Source: Politico
By Theodoric Meyer
August 20, 2020
HOTELS WROTE CHECKS TO LAWMAKERS WHO HELPED THEM IN PUSH FOR RELIEF: When more than 100 lawmakers sent a letter in June to Treasury Secretary Steven Mnuchin and Federal Reserve Chair Jerome Powell, it was a lobbying victory for the battered hotel industry. Hotel lobbyists had pressed members of Congress to urge Mnuchin and Powell to help hotels whose mortgages had been packaged into commercial mortgage-backed securities. Without enough guests, many of those hotels were struggling to make their mortgage payments with little ability to negotiate with lenders.
— Just two days after the lawmakers sent the letter, the American Hotel & Lodging Association’s PAC cut a check for $5,000 to the campaign of Rep. Van Taylor (R-Texas), the letter’s lead signer. The PAC — known as HotelPAC — also gave $5,000 to Taylor’s leadership PAC and wrote checks to the campaigns of two more of the letter’s first four signers in the days before the letter went out: Reps. Andy Barr (R-Ky.) and Al Lawson (D-Fla.). The PAC had never donated to any of the lawmakers before June, campaign finance records show. In total, HotelPAC gave more than $91,000 to 18 of the 105 lawmakers who signed the letter — including eight who had never received an AHLA donation before — in the days before and after they sent it on June 22.
— AHLA and several of the members of Congress who signed the letter said the timing of the donations was coincidental. A Taylor spokesperson said it was “absolutely ridiculous” to ask whether there was a connection between the contributions and Taylor’s decision to send the letter. “Congressman Taylor has been working on this issue since March when hundreds of his constituents started reaching out to him about the importance of this issue to them and their families,” she said in a statement.
— HotelPAC’s burst of contributions in June — which included dozens of checks to lawmakers who didn’t sign the letter as well as the ones who did — came after a long drought. An AHLA spokesperson said the PAC hadn’t made any political contributions since March 10 before resuming its giving in June because the trade group had shut down its offices and furloughed staff in response to the pandemic. “We did not resume PAC disbursement activity until June, so we did have a large number of checks go out in June in time for the quarterly fundraising deadline,” the spokesperson said in a statement.
— The economic pain of the pandemic has been especially intense for hotel and shopping center owners with mortgages that have been bundled into commercial mortgage-backed securities and sold to investors, since it is hard for such hotels to negotiate with their creditors. Nearly a quarter of hotels with such mortgages were delinquent in July, according to Trepp, an industry research firm. Such hotels haven’t been able to apply for Paycheck Protection Program loans or other lifelines because the loan covenants typically bar borrowers from taking on any more debt.
— Lawson, the Florida Democrat who was one of the letter’s lead signers, said he first learned about the issue from Steven Leoni, a Tallahassee businessman whose company owns a strip mall in his district. The strip mall — where the tenants include the Bajas Beachclub nightclub and an Aveda Institute beauty school — carries a mortgage that’s been packaged into a commercial mortgage-backed security. Lawson said he’d been working on the issue for months before AHLA reached out. “This was a group of people that really, really needed help,” he said in an interview. “We bailed out the airline industry but we hadn’t done anything for the hotel and restaurant industries as well as the shopping centers.”
— When the letter failed to convince Mnuchin and Powell to take action, Lawson, Taylor and Barr introduced a bill late last month to bail out hotels and other businesses with commercial mortgages that have seen steep drops in revenue, which has drawn nearly a dozen other cosponsors. But Cecil Staton, the Asian American Hotel Owners Association’s president and chief executive, said in an interview earlier this month that he wasn’t optimistic Congress would act. “It’s almost like Nero fiddling while Rome is burning,” he said. “I am just flabbergasted there is not more of an attempt to deal with this particular issue.”
