COVID Contradiction? Churches Get Federal PPP Money While Defying Local Health Orders

An NBC Bay Area Investigative Unit analysis of Federal SBA Paycheck Protection Program records found at least a dozen California churches got millions of dollars in Federal taxpayer COVID-19 relief money while, at the same time, defying local government health rules meant to reduce the spread of COVID.

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Few people in the Bay Area have defied local health ordinances during the COVID-19 pandemic as openly and fervently as San Jose Senior Pastor Mike McClure.

Congregants have flocked to his weekly indoor services at Calvary Chapel San Jose by the hundreds, most without masks, despite Santa Clara County’s public health order banning those types of indoor gatherings. McClure has also held rallies on the local courthouse steps after being charged with contempt of court for continuing those services and racked up nearly $2 million worth of fines in the process.

And at least twice, according to the county counsel’s office, a judge has held McClure and Calvary Chapel in contempt of court for defying those health orders.

“This entity is not following those safeguards, is not taking care of our community and their own congregation,” said Santa Clara County Counsel James R. Williams.

Williams also said that, so far, none of those penalties have been paid.

While McClure and his staff skirted the rules, Federal records show Calvary Chapel San Jose collected $340,400 in forgivable loans from the US Small Business Administration’s Paycheck Protection Program (PPP), as part of the CARES ACT COVID relief package passed last year. That apparent contradiction irks the county officials who have been fighting McClure and Calvary Chapel in court.

“It’s disappointing that on one hand, they would choose to willfully put people’s safety at risk in this time of crisis in our community, and on the other hand, [seek] taxpayer support for their operation,” said Williams. “This is about keeping our community safe. And it's not just the gathering indoors. There's no face masking, no social distancing, no compliance (at Calvary Chapel) with any of the very basic protocols that apply to everyone in our community,” Williams said.

An analysis of millions of records from the SBA giving details about PPP loan data by NBC Bay Area’s Investigative Unit found Calvary Chapel San Jose is one of at least a dozen places of worship in California that took taxpayer dollars while also ignoring county health orders. In total, those dozen religious organizations accepted $5,929,602 in taxpayer supported PPP money, according to federal records.

Examples include:

  • The Archdiocese of San Francisco, which records show accepted $1,876,500 in PPP money and that the San Francisco City Attorney’s Office said violated local health orders on multiple occasions. In one instance, church officials reportedly sanctioned a wedding last summer at Saints Peter and Paul Church where guests entered through an underground parking garage. The San Francisco Chronicle reported the church’s pastor said the arrangements were not meant to conceal the wedding.
  • Then, there is St. Mary’s Cathedral in San Francisco, where just last month the archbishop said publicly the church violated health orders by holding an indoor mass due to a potential security threat nearby. St. Mary’s received directly $320,405 in PPP forgivable loan money according to SBA records.
  • Spring Hills Community Church in Santa Rosa, which Sonoma County health officials said violated COVID-19 health rules on numerous occasions. Records show Spring Hills accepted $186,300 in Federal COVID relief money.
  • South Bay United Pentecostal Church in Chula Vista, a church that continued to meet indoors with no mask requirement. South Bay United Pentecostal took $109,000 in PPP money according to Federal SBA records. The Church sued California Governor Gavin Newsome over the health restrictions and the case went all the way to the US Supreme Court. In May 2020, the US Supreme Court denied a request for an emergency injunction against Governor Newsom to prevent the state from implementing restrictions on indoor gatherings.
  • Then in February 2021, the High Court partially ruled in South Bay United Pentecostal’s favor but allowed Governor Newsom and the state to continue to require certain restrictions on indoor church gatherings.

The US Supreme Court ruled that California churches can, in fact, hold indoor gatherings, but the state could cap those gatherings at 25% capacity and prohibit singing and chanting during those services.

Those organizations did not respond by NBC Bay Area's deadline for comment on whether it was hypocritical to accept taxpayer PPP funds while at the same time defying local health orders..

In a written post on his website, however, San Francisco Archbishop Salvatore J. Cordileone welcomed the Supreme Court's February ruling.

“As Christians we are members of a Church, which literally means an assembly of people coming together to worship God," Archbishop Cordileone wrote. "This is our identity; it is in our very nature to gather in person to give honor and glory to God. And especially as Catholics we know that our worship cannot be livestreamed: there is no way to give Communion, or any of the other sacraments via the internet."

Another church, Harvest Rock Church of Pasadena, also filed with the US Supreme Court a similar injunction request on behalf of itself and other California churches in 2020. Federal records show Harvest Rock of Pasadena received $311,241 in PPP money.

NBC Bay Area’s analysis of the detailed PPP data came after a US District Court ordered the release of these detailed records in December 2020, after a lawsuit by NBC News, The Washington Post and The Center for Public Integrity was filed against the US Small Business Administration requesting the records the news organizations said were public.

Combing through millions of PPP records from around the United States, NBC Bay Area’s Investigative Unit found at least 4,982 religious organizations in California, including churches, mosques, synagogues and the like, received $608,438,703.60 in PPP loans designed to keep small business afloat during the pandemic.

In an op-ed last May that appeared in The Washington Post, a trio of constitutional law professors from Cornell University and the University of Virginia argued that churches were making contradictory claims by arguing they were entitled to PPP funds while at the same time saying they should be exempted from certain pandemic-related health orders.

“These two striking developments reveal the confused state of our constitutional rules regarding the relationship between government and religion,” wrote professors Nelson Tebbe, Micah J. Schwartzman and Richard Schragger. “On the one hand, churches argue that the free exercise clause of the First Amendment entitles them to special exemptions from stay-at-home orders. On the other hand, they also assert that churches can and must be treated just like nonreligious organizations when it comes to taxpayer funding.”

They said it’s the first time in the country’s history that taxpayers have subsidized the salaries of clergy and church officials.

“Our basic concern in that piece was that churches were making contradictory constitutional claims in the context of the pandemic,” Tebbe said. “On the one hand, churches were arguing for equal treatment when it came to funding, especially PPP funding that was being provided by the federal government to small businesses. And on the other hand, they were arguing for special exemptions from COVID regulations that were limiting the size of gatherings.”

When NBC Bay Area caught up with Calvary Chapel’s Senior Pastor Mike McClure during a rally at the Santa Clara County Courthouse attended by dozens of supporters, few wearing masks or socially distancing, the pastor defended his church’s actions.

“I don’t want to take that money,” McClure said. “That’s your money, my money, our grandkids’ money. I don’t agree with that. But at the same time, I’ve got to pay all of our employees. And it’s not the church that took it, it was our school.”

When asked directly whether, as The Washington Post Op-Ed headline asserted, that it was hypocritical for churches to defy government health orders while also taking government relief money, McClure deflected the question and denied fighting Santa Clara County even as he stood in front of the court where he’d attended a contempt hearing.

“You said I’m fighting against the government. I’m not fighting against anybody. I want to help the government. I'm a chaplain. I'm not fighting against anybody. You're making me out to look like I'm crazy,” McClure said.

“I think that even churches are subject to government regulation, if that regulation is even handed and justifiable,” said the Honorable Michael McConnell, a former Judge on the Tenth Circuit U.S. Court of Appeals and now director of Stanford’s Constitutional Law Center and a Senior Fellow at Stanford’s Hoover Institution.

“The right to gather together and worship in accordance with conscience is one of the most precious rights that Americans have,” said Judge McConnell. “And so, although the government is certainly permitted to make rational decisions with respect to public health risks, it cannot do it on the basis of a presumption that religious worship is unimportant.”

“So, churches are perfectly entitled under the Constitution to share in neutrally available benefits. They can't get any money because they’re churches and they can't be favored in receiving the money because they’re churches,” Judge McConnell said.

“But if they (religious institutions) are doing precisely what secular entities are doing and receiving money, so, for example, if they're employing janitors and secretaries and doing the very things that money is supposed to be doing, there's no reason they shouldn't receive subsidy on a neutral basis,” said Judge McConnell.

“By the same token, they are subject to regulation, " Judge McConnell said.

When asked whether it was a contradiction by those churches defying local government COVID health orders to also accept federal government COVID relief money, Judge McConnell was brief.

“Well, let us just be glad that hypocrisy is not a crime in this country, or we'd all be in jail,” the judge said.

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