Elizabeth Weight, D-West Valley City, is on the board of Friendship Manor, which obtained a loan of between $150,000 and $350,000. Rep. Melissa Garff Ballard, R-North Salt Lake, has ownership interest in the Garff downtown automotive block, but said that is only in the land and its rent, and not the car dealerships there, that obtained PPP loans.
Numerous other lawmakers are employed by businesses that obtained loans.
Bramble said he applauds the federal program as long as it helps small business with true needs to survive the pandemic. But in his work as a certified public accountant, he said he has seen a variety of clients who likely don’t really need government help go after it anyway — because they see it as a benefit to which they are entitled even if they do not need it.
“Think of it this way,” he said. “If the people who didn’t need it wouldn’t overburden the process, there would be more money for those who are traumatically impacted.”
