Out of 60 business recovery grants that the City of Littleton gave in early May to business owners affected by the COVID-19 shutdowns, three went to a South Dakota-based company that owns three chain hotels in south Littleton, records show.

Littleton gave three grants of $2,500 each to KWB Hotel Partners, which owns the Staybridge Suites, Courtyard by Marriott and Residence Inn in south Littleton near C-470 and Santa Fe Drive, according to city documents obtained in an open records request. That means of the total of $150,000 in city business grants, 5% went to KWB.

Each of the hotels is a franchise owned by KWB and operated under three separate LLCs. KWB, based in Sioux Falls, South Dakota, owns six other hotels: four near Kansas City and two near Phoenix.

Because the city’s grants were approved on a first-come, first-served basis to qualifying companies, applications from more than a hundred companies were not reviewed. That list includes Littleton mainstays like Dirt Coffee Bar, Jackass Hill Brewing, In-Tea and Cafe Terra Cotta.

Recipients included many well-known small businesses, including Platte River Bar & Grill, Jake's Brew Bar, Curds Cheese and GraceFull Community Cafe.

More than 40 applications were rejected for not meeting the grant program’s criteria, including artSPARK Creative Studio and Think Tank South tattoo parlor.

Click here to read the  program's rules and see the full list of recipients, rejected and unreviewed companies.

KWB executives, however, say the hotels are hurting like many other companies.

“Between our employees, the property tax and use taxes we produce, we contribute a substantial amount to Littleton,” said Dan Boyum, KWB’s vice president of capital markets and finance. “Our company is in just as great of jeopardy of going out of business as the coffee shop on the corner.”

A 2019 filing with the Securities and Exchange Commission shows KWB offered equities securities, similar to shares of stock, worth $50 million last year. Boyum said they only sold $13 million worth, which went to pay down costs incurred from previous purchases of other hotels. The same form lists potential sales commissions of nearly $4.9 million had the full $50 million been raised.

Boyum said the $7,500 from the city grants will be useful to go toward payroll, materials and upkeep at the hotels.

Revenues are down nearly 90% at the three properties, Boyum said. Though the hotels have stayed open through the pandemic, they’re only 10% full, and most of the staff has been furloughed — down from 20-25 employees per hotel to five at each.

The situation doesn’t sit right with Lauren Burgess, who runs Dirt Coffee Bar. Her application was not reviewed because it came in after 60 qualifying grants had been awarded.

The coffee shop offers job training to people with autism, and Burgess hoped to use the grant to keep the shop’s summer internship program going.

“We’re trying to figure out how to stay afloat,” Burgess said. “We were hoping to use the grant to keep our mission alive.”

Burgess said she was dismayed that an out-of-state company took up three of 60 slots.

“It’s absurd,” she said. “It’s disappointing. The company should give the money back, and the city should do what they were hired and elected to do and support the local community.”

Boyum said KWB doesn’t plan to return the money.

“We didn’t award ourselves the grants,” Boyum said. “We applied like everyone else, and we met the requirements listed. I haven’t seen the City of Littleton offering any kind of breaks on taxes or fees during this time.”

City officials say they don’t see a problem with the grant awards.

A city rule forbade giving grants to national chains, but because the hotels are franchises, the grants didn’t violate that rule, said Denise Stephens, the city’s director of economic development, who oversaw the grant program. Stephens also noted that since the hotels operate under separate LLCs, they are considered separate companies.

“What we looked at was, is this a business with a physical location in the city? Are they in good standing? Do they pay sales and use tax? Can they demonstrate a negative impact on their finances as a result of COVID? All three hotels met those criteria,” Stephens said. “In a perfect world we could’ve given grants to everyone who needed one, but we have limited funds.”

City Manager Mark Relph said the city wasn’t in the position to make judgment calls on the relative merits of one business over another.

“We had huge demand for these grants,” Relph said. “We received enough qualifying applications to give out 60 grants in the first 15 minutes. We weren’t in a position to filter one business against another. It had to be first come, first served.”

Relph said the city hopes to give out another round of business grants, utilizing a portion of roughly $4 million in federal funds the city anticipates receiving from Arapahoe County in coming weeks. Companies that applied but weren’t reviewed in the first round of grants might receive priority consideration, he said.

The city is doing its best to be equitable in unprecedented circumstances, Relph said.

“There’s no playbook for responding to this crisis,” Relph said. “We’re doing our best to be thoughtful, and learning as we go. It’s not going to be perfect.”