Records: Restaurant inside boutique hotel received $4.6 million federal grant to offset COVID-19 losses

The Colony Palms grant was the largest single one in the Coachella Valley under an SBA program. Combined, more than 150 businesses in the valley were awarded almost $60 million.

Restaurants, bars and other businesses in Palm Springs that serve food and beverages received more than $26 million from a Small Business Administration (SBA) program designed to offset losses during the COVID-19 pandemic, records released Friday show.

The records were made public after a restaurant advocacy group, the Independent Restaurant Coalition, announced that it filed a Freedom of Information Act request in June demanding that the SBA provide more information about how the $28.6 billion in Restaurant Revitalization Fund (RRF) grants were awarded.

The American Rescue Plan Act of 2021 created the fund to help restaurants and other businesses serving food and drinks recover from financial losses during the pandemic. Many were shuttered for months due to regulations ending indoor dining.  Businesses that received funds must use them for specific expenses, including, but not limited to, payroll costs, rent, debt service, utilities, and construction of outdoor seating.

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The SBA said it provided grants of up to $10 million each to 105,000 restaurant operators before the program’s funds were depleted after only three weeks. Another 265,000 applicants were left out. The fund will officially close after its website is disabled on Wednesday.

The RRF program was not without controversy. Multiple lawsuits were filed earlier this year by white, male restaurant owners claiming discrimination because the program prioritized helping businesses owned by women, veterans and minorities in the first 21 days it was open. Eventually, a court ruled that the prioritization was unconstitutional and the SBA halted payments to 2,965 previously approved RRF grant applicants.

In Palm Springs, where more than a quarter of all workers are employed in leisure and hospitality, records show 45 businesses received $26,595,840 from the fund — more than double the amount received by businesses in any other city in the Coachella Valley. Grant amounts were determined by subtracting 2020 gross receipts from 2019 monthly average gross receipts multiplied by 12, and then subtracting any Paycheck Protection Program (PPP) loans received.

The largest recipient of RRF funds in Palm Springs was The Colony Palms Hotel and Bungalows at 572 N. Indian Canyon Dr. Records show it was awarded nearly $4.6 million under the program. The hotel’s “Colony Club” restaurant seats roughly 90 people. The next largest grant in Palm Springs — $2.5 million — went to Las Casuelas, which has two restaurants on Palm Canyon Drive seating more than 400 people combined. Billy Reed’s, at 1800 N. Palm Canyon Dr., received $1.8 million. It seats 340.

Ownership of Colony Palms changed hands last year when Steve Hermann, who also owns L’Horizon Hotel and Spa in the city, purchased the business, formed Colony Palms LLC, and undertook a multimillion-dollar renovation. Its ground lease, but not the actual property, was listed for sale in 2017. Representatives of the hotel did not respond to emails or phone calls from The Post.

Records show the Colony Palms grant was also the largest single grant in the entire Coachella Valley under the SBA program. Combined, more than 150 businesses in the valley offering food and beverages were awarded almost $60 million. The next largest grant was in Indian Wells, where The Nest received almost $2.8 million.

The RRF funds followed more than $90 million in PPP loans that were provided to Palm Springs businesses in 2020. Backing of those loans was part of the Coronavirus Aid, Relief, and Economic Security Act (CARES). More than 1,100 businesses in the city with a total of 10,200 employees received PPP funds. The largest loan here was to Desert AIDS Project (now known and DAP Health). Records show it received $2.7 million to help 168 employees.

Across the Coachella Valley, records show a total of $469 million in PPP loans, some of which were forgivable, went to nearly 6,000 businesses with a total of 3,600 employees. The largest PPP loan in the Valley — $5.2 million — was given to 29 Palms Casino in Coachella to assist 500 employees.

More information: A searchable database of RRF grant recipients is available online here. A searchable database of fulfilled PPP loans can be found here. A searchable database of every company approved for a PPP loan, whether or not they took the loans, can be found here.


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