Prominent and politically connected Austin firms among those getting bailout loans – Austin American-Statesman

Posted: July 13, 2020 at 5:34 pm

Oil industry magnate Bud Brigham, owner of Austin-based Atlas Sand, has long been a fan of the late libertarian-minded philosopher and novelist Ayn Rand, who espoused a code that promoted, among other things, self-reliance.

Brigham a geophysicist who has sold two companies for billions of dollars bankrolled two movies based on Rands novel "Atlas Shrugged" and recently made a five-year gift to the University of Texas to pay for a Rand-inspired program examining the relationship between economic freedom and freedom of thought.

Brighams Austin company is also among the recipients of government largesse related to the coronavirus epidemic, according to an American-Statesman analysis of newly released data.

While restaurants lead the way as recipients of potentially forgivable loans from the federal governments coronavirus bailout fund, hundreds of medical and law offices and an assortment of mom and pop businesses were also awarded the bailout money as well as the politically connected.

Atlas Sand received a loan of between $2 million and $5 million, to help retain 213 employees, from the federal Paycheck Protection Program, according to government records provided to the Statesman after it and other news organizations filed public information requests.

Brigham, who has met in recent years with high-ranking state and federal officials to win permission to mine sand in areas home to a rare species of lizard, did not respond to a request seeking comment.

Among the questions Brigham declined to answer: Was the federal money needed to keep Atlas Sand afloat; how has Atlas Sand used the money; and did applying for the aid clash with his free-market principles or change his views on the uses of big government?

Atlas Sand was among scores of prominent Austin businesses that applied for and received the federal loan money.

Westlake Dermatology, for example, received a loan of at least $2 million to retain 220 employees.

Dr. Gregory Nikolaidis, CEO of Westlake Dermatology, told the Statesman that without the federal loan, the company would have had to lay off a third of its staff. The company was shut down for six weeks because its medical procedures were nonessential as the governors office tried to ensure medical supplies were readied for hospitals.

The loan "allowed us to reopen with staff we otherwise would not have been able to maintain," Nikolaidis said.

SXSW LLC, beleaguered from the cancellation of the annual South by Southwest festival that it operates, also received at least $2 million.

Other prominent companies that received at least $2 million include Tacodeli Holdings and publicly traded development company Stratus Properties.

The money from the federal loan program has been "absolutely crucial" for many area businesses, said Dana Harris, vice president for federal/state advocacy at the Austin Chamber of Commerce.

"Some businesses wont have stayed open without it," Harris said. "This is about keeping people on the payroll and employed, and having businesses pay the rent and keep the lights on. If people are out of jobs, thats a problem for the entire economy."

Auto dealerships also figure prominently as recipients of the pandemic money. Austin Infiniti, Covert Buick, Leif Johnson Ford and Nyle Maxwell of Austin were among those to receive loans worth at least $2 million apiece.

Darren Whitehurst, president of the Texas Automobile Dealers Association, which represents about 1,400 dealers, has calculated that sales and service at dealerships have been off by at least 40% around the state.

Dealerships "are fairly people-intensive businesses," he told the Statesman earlier this year, and, "as the name implies, part of the reason behind the Paycheck Protection Program was to try and make sure people didnt end up in unemployment."

Nonprofits also benefited from the federal program. Disability Rights Texas, for example, was awarded a loan of at least $2 million, and Any Baby Can received one for at least $1 million.

Edie Surtees, a spokeswoman for Disability Rights Texas, said the money was important for making the groups payroll as the organization worries about the future of grants that underwrite its work.

Wheatsville Co-op received a loan worth at least $1 million. Wheatsville did not immediately return a request for comment.

Overall, about 25,000 Austin-based businesses and nonprofit entities received forgivable loans under the federal program designed to help keep the U.S. economy running amid the coronavirus pandemic.

The cumulative amount of loans to Austin recipients totals between $2 billion and $6.3 billion, based on a wide range of loan data released by the U.S. Small Business Administration on Monday.

Under the program, the loans dont have to be repaid if theyre used to keep employees on payrolls. The loans were backed by the U.S. Small Business Administration, but administered and approved by banks and other financial institutions.

Some of the Texas companies that received the loans are led by prominent supporters of President Donald Trump.

McKinney-based Pogue Construction received at least $2 million in federal money. Members of the Pogue family donated at least $200,000 to Trumps campaign since August, and in February the president pardoned construction company owner Paul Pogue for tax crimes to which he had pleaded guilty.

Pogue Construction officials did not respond to a request for comment from the Statesman.

Muy Brands a San Antonio-based company that operates Taco Bell, Pizza Hut and Wendys franchises was approved for a loan worth between $5 million and $10 million, according to The Associated Press. Its owner, James Bodenstedt, has donated $672,570 to Trump since 2016, records show. The AP reported that the company did not respond to a request for comment.

Irving-based M Crowd Restaurant Group, which owns 27 Texas restaurants including the Mi Cocina chain, was approved for between $5 million and $10 million. Ray Washburne, one of the companys founders, was vice chairman of the Trump Victory Committee in 2016 and donated $100,000 to the political action committee last August, the AP reported. The AP reported that the company did not respond to a request for comment.

The AP also reported that broadcasting company Patrick Broadcasting, which is owned by Lt. Gov. Dan Patrick, a conservative Republican and former talk radio host, received a loan of $179,000, according to Patricks senior adviser Sherry Sylvester. Patrick is the Texas chairman of Trumps presidential campaign.

The money was used to cover the payroll and expenses of 13 employees.

"The loan did not cover his salary, but he was able to save the jobs of all his employees, many of whom have been with him for decades," Sylvester told The Associated Press.

Other political players have benefited from the federal program.

Fort Worth-based car dealership company JRW Corp., owned by U.S. Rep. Roger Williams, R-Austin who ranks as one of the wealthiest members of Congress received at least $1 million in loans to retain 122 employees, according to the federal data.

Williams, who is running for reelection in the 25th Congressional District, which includes parts of Austin, as well as Dripping Springs and Wimberley, had declined an interview request from the Statesman, but his office has said the program has been crucial to retaining employees.

The political committee of Democrat Christine Mann, a candidate in the Democratic primary runoff for Texas 31st Congressional District, which encompasses most of Williamson and Bell counties, received a $28,000 loan through the federal program.

"As a grassroots campaign and like many other small businesses, we were hit financially during the pandemic," a spokesperson for Manns campaign told KXAN, which first reported on the loan. "As a front-line doctor testing patients during COVID-19, Dr. Mann did not fundraise the ways she had previously but wanted to ensure her staff continued to receive a livable wage."

Mann has said she paid the loan back.

Correction: This story has been updated to correctly refer to a rare species of lizard found in West Texas.

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Prominent and politically connected Austin firms among those getting bailout loans - Austin American-Statesman

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