For immediate release
June 5, 2015
Changes Proposed to Controversial Federal Visa Program for Foreign Investors
Hotel workers union: EB-5 deals need increased accountability and transparency around jobs
Washington, D.C.–Changes may be coming to a controversial federal program through which wealthy foreign investors can secure US green cards.
Yesterday, a proposal to re-authorize the EB-5 Regional Center Program was put forth by Senators Chuck Grassley (R-Iowa) and Patrick Leahy (D-Vt.), leaders of the Senate Judiciary committee, as Senate Bill 1501. The bill extends and makes changes to the federal EB-5 Regional Center Program – through which wealthy foreign citizens can secure US green cards for themselves and their family members in exchange for investing $500,000 each in businesses that create 10 direct, indirect or induced jobs in “high unemployment” Targeted Employment Areas (TEAs).
Even with the proposed changes, some critics remain concerned about how many jobs (especially good jobs) EB-5 investments actually create and for how long, the designation of the “high unemployment” TEAs, and the difficulty in accessing information from the United States Citizenship and Immigration Services (USCIS), which runs the program, about these TEAs and jobs created.
Since 2008, the hotel industry has seen a sharp increase in EB-5 investments, fueled by an expansion of the Regional Center Program. These hotel projects promise to create thousands of hospitality and construction jobs in areas of high economic need. However, not enough information is available to the public about the actual outcomes of these investments. UNITE HERE, a union that represents over 250,000 hotel, gaming and food service workers across the US and Canada, has been actively monitoring hotel development projects seeking and using EB-5 investments, and can share its research and analysis regarding several local projects including the following:
- In Chicago, the Regional Center GO USA EB-5, representing developer SMASHotels, is soliciting EB-5 investment overseas for a new 192 room “upscale” Marriott International Autograph-brand hotel in the affluent Streeterville neighborhood.
- The median family income in the zip code that houses Streeterville is $167,321 per year.
- Despite the luxurious surroundings and wealthy residents of the neighborhood, the federal government is likely deciding whether or not to designate a single census tract within Streeterville as a high-unemployment TEA.
- In Philadelphia, 90 EB-5 investors were recruited to provide $45 million in financing for the 268-room Kimpton Monaco Hotel across from Independence Hall.
- By late 2014, those investors needed to show USCIS that the hotel had created 900 direct and indirect jobs. According CanAm Enterprises, LLC, the firm that put together the EB-5 financing deal for the Philadelphia Monaco, that project has created 1,387 jobs.
- The USCIC permits projects to count direct jobs, jobs indirectly created or induced jobs from hotel operations, and indirect jobs created through construction spending. A City of Philadelphia document from 2011 indicates that the Hotel Monaco project had created only 177 jobs, which we believe to be direct jobs at the hotel. This means that the remaining 1,210 jobs CanAm says the Philadelphia Monaco project created were indirect or induced jobs.
- In response to a FOIA request, USCIS provided to UNITE HERE only a heavily redacted copy of CanAm’s model for these projections.
- Similarly, in San Francisco, the Kor Group plans to reopen the 135 room Renoir Hotel as the boutique Proper Hotel San Francisco.
- Kor raised $40 million in EB-5 financing for the project from 80 EB-5 investors. To support 80 EB-5 investors, the developer will have demonstrate at least 800 jobs related to the project. In 2013, the developer reported to a local agency the hotel will directly employ 155 people.
- The developer also reported in 2013 that, beyond EB-5 financing, the project is benefiting from financing with federal New Market Tax Credits and Historic Tax Credits.
- In Washington State, Yareton Investment & Management has entered into a development agreement with the City of Tacoma for the construction of a 300-room convention center hotel on what is now city-owned land.
- Yareton has stated its intention to use substantial EB-5 financing for the hotel, but has yet to expand its existing EB-5 regional center to include Tacoma.
- The existing regional center was established for an as-yet uncompleted project in Des Moines, Washington, a Four Points by Sheraton Hotel which received EB-5 investment funding and additional public subsidy.
- USCIS initially stated its intent to deny that regional center covering Des Moines, but the regional center was later approved following political intervention.
“We are obviously enthusiastic about programs that create good jobs for people that need them,” said Jo Marie Agriesti, UNITE HERE’s Hotel Division Director. “But we want the reality of EB-5 to match the rhetoric surrounding the program, especially when it comes to more transparency, better access to accurate information on EB-5 funded projects, and a more aggressive USCIS holding regional centers to higher standards for accurate and sensible job-creation numbers.”