‘Just insanity’: Closed Pa. businesses cry foul as competitors snag waivers to reopen

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A 100-unit student housing project at 4200 Ludlow Street, owned by the HOW Group. The project was placed on hold due to a business shutdown aimed at containing the COVID-19 virus. (Courtesy of HOW Group)

A 100-unit student housing project at 4200 Ludlow Street, owned by the HOW Group. The project was placed on hold due to a business shutdown aimed at containing the COVID-19 virus. (Courtesy of HOW Group)

Gary Jonas’ Philadelphia-based real estate development company, The HOW Group, had hundreds of units of housing in the pipeline when the COVID-19 outbreak hit. Some were already pre-sold or leased, like a 100-unit student housing project near the University of Pennsylvania, with residents scheduled to move in over the coming months.

But as the virus began to push much of the country into lockdown, Jonas says he didn’t take any chances. When Gov. Tom Wolf ordered “nonessential” businesses shut on March 19, he brought his construction projects to a standstill.

“If I have 125 employees, over our group of companies, I would say 100 of them are not working right now,” he said.

Like many business owners, he turned to government leaders for guidance about what to do next.

What he heard instead was confusion.

“In the beginning, the governor had said the construction was essential work. Then, the city said it wasn’t. Then the governor reversed his position,” he said. “Then [the Wolf administration] put something in place that said well, there are certain construction sites that are going to be essential.”

Soon, Jonas heard that some projects were back on, given special waivers by state officials allowing some developers to operate during the crisis. Critical infrastructure, like hospital projects. So were some nearly complete residential projects where delays risked a logistical nightmare for soon-to-be occupants.

“If 40 people are supposed to move in in two weeks and I have to shut you down, well, you can’t have 40 people be homeless. You have to finish that building,” he said. “We heard those projects were getting exemptions.”

Jonas applied for his own waivers on his student housing project, near 4200 Ludlow Street, and several nearly-complete townhomes in the city last week. He says he never heard back.

Meanwhile, he watched other projects deemed “essential” that didn’t seem quite as pressing. SORA West, a $325 million office and hotel complex in Conshohocken, Pa. will house a new headquarters for drug wholesaler AmerisourceBergen –– once it’s complete in 2021. But the project was granted a waiver on March 25th, because it “plays a critical role in the manufacture and supply of goods and services necessary to sustain life,” according to state officials.

“It’s crazy that a job like that would get opened back up,” Jonas said. “They say the waivers are granted based on need, but they don’t’ tell you what a good ‘need’ is. So we’re just guessing.”

‘This is just insanity’

The Wolf administration has faced mounting public criticism from lawmakers in the GOP over its handling of the COVID-19 shutdown and its effect on businesses.

State Sen. Ryan Aument (R-Lancaster) says there’s been a lack of transparency that has left thousands of business owners in different industries across the state in the dark.

“My staff has been fielding calls since the day these restrictions went into effect. Emails. I get text messages, social media posts about it. All day, every day,” he said. “The construction industry is particularly where I’m hearing a lot of concern. Companies put back to work while their competitors are not, even though they submitted applications around the same time.”

Cars dealerships in the state were also deemed nonessential, leaving paid-for vehicles stranded on lots — even emergency vehicles, like firetrucks, that were ordered before the shutdown.

The Lehigh Valley-based Kelly Auto Group laid off 123 employees in March, as president Greg Kelly said customers were free to travel across state lines to buy cars in coronavirus hotspots like New Jersey.

Kelly said it stung when he realized some local competitors had received a waiver to reopen.

“If it makes sense for one dealer to be open, it makes sense for them all to be open,” he said. “I mean, this is just insanity.”

Kelly watched as a Chevrolet dealership in Brodheadsville worked their waiver letter into advertisements, declaring that the business had reopened. Meanwhile, Kelly’s own dealerships in Emmaus and Easton, about 25 miles away, were still shuttered.

John Devlin, president and CEO of the Pennsylvania Automotive Association, speculated that some dealership exemptions may have simply been issued in error.

“There’s an indication that they’re going to go back on those other waivers that were granted,” he said.

Aument said part of the problem is that not even elected officials can say for certain who has been issued a waiver, why a particular decision was made, or when the status of an application will change.

He said Republican leadership in the Senate sent a letter to Wolf, a Democrat, on Wednesday afternoon, pleading for more clarity. GOP leadership in the State House penned a similar letter on Monday.

Both say they’ve heard little back from the governor’s office.

“Quite frankly, we’re not getting a lot more info than the average citizen,” Aument said. “The lack of transparency is troubling.”

Unprecedented times

Lyndsay Kensinger, a spokesperson for Gov. Wolf, explained that the administration faced a conundrum in issuing its far-reaching shutdown order on March 19: what, exactly, is a “life-sustaining” business?

According to Kensinger, the state used guidance from the Department of Homeland Security and, separately, the North American Industry Classification System to sort and evaluate the necessity of a business.

“We had no template for this type of situation, so the list was developed in an effort to provide structure and definition of something that was previously undefined,” said Kensinger.

Following backlash, the Wolf administration revised these criteria almost immediately. Then came the flood of waiver applications from businesses that believed they had been wrongly deemed “non-life-sustaining.”

Kensinger said the state had received nearly 31,000 waiver requests as of March 30, so far granting about 5,000 and denying about 7,700 of those applications. Kensinger added that the state’s Department of Community and Economic Development has been short-staffed, as many state employees had themselves been ordered to work from home.

Asked for a list of businesses that had received waivers, Kensinger said such accounting didn’t exist.

“There is no list that can be shared in the way that you’re requesting it at this time,” she said. “Information about businesses receiving exemptions from the Governor’s and Secretary of Health’s business-closure orders will be supplied following the conclusion of the review process.”

When, exactly, that process will conclude is unclear.

Aument said he did believe much of the current confusion stems from simple capacity issues. But the senator said both business owners and the general public are still owed a greater level of transparency. As is, without a list of businesses granted waivers, it’s unclear who is undermining the shutdown order and operating without permission.

“I think it increases the likelihood of that happening,” Aument said. “We’ve gotten reports from folks here who will call us and question why a certain business is operating again. And then that business gets calls. We’ve advised businesses that if they have a waiver to display it prominently.”

Mark Stehr, an associate professor of economics and public health at Drexel University, said the current process undermines the intent behind Wolf’s own aggressive shutdown order, which theoretically carries daily fines and the threat of imprisonment.

“If people learn that certain businesses are being granted waivers, and perceive that the government is walking back the lockdown to some extent, they may decide that they too can relax a little bit,” Stehr said. “They may be taking the government walk-back as a signal that the situation isn’t quite as bad as they first thought.”

‘Predictability’

In the meantime, business owners like Philadelphia developer Gary Jonas are still waiting. He says he just wants to know what to do next, what to tell the hundreds of residents that expect to move into his developments in the coming months.

“We’re always looking for predictability. Knowing what the rules are, that’s really what we need,” he said.

Among the thousands of businesses that did receive waivers, as reported last week by PA Spotlight and PA Post, were the Wolf family’s cabinetry business and Republican Senate President Pro Tempore Joe Scarnati’s chocolate company. The waiver for Wolf Home Products, which Gov. Wolf divested from shortly after becoming governor in 2015, was later rescinded.

Aument said the potential perception of impropriety as the government determines which businesses are allowed to reopen “was just another reason to be transparent about this process.”

“At first I didn’t believe it,” Aument said of the report. “But I’ve had businesses here that do similar work [to Wolf Cabinets] here in Lancaster that we were advocating on behalf of, and they were also granted a waiver. I thought that as long as there’s consistency, that’s okay.”

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